Street Calls of the Week
RF Industries Ltd (RFIL) delivered a robust performance in its Q3 2025 earnings, surpassing analyst expectations. The company reported earnings per share (EPS) of $0.10, outpacing the forecasted $0.07, a surprise of 42.86%. Revenue reached $19.8 million, exceeding the anticipated $17.68 million by 11.99%. Following the earnings release, RF Industries’ stock surged by 11.07% in aftermarket trading, reflecting investor optimism. According to InvestingPro data, the stock is currently trading near its 52-week high of $9.21, with a remarkable year-to-date return of 96.42%.
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Key Takeaways
- RF Industries achieved a significant earnings beat with a 42.86% EPS surprise.
- Revenue growth was strong at 17.5% year-over-year.
- The stock price rose by 11.07% in aftermarket trading.
- The company is expanding into new markets, including aerospace and data centers.
- Focus on innovation with new product lines in thermal cooling and concealment solutions.
Company Performance
RF Industries demonstrated substantial growth in Q3 2025, with net sales increasing by 17.5% year-over-year to $19.8 million. The company has successfully transitioned from a component supplier to a technology solutions provider, enhancing its competitive position in the market. Its expansion into aerospace, transportation, and data centers highlights its strategic diversification efforts. InvestingPro analysis shows the company maintains a healthy Altman Z-Score of 3.14 and has achieved a 20.14% revenue growth over the last twelve months, indicating strong financial stability.
Financial Highlights
- Revenue: $19.8 million, up 17.5% year-over-year
- Earnings per share: $0.10, compared to a forecast of $0.07
- Gross profit margin: 34%, a 450 basis point improvement
- Operating profit: $719,000, compared to a loss of $419,000 in the previous year
- Adjusted EBITDA: $1.6 million, representing 8% of net sales
Earnings vs. Forecast
RF Industries exceeded expectations with an EPS of $0.10, a 42.86% surprise over the forecasted $0.07. The revenue of $19.8 million also surpassed the forecast of $17.68 million by 11.99%. This performance marks a significant improvement compared to previous quarters, showcasing the company’s operational efficiency and strategic initiatives.
Market Reaction
The positive earnings report led to an 11.07% increase in RF Industries’ stock price in aftermarket trading, with shares reaching $7.7. This movement reflects strong investor confidence, as the stock nears its 52-week high of $9.21. The market’s reaction underscores the company’s successful execution of its growth strategy and improved profitability. InvestingPro data reveals the stock has delivered an impressive 106.17% return over the past year, with particularly strong momentum in recent months.
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Outlook & Guidance
RF Industries anticipates Q4 net sales to be similar to Q3, with a targeted EBITDA margin of 10%. The company remains focused on profitability and operational efficiency, while exploring growth opportunities in fiscal 2026, particularly in stadium and infrastructure projects.
Executive Commentary
Ray Bibisi, President and COO, emphasized the company’s proactive approach, stating, "We’re no longer just responding to customer needs; we’re helping them anticipate and shaping the solutions that drive their success." CEO Rob Dawson highlighted supply chain resilience, saying, "We’ve worked long and hard to diversify our supply chain both domestically and internationally."
Risks and Challenges
- Supply chain disruptions could impact inventory levels and cost structures.
- Market saturation in core segments may limit growth potential.
- Macroeconomic pressures, such as inflation and interest rate hikes, could affect consumer spending and investment.
- Competitive pressures from established technology providers may challenge market share expansion.
- Regulatory changes in key markets could alter operational dynamics.
Q&A
During the earnings call, analysts focused on the drivers behind the improved gross margin, the diversification of revenue sources, and the company’s path to achieving a 10% EBITDA margin. Executives highlighted the importance of product mix and sales volume in driving profitability and discussed long-term project pipelines as key growth catalysts.
Full transcript - RF Industries Ltd (RFIL) Q3 2025:
Conference Moderator: Greetings. Welcome to the RF Industries Ltd third quarter fiscal 2025 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Donni Case, Investor Relations. You may begin.
