RF Industries Q2 Earnings Call Highlights

Key Points

• RF Industries posted a strong fiscal Q2, with revenue up 9% year over year and sequentially to $20.7 million, gross margin expanding to 35.1%, and adjusted EBITDA nearly doubling to $2 million. The company also returned to profitability with net income of $879,000 versus a loss a year ago.
• Bookings were a major highlight, reaching $26.3 million and lifting backlog to about $20 million, which management said improves visibility for the second half of the year. Leadership described it as the company’s strongest bookings quarter in many years.
• Management expects continued growth from custom cabling, integrated systems, and especially direct air cooling (DAC) for edge data centers, which it says can be far more cost-effective than traditional HVAC. The company also guided for third-quarter sales to rise sequentially and noted its upcoming addition to the Russell 3000 should boost investor visibility.

RF Industries NASDAQ: RFIL reported higher fiscal second-quarter revenue and a return to profitability, with management citing improved operating leverage, stronger bookings and broader demand across several end markets.

Chief Executive Officer Robert Dawson said the company delivered “another quarter of solid execution” as it continued to focus on improving profitability, diversifying end markets and scaling the business in a disciplined manner. Revenue for the quarter was nearly $21 million, increasing both year over year and sequentially. Chief Financial Officer Peter Yin later specified that sales rose 9% on both a year-over-year and sequential basis to $20.7 million.

Gross profit margin expanded to 35.1%, up 360 basis points from 31.5% in the prior-year quarter. Dawson said adjusted EBITDA nearly doubled year over year to $2 million, while consolidated net income was $879,000, compared with a loss of $245,000 in the second quarter of fiscal 2025.

Bookings and Backlog Strengthen Visibility

Management highlighted bookings as a key indicator of momentum heading into the second half of the fiscal year. President and Chief Operating Officer Ray Bibisi said the company generated more than $26 million in bookings during the quarter, describing it as the company’s strongest bookings quarter “in many years.”

Yin said bookings totaled $26.3 million, up $8.4 million from the prior quarter, driving backlog to $20 million as of April 30, a $5.6 million quarter-over-quarter increase. Dawson said backlog stood at $20.1 million as of the call date, which he said provides improved visibility into the second half of the fiscal year.

“Most notably, we’re seeing the power in our operating leverage, with incremental revenue contributing disproportionately to the bottom line,” Dawson said. Yin added that the company has long believed its business has significant operating leverage above $20 million in quarterly revenue and said the second-quarter results reflected that dynamic.

Custom Cabling Leads, Integrated Systems Expected to Improve

Dawson said customer engagement has increased, particularly in the wireless carrier ecosystem and related infrastructure providers. He said customers are approaching RF Industries around specific use cases and deployments rather than general inquiries, which he characterized as evidence that the company is gaining visibility in target markets such as aerospace, data center infrastructure, venues and transportation.

Custom cabling remained a major contributor in the quarter. Dawson said these products are engineered builds rather than commodity items, often designed for exact performance, durability or regulatory specifications. He said demand from aerospace and industrial manufacturing customers was driving overall demand to near-peak historical levels.

During the question-and-answer portion of the call, Dawson said custom cabling is performing well with both existing and new customers. Asked whether it represented the new shape of the business, he said integrated systems underperformed expectations in the second quarter due largely to small cell shipment timing, but management expects integrated systems to continue growing.

“We’re enjoying the fact that the pistons are kind of firing in all different places and we’re seeing that diversity hit,” Dawson said.

Bibisi said custom cabling delivered strong results from both the company’s Connecticut and Long Island teams. He also said interconnect posted solid combined numbers and continued to build a healthy backlog, while integrated systems generated strong bookings during the quarter and entered the second half with improved backlog.

Direct Air Cooling Remains a Strategic Focus

Management continued to emphasize the company’s direct air cooling, or DAC, systems as a growth opportunity. Dawson called DAC systems “a game changer” and said adoption is expanding across more use cases, including applications identified by customers and partners.

Dawson said RF Industries is focused on edge data center deployments rather than hyperscale data centers. He said traditional HVAC remains a competitive solution, but management believes DAC has advantages in adaptability, functionality and cost efficiency. He also said liquid cooling, often used in hyperscale data centers, is more likely to complement RF Industries’ offering than replace it economically.

In response to an analyst question, Dawson said the company’s DAC solution is a strong fit for edge data center applications, including buildings, cabinets and enclosures where equipment is being moved closer to users. He said the company has data showing DAC can be up to 75% more cost-effective than traditional HVAC in those environments.

Bibisi said engineering and product management remain areas of significant focus. He said newly engineered products and solutions released in the first half generated strong bookings and shipments, and that the company launched new products in thermal cooling and RF passives during the second quarter. He also said RF Industries is advancing DAC trials with new customers, markets and applications.

Balance Sheet, Inventory and Cash Flow

Yin said RF Industries ended the quarter with $3.4 million in cash and cash equivalents, working capital of $16.5 million and a current ratio of about 1.9-to-1. Current assets were $35.1 million, and current liabilities were $18.6 million. The company had $6.1 million outstanding on its revolving credit facility at quarter-end.

Inventory was $14.4 million, up from $12.6 million in the prior-year period. Bibisi said inventory was slightly higher due to timing, as some products were built and ready to ship in the second quarter but customer releases moved into the third quarter. He said RF Industries expects inventory turns and working capital to improve as those releases occur.

Yin said the company continues to manage working capital to strengthen liquidity and its capital position. In response to an analyst question about cash flow, he said cash declined partly because the company used cash to pay down its credit line, which also helped with interest expense. He said RF Industries expects to reduce net debt to a level it views as immaterial relative to the balance sheet.

Outlook and Market Positioning

Dawson said RF Industries expects fiscal third-quarter sales to increase sequentially from the second quarter, based on what management knows today. He also said integrated systems activity should accelerate in the back half of the year and that diversified end-market exposure provides durability.

The company said small cell deployments were slower during the quarter because of timing issues with some key customers that were working through restructuring or merger-and-acquisition-related matters. Dawson said management views this as a temporary timing issue rather than a structural change in demand and expects activity to resume and increase through the balance of the year.

Bibisi said the company’s U.S.-based manufacturing footprint on both the East and West Coasts, along with its diversified supply chain, gives it flexibility to respond to changing demand. He also said cost reduction efforts are producing results through supplier negotiation, transformation initiatives and tariff management through source relocation, while noting that management is monitoring the tariff environment closely ahead of key decisions expected in July.

Dawson also noted that RF Industries is set to be included in the Russell 3000 beginning June 26, which he said should help expand institutional investor visibility, enhance liquidity and lead to a broader shareholder base.

About RF Industries NASDAQ: RFIL

RF Industries, Inc NASDAQ: RFIL is a manufacturer and supplier of connectivity products and solutions for the wireless, broadcast, cable television, data networking, defense and aerospace markets. The company specializes in both standard and custom coaxial and fiber-optic cable assemblies, connectors, adapters and test accessories designed to withstand demanding environmental conditions. Through its product portfolio, RF Industries supports applications ranging from RF signal transmission and satellite communications to industrial automation and instrumentation.

The company's offerings include premade and build-to-print coaxial cables and assemblies, field-installable connectors, power distribution components and calibration-grade test equipment.

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