RF Industries(RFIL) - 2024 Q4 - Annual Report

Financial Performance - Net sales for the fiscal year ended October 31, 2024, were $64.9 million, a decrease of 10.1$7.3 million compared to $72.2 million in 2023[208]. - Gross profit for fiscal 2024 decreased by$0.6 million to $18.9 million, while gross margins increased to 29.1$6.6 million, with a fully diluted loss per share of $0.63, compared to a net loss of$3.1 million and a loss per share of $0.30 in fiscal 2023[214]. - The provision for income taxes was$2.8 million, resulting in an effective tax rate of 73.5% for fiscal 2024[213]. Segment Performance - For the fiscal year ended October 31, 2024, the Custom Cabling segment accounted for 42% of total sales, while the RF Connector segment accounted for 58%[197]. - The Custom Cabling segment recorded a pretax income of $1.1 million, while the RF Connector segment incurred a pretax loss of$3.7 million in fiscal 2024[212]. - The Custom Cabling segment's growth was driven by increased Direct Air Cooling sales and small cell deployment[212]. Assets and Liabilities - As of October 31, 2024, the company reported total assets of $71.0 million, a decrease from$82.3 million in 2023[199]. - As of October 31, 2024, the company had a working capital of $11.0 million, down from$23.5 million in 2023, primarily due to changes in debt classification[201]. - The company recorded a valuation allowance of $3.8 million against its deferred tax assets as of October 31, 2024, reflecting an increase of$3.8 million from the previous year[192][193]. Cash Flow and Expenditures - The company generated $3.2 million in cash from operating activities for the fiscal year, despite a net loss of$6.6 million[203]. - The company spent $0.7 million on capital expenditures and drew$7.2 million on the EBC Revolving Loan Facility as of October 31, 2024[204]. Backlog and Future Plans - The company had a backlog of $19.5 million as of October 31, 2024, an increase from$16.1 million in the previous year, driven by Direct Air Cooling and small cell requirements[202]. - The company plans to implement cost-cutting measures and consolidate facilities to improve operating cash flow and liquidity[200]. Cost Management - Engineering expenses decreased by $0.4 million to$2.8 million in fiscal 2024, primarily due to advances in product development[210]. - Selling and general expenses decreased by $1.3 million to$18.9 million, representing 29.2% of sales, compared to 28.0% in fiscal 2023[211]. - The company experienced increased manufacturing costs due to rising labor and raw material prices, influenced by inflation and supply shortages[215]. - The company implemented cost-saving initiatives, including restructuring and reduced general office expenses, contributing to lower selling and general expenses[211]. Valuation and Impairment - The discount rates used in the DCF model for the Microlab reporting unit were 17.0% and 18.0% as of October 31, 2024, and April 30, 2024, respectively[188]. - The Microlab reporting unit had an estimated fair value exceeding its carrying value by 8.9% as of October 31, 2024, indicating no impairment was recorded[190].