Donni Case, Investor Relations, RF Industries Ltd: Oh, thank you, John, and good afternoon, everyone, and welcome to RF Industries Ltd fiscal third quarter 2025 earnings conference call. With me today are RF Industries Ltd Chief Executive Officer, Rob Dawson, President and COO, Ray Bibisi, and CFO, Peter Yin. We’re issuing a press release after market today, and that release is available on our website at rfindustries.com. I want to remind everyone that during today’s call, management will make forward-looking statements that involve risk and uncertainty. Please note that information on this call today may constitute forward-looking statements under the securities exchange laws. When used, the words anticipate, believe, expect, intend, future, and other similar expressions identify forward-looking statements. These forward-looking statements reflect management’s current views with respect to future events and financial performance and are subject to risk and uncertainties. Actual results may differ materially from the outcomes contained in any forward-looking statements.
Factors that could cause these forward-looking statements to differ from actual results include the risk and uncertainties discussed in the company’s reports on Form 10-K and 10-Q and other filings with the SEC. RF Industries Ltd undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout this call, we will be discussing certain non-GAAP financial measures. Today’s earnings release and related current report on Form 8-K describe the differences between our GAAP and non-GAAP reporting. With that, I’ll now turn the conference over to Rob Dawson, Chief Executive Officer. Go ahead, Rob.
Rob Dawson, Chief Executive Officer, RF Industries Ltd: Thank you, Donni, and welcome to our third quarter fiscal 2025 conference call. I’ll start with our third quarter highlights and some thoughts on the current environment. Our COO, Ray Bibisi, will expand on our go-to-market strategy and trends we’re seeing in newer markets, and our CFO, Peter Yin, will cover our financials before opening the call to your questions. Now to the third quarter. Our team continued to deliver strong results for the third consecutive quarter of fiscal 2025. Third quarter net sales grew 17.5% year over year to $19.8 million. Gross profit margin was 34%, which is a 450 basis point improvement over Q3 last year and 400 basis points above our target margin goal of 30%. We realized an operating profit of $719,000 versus a loss of $419,000 for a comparable period, which puts us in positive territory for four quarters in a row.
Adjusted EBITDA of $1.6 million was 8% of net sales in the quarter, which is an important metric we use to evaluate our operational efficiency. While this metric may vary from quarter to quarter depending on product mix and shipments, achieving 8% adjusted EBITDA as a percentage of net sales supports our conviction that our stated goal of at least 10% is within reach. Even through challenging times, we’ve been laser-focused on profitability. We now have a cost structure that gives us the operating leverage to continue improving profitability without diminishing quality, which we believe is the true path to value creation. Finally, we ended the quarter with a backlog of $19.7 million on third quarter bookings of $24.5 million. As of today, the backlog stands at $16.1 million.
Our team’s commitment to strong execution is printing through our financial results, and we’re all energized by the opportunity we see ahead. For those who’ve followed RF Industries Ltd for a while, first, thank you. Second, you’ve witnessed how our long-term strategy has transformed our company from a component supplier to a technology solutions provider. You also know this was no easy feat, but our commitment to delivering on what we said we would do has always been our focus. Now I want to spend some time on why we think RF Industries Ltd is in a great position to grow profitably going forward. The top line story here has three important drivers: one, diversification in products, customers, and end markets; two, deeper relationships with our traditional customers; and three, the value of new partnerships.
On our third quarter call last year, I talked about how our team was working hard to evolve our business to be more diverse in our products, end markets, and applications, and less reliant on the CapEx spend of our tier one carrier customers. One year later, we can proudly say that fast-growing markets like aerospace, transportation, and data centers are now contributing to our sales pipeline in addition to our strong standing in our traditional markets. Ray will go into more detail on our product innovation, go-to-market strategy, and trends we’re seeing across our end markets. In aerospace, we continue to win repeat orders from a leader in this market. With mission-critical components, failure is not an option, and you don’t get a second chance. Our success here continues to add to our credibility and reputation.
