RF Industries, Ltd.

Greetings and welcome to the RF Industries first quarter fiscal 2024 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 your host, Margaret Boyce, Investor Relations for RF Industries. Margaret, you may begin.

Thank you, Paul, and welcome everyone to RF Industries first quarter fiscal 2024 earnings conference call. With me on today's call are RF Industries CEO Rob Dawson, President and Chief Operating Officer Ray Bibisi, and CFO Peter Yin. Before I turn the call over to Rob and Peter, I'd like to cover a few quick items. We issued our Q1 earnings release after market today. That release is available on our website at rfindustries.com. I'd like to remind everyone that during today's call, management will make forward-looking statements that involve risks and uncertainties. Please note that statements on the call today may constitute forward-looking statements with 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 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 10-K describe the differences between our GAAP and non-GAAP reporting. With that said, I'll now turn the conference over to CEO Rob Dawson. Rob, please go ahead.

Thank you, Margaret. Welcome to our first quarter fiscal 2024 conference call. I also want to welcome Ray Babisi's participation in our call. Recently promoted to president, Ray will play a key role in shaping the next generation of our business strategy and operations, and as such, will be a valuable addition to our quarterly calls. For the first quarter, we reported net sales of $13.5 million, down 27% year over year. While the first quarter has always been our seasonally slowest period, sales were lower than anticipated, largely due to more than $2 million of customer shipments and orders that were delayed in the quarter. Importantly, these orders were not canceled, and we expect they will be shipped over the next few quarters. Fortunately, our lower cost structure helped us weather this rough period. When the market recovers, our cost reduction initiatives will yield even greater benefit and help us return to profitable growth. Turning to the overall market, it feels like the ice might be thawing on the low CapEx spend and sluggish activity we experienced for over a year. We're finally starting to see some early signs of reversal from the CapEx downturn that made fiscal 23 so challenging. As a welcome relief from the dramatic 17% decline in CapEx spending last year, telecom companies' guidance for 2024 indicated a CapEx spend increase of up to 5%, and we're seeing this reflected in our business. Important to RFI, more of the 2024 CapEx is related to densification of wireless networks. which aligns nicely with our expanded product offering. We're encouraged that many projects, which have been in the sales pipeline for several quarters, began to convert into purchase orders in February. Even better, this increase in new orders is primarily high-value products like our DAC thermal cooling solutions and small cell shrouds that are being purchased by multiple customers in the Tier 1 wireless carrier ecosystem. This has led to a substantial increase in our quarterly backlog, which now stands at $19.3 million, up $3.1 million compared to January 31st. The progress we made in 2023 to become a leaner and more efficient operation will have a meaningful impact on profitability as this carrier capex spending normalizes and our top-line growth resumes. We believe this recovery will be gradual but has staying power. Our backlog growth is comprised of multiple orders across a variety of customers and diverse geographies, not just one large order that's moving the needle. With several customers, we have signed long-term master agreements. This means that as long as we continue to execute, we'll remain part of their build plans, not just for 2024, but for the long term. One customer in particular is beginning the first phase of a multi-year program of 5G deployment and infrastructure updates. With a master agreement in place with this customer, we're optimistic this will result in repeatable business for RFI. We have also positioned RFI to benefit from diversification that isn't CapEx and end market specific. It's important to know that a portion of our products and solutions align well with operating and maintenance budgets versus CapEx. We believe that solutions like our DAC thermal cooling systems are helping us smooth out the peaks and valleys of carrier CapEx. by addressing annual updates and upgrades that are part of a carrier's maintenance budget. We've been working hard to successfully build strong relationships and a greater presence with our carrier customers, and capturing some of their maintenance budget is another source of funding separate from CapEx projects. It's also important to note that last year, 57% of our sales came from diverse end markets outside of wireless carrier applications, such as manufacturing, public safety, energy, hospitality, education, and medical. In addition, we're continuing to explore opportunities with new customer segments, including cable companies, wireline telecom carriers, and industrial markets that could develop into meaningful business over time. As I've said before, we felt strongly that our wireless carrier customers could only stay on sidelines for so long. To stay competitive, they need to continuously improve the telecom infrastructure to meet customers' expectations for speed and coverage. Not only are they focused on the 4G and 5G macro towers, but also on network densification. To meet both new and pent-up demand in the telecom market, we made significant investments in our integrated systems product line and can now offer a broad selection of high-quality interconnect products and next-generation integrated systems. This positions us to gain a larger percentage of our customers' bill of materials by having the leading-edge products they need for key applications. In addition to expanding our portfolio of high-value products, over the last year we executed our plan to control costs and drive further synergies by consolidating our facilities. While the work we did in 2023 reduced our annual expenses by $2.5 million, we have other initiatives underway to potentially reduce annual expenses by another $3 million by the end of fiscal year 2024. Ray will provide more details during his remarks. In 2023, we accomplished a great deal through the hard work and dedication of our outstanding team, and Ray, as Chief Operating Officer, was very instrumental in achieving this progress. Recognizing his leadership, in February, we promoted him to President and Chief Operation Officer. This promotion expands his leadership role at RFI beyond operations to include greater oversight on our go-to-market strategies. I'm confident that Ray will make significant contributions to shaping our business strategy, go-to-market, and operations for the next phase of our strategic plan. Looking ahead to 2024, we're optimistic about our future prospects. We have a strong competitive position with a highly attractive product portfolio, a capital-light business model, and substantial operating leverage. As you heard me say before, as capital expenditures pick up, we see significant leverage in our P&L that can have a favorable impact on gross margins, either from higher sales, a better product mix shift, or both. Plus, as we reduce expenses, any incremental sales should flow to the bottom line. With what we know today, we expect Q2 sales to increase sequentially over Q1 as we begin to benefit from the substantial new order flow that I discussed earlier. I want to thank our employees who've worked diligently to improve our operations and set the company up for future success. I also want to thank our shareholders who've been patient through the downturn. We appreciate all of your support. I'll now turn the call over to Ray Babisi to speak about our operations. Ray?