Financial Data and Key Metrics Changes - First quarter sales were $13.5 million, a decrease of $4.9 million or 27% year-over-year and down 15% sequentially [36] - Gross profit margin decreased to 24.5% from 27.7% year-over-year, reflecting a 320 basis point decrease due to lower sales and less leverage to cover fixed costs [36] - The net loss was $1.4 million or $0.13 per diluted share, compared to a net loss of $1.2 million or $0.11 per diluted share for Q1 2023 [54] Business Line Data and Key Metrics Changes - The backlog as of January 31 was $16.2 million, with first quarter bookings of $13.6 million, which increased to $19.3 million subsequently [15][36] - The company has signed long-term master agreements with several customers, indicating a commitment to ongoing business beyond 2024 [7] Market Data and Key Metrics Changes - Telecom companies are expected to increase CapEx spending by up to 5% in 2024, reversing the previous year's 17% decline [47] - 57% of sales came from diverse end markets outside of wireless carrier applications, including manufacturing, public safety, energy, hospitality, education, and medical [8] Company Strategy and Development Direction - The company is focusing on cost reduction initiatives, with a goal to potentially reduce annual expenses by another $3 million by the end of fiscal year 2024 [9] - There is a strategic alignment of sales, product management, engineering, and operations teams to enhance cross-selling opportunities [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the telecom market and expects a gradual improvement in sales and profitability as CapEx spending normalizes [48][51] - The company is positioned to benefit from diversification that aligns with operating and maintenance budgets, smoothing out the peaks and valleys of carrier CapEx [49] Other Important Information - The company has refinanced its term loan with a new asset-based revolver to support its next phase and provide working capital flexibility [55] - Inventory was reported at $18 million, down from $18.7 million, reflecting a rationalization to address lower demand levels [55] Q&A Session Summary Question: What are the expectations for revenue growth in Q2? - Management expects a nice recovery starting to show in the second quarter, driven by improved order flow [39] Question: Can you elaborate on the potential additional savings of $3 million? - The company is looking at multiple facets of the business, including direct material costs, facility consolidation, and lean principles to eliminate waste [41] Question: How much reliance is there on China for components? - The company indicated that less than 10% of its inventory has a direct connection to China [21] Question: What is the status of obsolete inventory? - Management clarified that while there is some obsolete inventory, much of it is slow-moving and being rationalized to convert to cash [22]
RF Industries(RFIL) - 2024 Q1 - Earnings Call Transcript