The transportation market, including both in vehicles and in transportation hubs, is a wide open field for us. For example, we’ve already received a meaningful order for a terminal infrastructure project at a major U.S. airport. As you know, the current administration justifiably wants to see our airport terminals upgrade their functionality in line with world-class airports. This could evolve into a significant opportunity for us. Municipal governments also want to upgrade their transportation infrastructures with distributed antenna deployments that will improve communication, connectivity, and efficiencies for their bus and train systems. We’ve only just scratched the surface of our product applications for transportation. Our DAC thermal cooling systems continue to attract wide attention with a variety of applications across several end markets.
As I mentioned last quarter, we launched a next-gen system that has advanced control capabilities and ANIMA certification for more rugged environments that expands our opportunity set in wireline telecom, edge data centers, energy, and transportation. More on data centers shortly. Stadium and venue buildouts are undergoing a significant revival, especially in the U.S., playing host to major events like the Olympics and World Cup in coming years. With our well-established reputation in this end market, we have a pipeline of over 100 venues, including some very intriguing projects around corporate and university campuses where greater connectivity is both an essential and competitive advantage. It’s exciting to be at that inflection point when our technology, know-how, and reputation create several opportunities to diversify our customer base. Yet equally important is building deeper relationships with our existing customers.
Wired and wireless communication customers have been our bread and butter for many years. However, we were mostly a downstream supplier away from the center of action and key decision makers. Now that has changed dramatically with our advanced technology and problem-solving approach. We’ve elevated our value proposition to this important customer base, which in turn has resulted in a greater share of their bill of materials, especially in our higher value solutions. While telecom CapEx spending is still short of historical levels, we’ve diversified our revenue sources within these organizations to capture a share of the OpEx budgets, a direct result of building and expanding our relationships. Plus, we continue to drive growth with many longstanding customers in our OEM and industrial markets where we design and build custom assemblies and wire harnesses. The third driver is the value of partnerships, both old and new.
We’re proud of our longstanding relationships with all the tier one carriers, the major installers and integrators, and especially our distribution partners. The trust we’ve earned for innovation, collaboration, and service has attracted new partners, which opens the door to additional diverse customer and market opportunities. For example, a major manufacturer of electronic cabinet and enclosures identified our DAC thermal cooling systems as a solution for edge data center installations, which are small decentralized facilities located closer to where data is generated and consumed. While hyperscale data centers are multi-billion dollar installations requiring technologies like liquid cooling systems, facilities on the edge also need energy-efficient cooling. RF Industries Ltd is a great solution for this, and we currently have market trials in process. Before I turn the call over to Ray, a final note on diversification. We’ve worked long and hard to diversify our supply chain both domestically and internationally.
Although our finished products are American made, there are certain vital components that are generally available only from outside of the U.S., which means we must deal with the uncertainty of the evolving tariff landscape. So far, our team has done a great job in mitigating tariff impacts, and we’ve only had nominal price increases on certain products. Putting this uncertainty aside, we’re focused on what’s in our control, maximizing the great opportunity ahead of us, and delivering one of the best full fiscal year results in RF Industries Ltd’s history. We now have three great quarters under our belt for fiscal 2025, and based on what we know today, we expect that our fiscal fourth quarter net sales will be similar to what we delivered in Q3. Finally, thank you to the entire RF Industries Ltd team for executing on the plan and keeping our momentum going.
I’m honored to get to work with all of you. Great job. We will continue to stick to the strategy, work hard, be kind, and keep a sense of humor. It certainly seems like we can all use a little more kindness. Now, here’s Ray.
