RF Industries, Ltd.

Greetings. Welcome to the RF industry's second quarter fiscal 2026 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, Donnie Case, Investor Relations.

Thank you, Jeff. Thank you, John, and good afternoon, everyone, and welcome to RF Industries' second quarter fiscal 2026 earnings conference call. With me today are RFI's Chief Executive Officer, Rob Dawson, President and COO, Ray Babisi, and CFO, Peter Yin. We issued our press release after market today, and that release is available on our website at rfindustries.com. I want to remind everyone that during today's call, management will be making 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 statements Factors that could cause these forward-looking statements to differ from actual results include the risk and uncertainties discussed in the company's reports on Form 10-K and 10-Q and other filings with the SEC. RF industry 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 related current report on Form 8K describe the differences between our GAAP and non-GAAP reporting. And with that, I'll turn the conference over to Rob Dawson, Chief Executive Officer. Go ahead, Rob.

Thanks, Donnie. Good afternoon, everyone. Thanks for joining us. The RFI team delivered another quarter of solid execution in Q2, continuing the steady progression we've outlined over the last several quarters. As we've consistently communicated, our focus has been on improving profitability, diversifying our end markets, and scaling the business in a disciplined way. And we're now delivering tangible results across each of those priorities that are converting into meaningful year over year improvement in both revenue and profitability. As a quick summary, second quarter revenue of nearly $21 million increased both year over year and sequentially. And gross profit margin expanded to 35.1%, a 360 basis point gain over the same period last year. Adjusted EBITDA nearly doubled year over year to $2 million. And we also delivered positive consolidated net income of $879,000 versus a loss of $245,000 in the second quarter of fiscal 2025. Our team continued to generate robust bookings, driving backlog to $20 million at quarter end, and as of today, it sits at $20.1 million, which helps provide better visibility into the second half of the fiscal year and supports our expectation of continued growth. Most notably, we're seeing the power in our operating leverage, with incremental revenue contributing disproportionately to the bottom line. These results reflect both the improved mix and operational discipline we've implemented across the business. From a momentum perspective, we're seeing clear validation of our strategy to position RFI as a solutions provider versus a component supplier. Customer engagement has increased meaningfully, especially in the wireless carrier ecosystem and with the related infrastructure providers. We're receiving more targeted inbound interest with customers approaching us around specific use cases and deployments rather than general inquiries. I think this indicates that we're gaining visibility in our target end markets, which are among the most dynamic sectors in the US economy. These are markets like aerospace, data center infrastructure, venues, and transportation, which includes airport settings, rail, and other mass transit, for example. Our longstanding reputation for quality and service, our talented technical engineering teams, and our commitment to the American workforce have created a strong value proposition to current and prospective customers. Importantly, this is translating into increased demand. We continue to see steady activity across our pipeline, recurring order flow from key customers, including our largest accounts, and continued strength in our distribution channels. Our pipeline remains a key source of competence. We're actively engaged in several large potential opportunities, including multi-site deployments of our integrated systems that could represent meaningful incremental revenue if awarded. These opportunities are driven by large-scale network deployments and upgrades, and they include turnkey solutions that combine our products and technical know-how with installation and logistics support. And of course, with each new solution or application, we fine-tune and expand our product and services roadmap. Across our end markets, we're seeing visibility improve going forward, Regarding small cells, deployments were slower in the quarter based on timing from some key customers as they work through restructuring or other M&A-related details. We view this as a temporary timing issue, not a structural change in underlying demand, and we expect activity to resume and increase through the balance of the year. In early May, RFI participated in ConnectX, which is widely considered to be a premier U.S. event for communication infrastructure and connectivity. It brings the entire wireless ecosystem together. Carriers, power companies, integrators, distributors, and manufacturers in a single venue. Our booth was extremely active and our customer discussions were specific and actionable. If customer engagement and booth traffic are real-time demand indicators, our telecom pipeline should continue to grow. Custom cabling solutions continue to be a big contributor in the second quarter. To be clear, these are engineered builds rather than commodity items and are typically designed to meet exact specs for performance, durability, or regulatory requirements. RFI's reputation in this business is second to none and a big reason that major aerospace and industrial manufacturing companies are repeat customers for mission-critical cabling systems, which is driving overall demand to near-peak levels historically. As you've heard previously, From me before, we believe our DAC or direct air cooling systems are a game changer. We're seeing adoption expand across a broader set of use cases, many of which have been identified by our customers and partners. DAC is uniquely efficient and cost effective for both small and large deployments. And we're finding new ways to add incremental value, such as remote monitoring and installation services. I've been asked about our DAC's competitive position And while traditional HVAC is still an obvious competitive solution, we believe we have an edge on adaptability, functionality, and cost efficiency. Technologies like liquid cooling, which is often used in hyperscale data centers, is more likely to complement our offering rather than economically replace it. This is why we are leaning into edge data center market versus the massive hyperscale data centers. We believe our product portfolio is better understood and more visible in the market. Hats off to our marketing and technical teams who are making this happen. From an operational perspective, we continue to believe in the scalability of our manufacturing footprint and our capacity to meet growing demand. Ray will go into more detail on some of the areas that I've discussed, but let me give a quick summary before I hand the call off to Ray. Looking ahead, we're feeling confident in our trajectory. With what we know today, we expect fiscal third quarter sales to increase sequentially over Q2. Integrated systems activity should accelerate in the back half of the year. Our diversified end market exposure provides durability. Operating leverage should continue to drive margin expansion. And most importantly, we're executing against the same strategic priorities we've outlined and delivering measurable results. On a final note, we were pleased to learn that RFI is set to be included in the Russell 3000 beginning on June 26th. Being included in this index should help to expand our visibility with institutional investors, enhance our liquidity, and lead to a broader shareholder base. Now let me turn the call over to Ray.