RF Industries, Ltd.

Greetings. Welcome to the RF industry's first quarter fiscal 2023 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 anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Jack Drapez, Senior Vice President. You may begin.

Thank you, operator. Good afternoon and welcome to RF Industries' first quarter fiscal 2023 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 afternoon, RF Industries issued a press release announcing its first fiscal 2023 financial results. That release is available on the company's website at rfindustries.com. This call is also 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 the 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 other risks and uncertainties discussed in the company's periodic reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. RF Industries undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout this call, we will be discussing certain non-GAAP financial measures. Today's earnings release and the related current report on Form 8-K describe the differences between our GAAP and non-GAAP reporting, and present the reconciliation between the two for the periods reported in the earnings release. With that said, I will now turn the conference over to Rob Dawson, President and Chief Executive Officer.

Thank you, Jack. Good afternoon, everyone. Thank you for joining RF Industries' first quarter fiscal 2023 conference calls. While we delivered net sales of 18.3 million in the first quarter, which is an 8.4% increase year over year, we expected to do better, and I'll explain why. Even though our first quarter is our seasonally slowest period, we anticipated shipping an additional $1.4 million in orders that were delayed due to customer requests and timing of shipments, and will be recognized in future quarters. That additional revenue would have made a big difference on our margins and bottom line. As the quarter wound down, we saw some definite signs of slowing in CapEx spending from wireless carriers. Coming off of a record year for us, we had sized our operations to handle higher capacity levels. With carriers now announcing cost-cutting plans and tightening budgets, we took steps to realign our own cost structure. To that end, and with the full support of our board of directors, we've accelerated our 2023 strategic plan to consolidate and streamline operations and reduce operating expenses. These additional savings, along with our healthy and diverse run rate business, will allow us to continue to deliver a solid performance in the near term and to sustain any extended challenging macro market conditions. The big question for suppliers like us is how and when the revised carrier CapEx will be deployed. While we're seeing steady growth in our core interconnect products, wireless carriers are slowing larger site buildouts of their planned 4G and 5G networks. This directly affects our project-based business, sales of small cells, DAC thermal cooling systems, hybrid fiber cables, and in-venue wireless deployments, all of which are directly related to carrier CapEx. By now, I've been through at least four major wireless build-out cycles, and there are always some unexpected delays and pauses. The COVID lockdown was especially brutal when it stopped projects in their tracks. Eventually, We get on the right side of what the carriers need to do to stay competitive and keep their customers happy, while also leveraging the benefits of new advancements in radios and other technologies. However, with the current macro factors of inflation and high interest rates, the timeline has certainly become more unpredictable. That's all beyond our control. And that said, each time we run into obstacles, we've been able to fight our way through and get better. It starts with focusing on what's in our control and what levers we can pull to both grow sales and become a more cost-efficient business. To that end, as I mentioned, we are now accelerating our plan to streamline our operations and to reduce operating expenses. Today, Peter and I are speaking to you from our new San Diego facility that now houses our corporate headquarters and several production lines. We've already moved our coaxial cable operations. with no production downtime, which is pretty amazing considering the complexity of a move like that. Other product lines, like our fast-turn fiber, will follow in the next few months. When completed, our West Coast operations will be fully consolidated in an efficient, state-of-the-art facility manufacturing built-in America specialty interconnect products. On our fourth quarter call in January, we mentioned our plans to consolidate some of our East Coast operations this year. We've now pushed that timeline forward for certain product lines. We're also looking at operating expenses with an eye toward shaving expenses wherever we can without impeding our ability to serve our customers and continue to grow. With inflation, everything is more expensive. Wages, materials, insurance, you name it. Plus, logistics and especially scheduling of transportation remains a challenge. Most of our cost savings will come from consolidating operations and streamlining operations, but we will also continue to carefully manage operating expenses across the board. Through all of these focus areas, we expect to realize more than $2 million of annualized savings this year and add at least another $1 million of cost savings next year. Regarding guidance for fiscal year 2023, with what we see today, it's difficult to predict with much certainty what to expect in the near term. Judging by what our customers are saying, we are cautiously optimistic that larger projects should gradually pick up with greater momentum in the back half of the year. While the first half of the year will be impacted by the changes in the carrier market, we expect second quarter sales to increase sequentially from the first quarter, and that sales and profitability in the second half of the year will improve significantly over the first half. Notwithstanding the headwinds we're experiencing, we remain committed to our long-term strategy that has helped us profitably grow sales from $23 million to $85 million over the last five years. Our core run-rate business continues to benefit from a steady and diverse customer base and tends to be less project-centric and driven mostly by day-to-day orders. Wireless carriers will continue to invest in 4G and 5G build-outs over the next several years. And the acquisitions we have made over the past few years, especially Microlab, are game changers. We have a compelling business model, an outstanding team, and a dynamic and prudent approach to managing our business to meet changing market conditions and customer demand. I'm confident that we are well positioned to manage near-term volatility, respond to pent-up customer demand when the market normalizes, and to deliver profitable growth and returns to our shareholders over time. With that, I'll now turn the call over to Peter to discuss our financials. Peter?