RF Industries Ltd 2026 Q3 Earnings Call

You may begin. Thank you, Holly, and good morning, everyone.

Joining me today are Rob Dawson, Chief Executive Officer, Ray Bibisi, President and Chief Operating Officer, and Peter Yin, Senior Vice President and Chief Financial Officer. Before we begin, please note that today's discussion contains forward-looking statements under federal securities laws. Forward-looking statements are identified by the words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Actual results may differ materially due to risks and uncertainties described in RF Industries' filings with the SEC, including reports on Form 10-K and 10-Q. The company undertakes no obligation to update forward-looking statements except as required by law. During the call, management will also discuss certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP net income, and non-GAAP earnings per share.

Reconciliations to the most direct comparable GAAP measures are included in today's earnings release, as well as the company's SEC filings. I will turn the call over to Rob.

Thank you, Donni, and good morning, everyone. I am on the East Coast today, so I appreciate you tuning in for something a little different with our morning call today. So good morning. As I have said several times over the years, we like to communicate exactly what we are going to do as part of our long-term strategy, and then we execute. Fiscal year 2026 is unfolding as we anticipated and communicated to you. Our third quarter results continued to demonstrate the earnings power we have been building across RF Industries. We delivered record high quarterly revenue of $24 million, up 21% year-over-year and 16% sequentially. We do not spend a lot of time talking about records while we are working hard on the business, but I think this deserves some acknowledgment. $24 million in sales is a new high watermark for RFI.

Of course, our goal now is to break that record. Great work by the team. With quarterly revenue above $20 million and increasing, our results are benefiting from the operating leverage we have long discussed, driving increased margins and allowing more dollars to flow through to the bottom line and producing significantly stronger profitability across the income statement. In Q3, we delivered profits that in many cases set a new standard for RFI performance. Operating income was $1.8 million. Non-GAAP net income was $2.2 million, or $0.19 per diluted share, and adjusted EBITDA was $2.7 million or 11.1% of sales above our 10% goal. Combined with a gross profit margin of 35.6%, exceeding our 30% gross margin objective in six of the last seven quarters, we believe these results reinforce that our transition toward higher value solutions is creating a stronger, more profitable business.

This is especially evident as our higher value integrated systems and custom cabling solutions continue to gain traction. These offerings carry more engineering content, address larger project scopes, and deepen our customer relationships. In the third quarter, they made a significant contribution to our results. While our business mix can vary each quarter based on shipments and pipeline conversion, we believe the underlying strength and growing diversity in our business will carry forward. As customers increasingly seek fewer, more capable partners, we have expanded our offering to deliver turnkey solutions that span design, product fulfillment, and site installation management. Ray will discuss this in more detail and share some of the behind-the-scenes execution that continues to strengthen our value proposition and business opportunities. Our strategy to diversify RFI's end markets and customer base is working.

Today, our solutions support applications across aerospace, edge data centers, AI infrastructure, industrial manufacturing, medical imaging, transportation, and public safety, many of which are rapidly growing markets. Our business platform is now broader, more resilient, and has multiple avenues for growth. In closing, we are very excited about the future. Going forward, we remain focused on disciplined execution, serving our customers, and building durable long-term value for shareholders. As I mentioned on our Q2 call, we expected a strong second half, and with one quarter to go, we are on target to achieve exactly that. With what we know today, we expect sales in our current fiscal fourth quarter to be roughly the same or above our Q3 sales level. I want to thank the entire RF Industries team for their continued hard work and commitment.

As always, we appreciate the trust and partnership of our customers and the support of our shareholders. Now I will turn the call over to Ray to expand on our operational and go-to-market progress.

Thank you, Rob, and good morning, everyone. I want to take a few minutes to walk you through how we are actively managing the key levers across our business to drive growth, reduce vulnerability, and create lasting shareholder value. I will take you through sales, product management, engineering and operations, and the levers driving our strategy forward. Let me begin with our commercial results. In this quarter, I am pleased to say the results speak for themselves. As Rob highlighted, we delivered and delivered big. Q3 revenue came in at $24 million, exceeding expectations. But what I am most proud of is not just the number, it is how we got there. May, June, July, three consistent months. No slow start, no late quarter heroics, just steady, disciplined execution from day one to the last. That is what we have been building toward, and in Q3, we delivered it.

If Q1 and Q2 showed you the direction we were headed, Q3 showed you what this team is capable of. Our year-to-date revenue was solid, and I feel the momentum behind our team's determination to win. Regarding bookings, Q3 was another strong quarter following the record-setting Q2 bookings. Importantly, our year-to-date bookings are ahead of our year-to-date sales, reflecting continued strong demand across our end markets, and our backlog heading into Q4 gives us line of sight for the balance of the year. We have been saying diversification would be our strength, and Q3 reinforced it. This quarter, every segment contributed meaningfully to our results, and the contribution balance across the portfolio was improving. Custom cabling continued to lead and deliver. Interconnect stepped up from Q2, and integrated systems continued to gain traction, demonstrating that the work that we have been doing across that segment is showing up in the results.

This balance matters. We are a company where every segment contributes, every function executes, and the whole is greater than the sum of its parts, and our team's performance in Q3 is evidence of that. Our customer base continues to broaden as well. This quarter, we saw meaningful contributions from customers across aerospace and defense, telecommunications, industrial, and distribution channels, with several new contributors emerging across our end markets. That breadth is what a healthy, diversified business looks like, and I believe we are just getting started. Turning to engineering and product management. This quarter, we made a significant and deliberate organizational move that I believe will be a meaningful driver of performance in quarters ahead. We unified our engineering and product line management teams under a single integrated structure within our interconnect and integrated system segments.