Ray Bibisi, President and COO, RF Industries Ltd: Thank you, Rob, and good afternoon, everyone. As you just heard, we believe we are entering an exciting period of growth and opportunity. A key driver of our performance this quarter has been the deep engagement of our sales team. Their collaboration with engineering and marketing has allowed us to deliver fully integrated solutions that address critical needs across our target markets. This quarter, we saw strong growth across aerospace, venues, telecommunication, and broadband networks, supported by consistent contributions from our distribution channels. Our target initiatives in venues and broadband delivered meaningful bookings and revenue, demonstrating the effectiveness of our market-driven strategy. Marketing and product management played a critical role in reinforcing these efforts through impactful campaigns, events, and partner engagements. These activities strengthened our presence in the market and supported pipeline conversion. On the operations side, execution remains disciplined and strategic.
We increased inventory levels in certain product categories to mitigate pending tariff impacts, while our ongoing cost reduction programs remain on track. At the same time, process improvements and IT enhancements are enabling real-time decision making and building scalability to meet growing demand. From an engineering standpoint, our focus continues on small cell concealment solutions, DAC thermal cooling systems, and integrated RF passive solutions. While aligning engineering output with market demand is still a challenge, our improved processes on stage gate discipline and ensuring resources are directed toward the highest value opportunities. As Rob mentioned earlier, the story today looks very different than it was just a year ago. I couldn’t agree more. The change has been dramatic. From my vantage point, the real difference is how we are pairing advanced technology with a problem-solving approach.
We’re no longer just responding to customer needs; we’re helping them anticipate and shaping the solutions that drive their success. The shift has fundamentally strengthened how customers view RF Industries Ltd and the role we play in their strategic planning. Looking ahead to Q4, we expect revenue to remain steady with continued strength in small cell concealment solutions, DAC thermal cooling systems, aerospace, venues, and broadband markets. We are mindful of the potential tariff impacts and ongoing supply chain constraints, but our robust sales pipeline, disciplined operations, and strong cross-functional alignment position us to finish the year strong and carry momentum into 2026. Ultimately, execution is the bridge between potential and results. As Chief Operating Officer, I am proud of how our team continues to execute with focus, discipline, and collaboration. I now turn the call over to Peter.
Conference Moderator: Thank you, Ray, and good afternoon, everyone. As Rob described, we’ve had strong momentum across our business for three consecutive quarters in fiscal 2025. Before I review the financials, the overall theme to note is continuous improvement, both top line and bottom line. Our sales continue to increase, and this drives better margins and operating leverage as our fixed costs are spread over higher sales levels. In the third quarter, revenue grew 17.5% to $19.8 million year over year and 4.7% on a sequential basis. Gross profit margin was up 450 basis points to 34% from 29.5% year over year, primarily driven by an overall increase in sales as well as a higher margin product mix and our ongoing efforts to drive cost savings and operating efficiencies. Operating income was $720,000 compared to an operating loss of $419,000 we reported last year.
That’s over a $1.1 million improvement year over year. Consolidated net income was $392,000 or $0.04 per basic and diluted shares, and non-GAAP net income was $1.1 million or $0.10 per basic and diluted shares. This compared to a net loss of $705,000 or $0.07 per basic and diluted shares and a non-GAAP net loss of $95,000 or $0.01 per basic and diluted shares for Q3 2024. Adjusted EBITDA was $1.6 million, a significant improvement compared to adjusted EBITDA of $460,000 in Q3 2024. Thus far, our financial results this fiscal year reflect both our focus on profitability and strong execution against our plan to diversify our customer base and expand our presence in new end markets.
Moving to the balance sheet, we close the quarter with a strong balance sheet including $3 million of cash and cash equivalents, working capital of $13.1 million, and a current ratio of approximately 1.6 to 1, with current assets of $34.1 million and current liabilities of $21 million. At quarter end, we had borrowed $7.8 million on our revolving credit facility. As previously mentioned, we continue to manage our working capital to strengthen our liquidity and overall capital structure. We are actively assessing our borrowing costs and see near-term opportunities for more advantageous financing arrangements. At the end of Q3, our inventory was $14.2 million, down from $14.7 million last year. However, our inventory is up when compared to last quarter’s $12.6 million. While our inventory may fluctuate from quarter to quarter, we continue to carefully manage inventory levels while improving procurement and supply chain processes.
