RF Industries(RFIL) - 2025 Q2 - Quarterly Report

Part I. FINANCIAL INFORMATION This section provides the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the recent fiscal periods Financial Statements This section presents the unaudited condensed consolidated financial statements, showing improved net loss, increased assets, and positive operating cash flow for the period ended April 30, 2025 Condensed Consolidated Balance Sheets The balance sheet shows an increase in cash and total current assets, leading to a slight rise in total assets and liabilities, while stockholders' equity remained stable Consolidated Balance Sheet Highlights (in thousands) | Account | April 30, 2025 | October 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $3,586 | $839 | +$2,747 | | Trade accounts receivable, net | $15,000 | $12,119 | +$2,881 | | Inventories | $12,574 | $14,725 | -$2,151 | | Total Current Assets | $32,721 | $29,113 | +$3,608 | | Total Assets | $72,679 | $71,046 | +$1,633 | | Liabilities & Equity | | | | | Accounts payable | $4,784 | $3,798 | +$986 | | Line of credit | $7,994 | $8,197 | -$203 | | Total Current Liabilities | $20,595 | $18,090 | +$2,505 | | Total Liabilities | $38,509 | $36,980 | +$1,529 | | Total Stockholders' Equity | $34,170 | $34,066 | +$104 | Condensed Consolidated Statements of Operations The statement of operations reflects increased net sales and gross profit for both the quarter and six-month period, significantly reducing the consolidated net loss Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 | Six Months Ended April 30, 2025 | Six Months Ended April 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $18,910 | $16,110 | $38,110 | $29,568 | | Gross profit | $5,950 | $4,824 | $11,667 | $8,127 | | Operating income (loss) | $106 | $(415) | $162 | $(2,499) | | Consolidated net loss | $(245) | $(4,294) | $(490) | $(5,656) | | Diluted loss per share | $(0.02) | $(0.41) | $(0.05) | $(0.54) | Condensed Consolidated Statements of Cash Flows The cash flow statement indicates a substantial increase in net cash from operating activities, leading to a positive net increase in cash and cash equivalents Cash Flow Summary for Six Months Ended April 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,792 | $1,037 | | Net cash used in investing activities | $(49) | $(312) | | Net cash provided by (used in) financing activities | $4 | $(4,222) | | Net increase (decrease) in cash | $2,747 | $(3,497) | | Cash and cash equivalents, end of period | $3,586 | $1,400 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide additional details on the company's financial performance, including cost-cutting measures, debt agreements, customer concentration, segment sales, and dividend policy - The company has implemented cost-cutting measures, including facility consolidation, to reduce operating expenses, drive positive operating cash flow, and increase liquidity. These efforts contributed to generating operating income in the first six months of 2025, compared to a loss in the same period last year[21] - In March 2024, the company entered into a new loan and security agreement with Eclipse Business Capital (EBC), replacing its prior facility with Bank of America. As of April 30, 2025, outstanding borrowings under the EBC credit agreement were $7.994 million[22][61][66] - For the six months ended April 30, 2025, one wireless provider accounted for 11% of net sales. For the three months ended April 30, 2025, a different wireless provider accounted for 11% of net sales[30] Segment Net Sales for Six Months Ended April 30 (in thousands) | Segment | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | RF Connector and Cable Assembly | $18,081 | $18,709 | -3.4% | | Custom Cabling Manufacturing and Assembly | $20,029 | $10,859 | +84.5% | | Total Net Sales | $38,110 | $29,568 | +28.9% | - The company did not pay any dividends during the three or six-month periods ended April 30, 2025, or in the comparable periods of 2024[67] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant increases in net sales, particularly in the Custom Cabling segment, alongside improved operating income and positive cash flow from operations Overview This overview details the company's two primary operating segments: RF Connector and Cable Assembly, and Custom Cabling Manufacturing and Assembly - The company operates through two segments: RF Connector and Cable Assembly (RF Connector) and Custom Cabling Manufacturing and Assembly (Custom Cabling)[73] - For the six months ended April 30, 2025, the Custom Cabling segment accounted for 53% of total sales, while the RF Connector segment accounted for 47%[74] Liquidity and Capital Resources This section analyzes the company's cash position, operating cash flow generation, and changes in order backlog, reflecting improved liquidity - Cash and cash equivalents increased to $3.6 million as of April 30, 2025, from $0.8 million as of October 31, 2024[77] - The company generated $2.8 million in cash from operating activities during the first six months of fiscal 2025, primarily due to a $2.2 million decrease in inventories and non-cash charges like depreciation and amortization[79] - Order backlog was $15.0 million as of April 30, 2025, a decrease from $19.5 million as of October 31, 2024, attributed to shipments and timing of new orders[78] Results of Operations This section details the financial performance for the quarter and six-month periods, highlighting significant increases in net sales and gross profit, and a substantial reduction in net loss Q2 2025 vs Q2 2024 Performance Comparison | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $18.9M | $16.1M | +17.4% | | Gross Profit | $6.0M | $4.8M | +25.0% | | Gross Margin | 31.5% | 29.9% | +1.6pp | | Net Loss | ($0.2M) | ($4.3M) | +95.3% | - The Q2 2025 sales increase was driven by a 54.8% rise in the Custom Cabling segment, fueled by demand for direct air cooling offerings and new market penetration[83] Six Months 2025 vs Six Months 2024 Performance Comparison | Metric | 6M 2025 | 6M 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $38.1M | $29.6M | +28.7% | | Gross Profit | $11.7M | $8.1M | +44.4% | | Gross Margin | 30.6% | 27.5% | +3.1pp | | Net Loss | ($0.5M) | ($5.7M) | +91.2% | - The sales increase for the six-month period was mainly due to an 83.5% increase in the Custom Cabling segment, while the RF Connector segment saw a slight decrease of 3.2%[90] Quantitative and Qualitative Disclosures about Market Risk As a "smaller reporting company," RF Industries is not required to provide the information for this item - The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a "smaller reporting company"[97] Controls and Procedures Management, including the CEO and CFO, conducted an evaluation of the company's disclosure controls and procedures and concluded that they were effective at a reasonable assurance level as of April 30, 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of April 30, 2025[101] - No changes in internal control over financial reporting occurred during the second quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, the company's internal controls[102] Part II. OTHER INFORMATION This section covers legal proceedings, updated risk factors, equity security sales, other disclosures, and a list of exhibits filed with the report Legal Proceedings The company reports that it is not currently subject to any material legal proceedings outside of the ordinary course of business - As of the report date, the company is not subject to any proceeding that is not in the ordinary course of business or that is material to its financial condition[103] Risk Factors This section updates the risk factors from the company's Annual Report, highlighting a new significant risk related to changes in trade policies - A new risk factor has been added regarding changes to trade policies, tariffs, and import/export regulations of the U.S. and foreign governments[106] - The company notes that recent and potential future tariffs could pose a significant risk by increasing product costs, which may lead to lower gross profit and margins if costs are not passed on to customers[107] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of its equity securities and no issuer purchases of its equity securities during the period - There were no unregistered sales of equity securities or no issuer purchases of equity securities during the reporting period[109][110] Other Information The company disclosed that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter, and announced a salary increase for Ray Bibisi following his promotion - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the quarterly period ended April 30, 2025[113] - Effective May 1, 2025, Ray Bibisi's salary was increased from $275,000 to $300,000 in connection with his promotion to the Company's President and Chief Operating Officer[114] Exhibits This section provides a list of exhibits filed with the quarterly report, including certifications by the CEO and CFO and Inline XBRL financial data files - The report includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[116] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation) are included as exhibits[116][117]