RF Industries, Ltd.

Greetings. Welcome to ORF Industries' second quarter fiscal 2025 Financial Results Conference call. At this time, all participants are in 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, Donnie Case, Investor Relations at ORF Industries. Donnie, you may begin.

Thank you, Paul. And good afternoon, everyone, and welcome to ORF Industries' second quarter 2025 earnings conference call. With me today are ORFI's Chief Executive Officer, Rob Dawson, and CFO, Peter Yin. We issued our press release after market today, and that release is available on our website at orfindustries.com. I want to remind everyone that during today's call, management will make forward-looking statements that involve risk and uncertainties. Please note that information 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 risk and uncertainties. Actual results may differ materially from the outcomes contained in any forward-looking statement. Factors that could cause these forward-looking statements to differ from actual results include the risk and uncertainty discussed in the company's reports on Form 10-K and 10-Q and other filings with the FTC. ORF Industries undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout this call, we will be discussing certain non-GAP financial measures. Today's earnings release and related current report on Form 8-K describes the differences between our GAP and our non-GAP reporting. With that, I'll now turn the conference call over to Rob Dawson. She's Executive Officer. Please go ahead, Rob.

Great. Thank you, Donnie. And welcome to our second quarter fiscal 2025 conference call. I'll start with our second quarter highlights and some thoughts on the current environment. And our CFO, Peter Yen, will cover our financials before opening the call up to your questions. Ray Babisi, our President and COO, won't be joining us today as he's proudly attending his son's graduation. Now let's talk about the quarter. We followed our exceptionally strong first quarter with a very successful second quarter. Fiscal second quarter net sales grew 17% to $18.9 million year over year. And gross profit was 31.5%, exceeding our target goal of 30%. For the third consecutive quarter, we delivered an operating profit, which was $106,000 versus an operating loss of $415,000 in the second quarter of 2024. And adjusted EBITDA was more than $1.1 million with a 6% margin. Moving us closer to our 10% adjusted EBITDA margin goal, we ended the quarter with a backlog of $15 million and as of today, it stands at $18.4 million, a big increase from six weeks ago. To us, this seems like night and day compared to our results in the first half of fiscal 2024. I believe we've reached the inflection point where RFI's repositioning from a products company to an integrated solutions provider for diversified end markets is printing through in our financial results. Our results are now more diverse, both by product and customer than ever before. We're driving growth in wireless, aerospace, public safety, and industrial OEM customers. While we're also identifying applications in markets like energy, transportation, wireline telecom, data centers, and new industrial use cases. We're seeing repeat and new customer wins across the board in our various product categories. Our expanded portfolio of innovative solutions has further diversified our end markets. As I mentioned on our last call, we want a large custom cabling project from a leading aerospace company. Since then, we've received multiple significant additional orders from this customer. This repeat business builds our credibility and reputation in an industry that demands the highest degree of precision. Our small cell solutions are gaining momentum as we finally start to see some larger deployments moving forward. Wireless DAS build outs in stadiums and venues continue to be opportunity. And we currently have over 100 opportunities in our sales pipeline. And our core custom and standard interconnect offer remain stable and strong. Our direct air cooling or DAC systems are also gaining momentum in the market. In this category, we're continuing to push the boundaries with new innovations to enhance efficient, cost-effective cooling solutions that can cut energy consumption while reducing repair and cost. We recently launched a next-gen system that features advanced control capabilities and anemopore certification for more rugged environments. These new developments expand our opportunity set into wireline telecom, edge data centers, as well as energy and transportation applications. To elaborate on one example application that I've mentioned in recent calls, AI is driving the overall demand for data centers and more equipment is being pushed to the edges of network into the small buildings, cabinets, and enclosures that house equipment there. 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 at a lower cost than traditional systems. Our patented systems are built to stand the rigor of outdoor environments. Plus, they have -the-art technology that can reduce operating expenses by up to 70% over conventional HVAC systems, as well as helping companies achieve their green initiatives. Importantly, DAC systems are often funded by operating and maintenance budgets that are not correlated to capex spending, further diversifying our revenue sources. As I mentioned earlier, wireless build-outs in stadiums and venues are regaining the momentum that was lost during the COVID pandemic and coming back in both greater size and numbers. Today, who doesn't know pro or college team looking for a new venue or to modernize their existing venue? Not to mention major upcoming events like the 2026 FIFA World Cup, where the U.S. is scheduled to host games in cities like L.A., New York, Dallas, and Miami, and the 2028 Summer Olympics in L.A. As I mentioned, we have over 100 venues in our sales pipeline and an experienced sales team dedicated to further penetrating this market. We're a technology leader developing new solutions for distributed antenna systems, or DAS, that are needed to enhance wireless capabilities in stadiums, as well as airports and other high traffic venues. On the business development front, we bolstered our sales team with seasoned and connected leaders. Through their efforts, we've migrated up the food chain with key customers and are now getting a larger share of their total purchases. And as previously mentioned, we're breaking into new markets with new customers. This diversity is huge for us. It's also important to note that our prior acquisitions have been transformative in creating new opportunities with high-value solutions. Well-established brands like Microlab have market currency, and the talented teams who've joined us in product engineering and sales are leading the charge to untapped potential. While we're certainly set up to have a breakout year, a looming question is what to expect in the back half of the fiscal year given the uncertainty around the tariff situation and its impact on the supply chain. I think the summary is that so far we've handled it with our usual calm and pragmatic approach. In a bit more detail, for quite some time we've been actively working to drive even greater diversification across our supply chain. And the majority of what we produce and deliver is domestically sourced. We do have some exposure to tariffs from certain products and components through certain suppliers in Asia, but it is limited. By all measures, RFI should be the poster child of what I think the tariffs are meant to accomplish. The majority of our products are produced in the United States by an entirely American workforce. We're very proud of our team, and I believe in the integrity and quality of what we make and how we make it. That said, what's happening with tariffs is beyond our control. We continue to tweak our supply chain and pricing policies to anticipate and manage any potential new cost pressures. And the RFI team has done a great job navigating this challenging and dynamic situation. I really appreciate their flexibility, resilience, and positive attitude. We see plenty of opportunity ahead and are prepared to seize it. RFI has fought through some tough and confusing times in the past and emerged as a stronger and smarter organization. Right now we have a far greater set of opportunities than ever before, and we're focused on making steady progress and penetrating new end markets and winning more opportunities with key customers. So in summary, our results are now more diverse by product, market, and customer than ever before. This evolution has also made our results more stable and more predictable. We have standing agreements and contracts with the who's who in our various markets. RFI has a marquee list of customers, and it's growing. Our distribution channel is growing stronger as our reputation for quality products and dependable delivery also grows. We've redeveloped product lines and launched new products with a keen focus on managing R&D and capex spend. Our portfolio of innovative solutions is growing and making an impact both in the marketplace and in our results. Operationally, we've consolidated our footprint, streamlined the company, and are continuing to identify other pockets of efficiency. We're driving profit growth through our strong operating leverage and through market execution. Our financial position has greatly improved and will continue to benefit from our intense focus on profitability. We're managing the impact of tariffs and our ability to execute is our strength. With what we know today, we expect our fiscal 2025 third quarter sales to be roughly in line with second quarter sales, which would be a significant increase over the $16.8 million that we reported in the third quarter last year. We're executing well and doing what we said we would do with enthusiasm and optimism. We've never had a greater team or platform for growth to realize RFI's full potential. With that, I'll turn the call over to Peter.