We are very mindful of our value proposition of inventory availability and believe our current inventory level supports both our strategic business model of inventory availability and continued healthy demand that we see for the balance of 2025 and beyond. Moving on to our backlog, as of July 31, our backlog stood at $19.7 million on bookings of $24.5 million. We have been successful in working through a portion of our backlog since quarter end, and as of today, our backlog currently stands at $16.1 million. We are looking forward to closing out 2025 with solid momentum in our business. Our team’s execution is printing through with strong financial results, and we are well positioned to capitalize on the opportunities that are ahead of us. With that, I’ll open up the call for your questions.
Conference Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment. The first question comes from Josh Nichols with B. Reilly Securities. Please proceed.
Matthew, Analyst, B. Reilly Securities: Hi, this is Matthew on for Josh. Thanks for taking my questions. I guess to start off, I mean, the 34% gross margin is impressive, and it’s well above the 30% target. Can you help us understand how much of that improvement is driven by DAC thermal cooling systems and small cells versus mix?
Rob Dawson, Chief Executive Officer, RF Industries Ltd: Yeah, I think good question, and thanks, Matthew. The mix that including those two product lines is increasing, right? You’ve got those two things and some of our other high-value items. We talked about, obviously, last quarter we put out some press on winning some new aerospace projects. Those are also some of the higher value, more technical kinds of solutions. Overall, the mix is sort of leaning towards higher value items, which help take that up. The other piece I would just mention is, and Peter mentioned it in his comments, a higher sales number is hugely helpful for us too, because once we absorb all those fixed costs, including the labor that we do, again, to build products in the U.S., once we do that, it’s heavily profitable beyond a certain level.
You’re starting to see that operating leverage that kicks in as we move between these, you know, 18, 19 plus kind of sales levels. You get some help from that operating leverage also in addition to the mix.
Matthew, Analyst, B. Reilly Securities: Got it. As a follow-up to that, you guys mentioned you expect Q4 to be a similar revenue base. I guess I’m assuming, should gross margin, assuming that DAC thermal cooling systems and other high-value items keep up this kind of % of mix and the revenue base being steady, should we expect gross margins in Q4 to be similar to Q3? I guess going into fiscal 2026, how should that change as you grow and that mix probably continues to shift?
Rob Dawson, Chief Executive Officer, RF Industries Ltd: Yeah, I think as we’ve talked about in the past, the mix will change quarter to quarter, and it doesn’t take much of a little movement in top line dollars to wildly swing our margins. We’re talking about $50,000 here, $70,000 there. Those kinds of numbers are material against our total dollars that are being delivered. I think our belief is that we’ve moved into this world where 30% and above is where we should be all the time. I don’t have specific expectations quarter by quarter based on the fluctuations, but it’s not out of the question to stay at the sort of low to mid 30% levels where we’ve been performing. Look, we’re happy to be at 34%, obviously. You see not just the mix, but also the leverage really kicking in.
It’s not out of the question to do that again, but I think from a specific commitment perspective, it’s tough to nail exactly what that number will be. Short of saying, we certainly expect it to be north of 30%.
Matthew, Analyst, B. Reilly Securities: Very helpful. Thank you. Based on, I guess, shifting over to the strong bookings, can you characterize the competition between, you know, I guess, traditional wireless business versus the newer end markets where you’ve seen strength like aerospace, transportation, and data center?
Rob Dawson, Chief Executive Officer, RF Industries Ltd: Yeah, I think we’re seeing a contribution from all of them. That’s the helpful part, you know, in the past we’ve had some, you know, if we go back six or seven years, we had some big quarters and some big wins. When you dug into the Q4, you’d see some concentration within that. I think we’re seeing a different scenario play out right now. It’s coming from several different areas, several different product lines, not just within one market, but within individual customers. We’re selling multiple of these newer, higher value product lines as well. I think the diversity is probably the biggest story around that. That’s also helpful quarter to quarter because one quarter a certain customer might be our largest, and the next quarter there may be a different customer. That’s a world that for a growing company you want to be in.
