RF Industries, Ltd.

Greetings. Welcome to RF Industries' third 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 at RF Industries. Margaret, you may begin.

Thank you, Paul. Good afternoon, everyone, and welcome to RF Industries' third quarter fiscal 2024 earnings call. With me on today's call are RF Industries Chief Executive Officer Rob Dawson, President and COO Ray Babisi, and CFO Peter Yin. We issued our Q3 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 except for the historical statements, statements on this call today may constitute forward-looking statements under the securities exchange laws. 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. 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 the risks and uncertainties discussed in the company's reports on Form 10-K and 10-Q and other filings with the SEC. 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 our CEO, Rob Dawson. Slab, please go ahead.

Thank you, Margaret, and welcome to our third quarter fiscal 2024 conference call. I'm here today with Ray Babisi, our president and COO, and Peter Yin, our CFO. I'll start with our third quarter highlights and some comments on our market opportunity. Ray will discuss our sales progress and what we're hearing from customers, and Peter will cover our financials before we open the call to your questions. We're pleased that our third quarter results continued to build on the momentum that we reported in the second quarter. Net sales of $16.8 million were up almost 5% sequentially and 8% year over year. Our gross profit margin for the third quarter was 29.5%, a 510 basis point improvement versus the comparable period last year and roughly in line with the prior quarter. Importantly, for two quarters in a row, we're very close to our 30% near-term target for gross margin. which reflects a product mix shift to our higher value, higher margin solutions. Our adjusted EBITDA was in positive territory for two quarters in a row, a sharp reversal from the losses we experienced during a challenging 2023. As mentioned before, I believe our business is at an inflection point where we can continue to deliver meaningful progress now and tap into even greater future potential. The Tier 1 wireless carrier ecosystem had major cutbacks in their 2023 capital spending over the last several quarters, and this created considerable hardship for RFI and other downstream vendors. We continue to see major telecom companies being cautious about spending for large CapEx projects, but they continue to allocate significant resources to address critical needs in operations and maintenance. Regardless of overall CapEx spend, Telecom companies always want to ensure their infrastructure is upgraded with next generation technologies that are cost effective and sustainable. Fortunately, our direct air cooling or DAC product line meets the required standards for the replacements and upgrades they need to future proof their cooling infrastructure. As we've discussed previously, networking equipment can generate substantial heat inside the small buildings, enclosures, and boxes at the edges of networks. And with the huge impact that AI is having on data centers, more equipment is being pushed to the edges of the network. This equipment must be cooled to operate effectively and consistently, and our DAC systems offer high-efficient, climate-durable cooling that is both eco-friendly and lower costs than traditional systems. These patented systems are built to stand the rigor of outdoor environments. Plus, they have state-of-the-art technology that can reduce operating expenses by up to 70% over conventional HVAC systems. and can help companies achieve their green initiatives. Our team continues to work hard on evolving our business to make us more diverse in our end markets and applications, and therefore less reliant on CapEx spend. While it's taken some time and foresight, I think we've finally arrived at the point when the market is meeting us where our products are. As we prepared for this moment, we executed a series of expense reduction initiatives that has created significant operating leverage in our business. As demand increases, we have capacity to serve our customers and scale our business with little to no material incremental investment. With a portfolio of high-value products, we've been able to build stronger customer relationships at higher decision-making levels within large and complex organizations. This has given RFI much greater visibility and relevance than we've ever had. In fact, now some key customers are asking us to partner with them to help solve challenges with new solutions. In some cases, they're coming directly to me or Ray or the team and telling us exactly how we can help, which is definitely a new and much welcome reversal of roles. After performing well for these customers, they're now beginning to treat us as an incumbent, giving us insight into the amount and timing of future orders, which improves our ability to forecast, control our supply chains, and a clearer pathway to improving margins. As CapEx continues on the densification of much-needed 4G and 5G networks, I believe our small-cell solutions, along with our overall bill of materials, will give us an additional level of opportunity. Densification and bandwidth continue to be real issues in wireless coverage, and while lower CapEx spending for large deployments has impacted some product lines, like our Microlab RF passives offering, We look forward to a recovery. Microlab products have had some wild swings in quarterly performance since we acquired them two years ago, and the carrier spending pause definitely had a negative impact on potential sales. And we hope to see improved performance in 2025. Microlab has an industry-leading RF passives bill of materials that we can leverage as anticipated demand increases for venue wireless deployment in stadiums and other critical wireless densification activities. Looking ahead, I believe our company is in a great position to answer our customers' current and future needs. We're a leaner, more efficient company with a strong and relevant product and solution offering, and a talented team totally focused on execution to deliver improved results and value creation for our stakeholders. With what we know today, we expect our current fiscal fourth quarter to deliver another quarter of increased sales as compared to Q3. I'd like to now turn the call over to Ray to share what he's hearing from our customers. Ray?