RF Industries Forecasts Q3 2025 Sales to Match Q2 Levels, Sees $18.4M Backlog Growth as It Expands into New Markets

Posted by The News Pulse June 16, 2025 Post a Comment

Earnings Call Insights: RF Industries (RFIL) Q2 2025

Management View

CEO Robert D. Dawson opened by stating that the company followed its “exceptionally strong first quarter with a very successful second quarter,” highlighting a 17% year-over-year net sales growth to $18.9 million and a gross profit margin of 31.5%. For the third consecutive quarter, the company delivered an operating profit. Dawson emphasized, “I believe we have reached the inflection point where RFI is repositioning from a products company to an integrated solutions provider for diversified end markets is printing through in our financial results.” He reported ongoing growth in wireless, aerospace, public safety, and industrial OEM customers, supported by applications in energy, transportation, wireline telecom, data centers, and other industrial sectors. The quarter’s backlog ended at $15 million, and as of the call date, backlog has grown to $18.4 million.
Dawson noted repeat business from a leading aerospace company and accelerating deployments in small cell solutions and wireless DAS build-outs, with over 100 opportunities in the company’s pipeline. He detailed that the recently launched next-gen DAC system opens new opportunities in wireline telecom, edge data centers, energy, and transportation. He highlighted that DAC systems can “reduce operating expenses by up to 70% over conventional HVAC systems.”
The company has bolstered its sales team and credited prior acquisitions, such as Microlab, for creating new opportunities. Dawson commented, “We have standing agreements and contracts with the who's who in our various markets. RFI has a marquee list of customers, and it's growing.” He also addressed tariff concerns, stating that while some exposure remains, “the majority of our products are produced in the United States by an entirely American workforce.”
CFO Peter Yin stated, “Second quarter sales increased 17.4% to $18.9 million year-over-year and slightly decreased 1.6% on a sequential basis. Second quarter gross profit margin increased to 31.5% from 29.9% year-over-year.” Yin highlighted the company’s improved financial position, with $3.6 million in cash and cash equivalents, $12.1 million in working capital, and a current ratio of approximately 1.6:1. Adjusted EBITDA was $1.1 million. Yin added, “We continue to keep a close eye on our borrowing costs and see opportunities in the near term to move to a more advantageous financing structure for us, as our overall performance have been improving.”

Outlook

Dawson stated, “With what we know today, we expect our fiscal 2025 third quarter sales to be roughly in line with second quarter sales, which would be a significant increase over the $16.8 million that we reported in the third quarter last year.”
Management communicated that the current inventory level supports the company’s model and anticipated “continued demand in the second half of 2025.”

Financial Results

Net sales for the second quarter were $18.9 million, representing 17% year-over-year growth. Gross profit margin reached 31.5%. Operating income was $106,000, with a consolidated net loss of $245,000 or $0.02 per diluted share. Non-GAAP net income was $701,000 or $0.07 per diluted share. Adjusted EBITDA totaled more than $1.1 million. Inventory was $12.6 million, and the company reported a backlog of $18.4 million as of the call date. The company maintained $3.6 million in cash and cash equivalents and borrowed $8 million from its revolving credit facility.

Q&A

Matthew Maus, B. Riley: Asked what drove the backlog growth and how much would be recognized over the next year. Dawson responded that the increased backlog is “spread out across several different product areas,” with both short- and long-term opportunities across many customers and product lines, rather than one large order.
Maus requested a breakdown between cell tower, small cell, and DAS revenue. Dawson replied that while the company does not report specific contributions, “small cell continues to be a big play for us. Last year, it was a minimal contributor to sales. It's become something this year that is more of a growth engine.” He also noted growing contributions from OEM, aerospace, and industrial markets.
Maus inquired about DAS opportunities and their impact on growth. Dawson stated that there are “over 100 opportunities in our sales pipeline,” ranging from small venues to large stadium projects, with an increasing number of these contributing to the backlog.
Maus asked about wireless provider A’s revenue share and future run rate. Dawson explained that the top customer in Q2 differed from Q1, reflecting “project-based nature of certain applications,” and highlighted growing sales diversification.
Steven Kohl, Mangrove: Asked about the timing and impact of a new credit facility. Yin stated, “We expect to have that here in the current Q3, if not definitely by our year-end. We expect, obviously, an interest rate decrease there and savings there we think will be meaningful.”
Kohl questioned the path to a 10% EBITDA margin target. Dawson emphasized mix improvement, cost efficiencies, and leveraging SG&A, stating, “If we have room to push sales higher... the combination of those 3 things will help push that up.”
Kohl asked about DAC and small cell growth. Dawson confirmed both are “meaningful contributors to sales” and are diversified across several customers and regions.

Sentiment Analysis

Analysts showed a positive to slightly positive tone, probing for clarity around growth drivers, customer and product diversification, and financial targets, with no pressing skepticism or negative sentiment observed.
Management maintained a confident tone throughout, frequently referencing successful execution, expanding opportunities, and resilience to challenges. Dawson and Yin provided detailed responses and reaffirmed targets and growth strategies.
Compared to the previous quarter, both analysts and management maintained a similar slightly positive tone, with continued confidence but greater emphasis on diversification and backlog growth.

Quarter-over-Quarter Comparison

The current quarter saw the company maintain sales above $18 million, a slight sequential decline but notable year-over-year growth. Gross margin improved to 31.5% from 29.8% in Q1. Operating profit was achieved for the third consecutive quarter. The backlog increased significantly to $18.4 million from $15 million at the end of Q1. Management’s tone remained confident, with more emphasis on diversification, end-market expansion, and strategic execution. Analyst questions in both quarters centered on growth drivers, margin expansion, and customer concentration, but current quarter questions reflected greater interest in the sustainability and breadth of growth.

Risks and Concerns

Management highlighted ongoing supply chain and tariff risks, noting, “We do have some exposure to tariffs from certain products and components through certain suppliers in Asia, but it is limited.” To address this, the company continues “to tweak our supply chain and pricing policies to anticipate and manage any potential new cost pressures.”
Yin reported that shipment delays in Q2 were not materially impactful due to adequate inventory levels.

Final Takeaway

RF Industries reported a strong second quarter with diversified growth across products and markets, highlighted by a rising backlog and continued profitability. The company expects third quarter sales to remain in line with the second quarter, supported by a robust pipeline, expanded sales team, and operational efficiencies. Management remains focused on driving further margin improvement, managing supply chain risks, and leveraging its position in key growth sectors such as wireless, aerospace, and data centers.

Read the full Earnings Call Transcript

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