You want that spread out. It’s kind of a who’s who of who you’d like to have for customers. For a company our size, and we talk about this often internally, we don’t do a lot of disclosing who all of these customers are, short of saying things like the tier one wireless carrier ecosystem or a large well-known aerospace company. For us, those are marquee names that we’re putting up. I think that’s the helpful part, our core business in the background is cranking and doing its thing, grinding out the book and ship business and doing a great job on the wire harnesses and other custom cabling to the good industrial OEM customers we’ve had a long time. These newer growth markets for us are, you know, growth product lines are coming from a diverse set of customers on top of that.
That really is, I think, the bigger story overall.
Matthew, Analyst, B. Reilly Securities: Right. Yeah, I agree. I guess you mentioned being well positioned for the Olympics and World Cup buildouts, and you also mentioned the 100+ venue pipeline. Are we talking calendar kind of Q1 2026 for meaningful bookings, or could we see acceleration even sooner than that?
Rob Dawson, Chief Executive Officer, RF Industries Ltd: Yeah, I think, so when we talk about the pipeline overall, the great thing about the pipeline and whether it’s venues or other of the kind of newer project-based product lines, they’re long term. The sales cycle can be lengthy, which is fine. It starts to sort of compound itself though quarter to quarter. We’re expecting contribution from those kinds of deployments and solutions certainly into fiscal 2026. In some cases, those are going to be multi-year deployments. If you think about a brand new stadium, for example, being built for an NFL market or being built for something like the World Cup, when they build those, the last thing really to go in, once the infrastructure of the actual building itself is put in place, is they start throwing in the wires and the antennas and the overall communications piece.
It can be certainly over several quarters for us, but we think that that pipeline that we’re talking about is continuing to grow, and we feel like that’s a long-term indicator of, you know, whether it happens in one quarter or six quarters, we always need to have that pipeline being added to and growing.
Matthew, Analyst, B. Reilly Securities: Awesome. Thank you. Last question from me. You hit 8% EBITDA margin this quarter with revenue just under $20 million. Can you walk us through the bridge to your 10% target? Is it mainly just from a higher sales base, or are there more operational improvements in the works?
Rob Dawson, Chief Executive Officer, RF Industries Ltd: Yeah, so we’re always doing operational improvements. One of the things you heard Ray said is we’re constantly working on what’s next there and getting better and smarter about how we do things. There’s always opportunity there to streamline the operations overall to get more profitable there. Certainly, a higher sales number, as we just showed, a number just short of $20 million, on its own can produce some pretty significant upside results for us. We think it’s probably a mix of those two things. We’re obviously pushing to have higher sales numbers all the time. That’s sort of an obvious statement. At the same time, we do believe there’s some more efficiencies that we can continue to find. The better that we do with that product mix of driving these larger project-based kind of long-term customer relationships will help both those things.
The more you can predict what you’re going to ship out in a quarter or two, it makes it way easier to manage that supply chain, which is one of those examples of the kind of operating levers that we have.
Matthew, Analyst, B. Reilly Securities: Got it. Thanks for taking my questions. You have a great quarter.
Rob Dawson, Chief Executive Officer, RF Industries Ltd: Thanks, Matthew.
Conference Operator: If there are any remaining questions, please indicate so by pressing star one. Okay, we have no further questions in the queue. This completes the question and answer session of the call, and I’d like to turn the floor back to Rob Dawson for any closing remarks.
Rob Dawson, Chief Executive Officer, RF Industries Ltd: Great. Thank you, John. Appreciate it. Thanks all of you for joining us today. Thanks for your support. On our next conference call, we look forward to sharing our full fiscal year results and the initiatives for fiscal 2026. Thanks, everybody, for your time. Have a good day.
Conference Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.
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