WEB NEWS Research
Rf Industries Ltd. (NASDAQ:RFIL)($6.25, was marked up ~30% pre market; $56.0M market cap) designs and manufactures a broad range of interconnect products across diversified, growing markets including wireless/wireline telecom, data communications and industrial. RFIL announced Q2 2018 results:
Quotes from management:
"Q2 was a big quarter for us and while we strive to set records every quarter, I'm aware that there will be ebbs and flows from quarter to quarter as we execute on our growth strategies. While we still have a lot of work to do, I'm confident in our ability to perform and believe that now is the time to invest in the business as we build a platform for long-term, sustainable and profitable growth.
Please see our past full reasons for tracking RFIL here .
Comments & Business Outlook
Fourth Quarter 2013 Results
For the fourth quarter ended October 31, 2013, preliminary unaudited revenues decreased $0.9 million, or 9%, to $8.4 million as compared to $9.3 million in the same quarter of fiscal 2012.
Preliminary unaudited income from continuing operations for the 2013 fourth quarter was $0.9 million, or $0.12 per basic and $0.11 per diluted share, compared to $0.9 million, or $0.13 per basic and $0.12 per diluted share in the fourth quarter of 2012.
As previously announced, the company recently sold both divisions that constituted the Company’s RF Wireless segment (RF Neulink was sold on July 31, 2013, and RadioMobile was sold on October 31, 2013). Neither of these divisions had performed according to the Company’s expectations during the past few years and, in general, the wireless segment operated at a loss. The Company recorded a preliminary unaudited loss from discontinued operations, net of tax, of $1.1 million during fiscal 2013 as a result of the disposition of the RF Wireless segment. The foregoing preliminary unaudited loss from discontinued operations reduced the company’s preliminary unaudited net income for the fiscal year ended October 31, 2013 to $3.8 million, or $0.50 per basic and $0.46 per diluted share. For the 2012 fiscal year, earnings per share was $0.38 per basic and $0.34 per diluted share.
Howard Hill, RF Industries’ Chief Executive Officer, stated, “During most of 2013, we saw increased demand for our offerings across all end markets, which resulted in solid revenue growth for the year. Our Cables Unlimited division was particularly strong and generated over 90% of our company’s overall revenue growth in fiscal 2013. The revenue growth at Cables Unlimited was the result of sales of its OptiFlex™ power and fiber optic cabling system that is marketed for use with cell towers.”
Mr. Hill further stated, “Since mid-October, sales for OptiFlex™ have substantially slowed primarily due to a decline in the demand for cabling systems and increased competitive pressure. Given what we’ve seen in the first two months of fiscal 2014, we expect to see a material decline in revenues and operating profit from Cables Unlimited in the first quarter, both sequentially and as compared to the first quarter of 2013. Accordingly, we anticipate a corresponding material decline in revenues and income from continuing operations on a consolidated basis in the first quarter, both sequentially and as compared to the first quarter of 2013.”
Research
Alert Sent to Members on October 30, 2013
Rf Industries (NASDAQ:RFIL) ($9.50) - RFIL designs, manufactures, and/or sells communications equipment primarily to the radio and other professional communications related industries in both the United States and internationally.
article “Is Rf Industries’ (RFIL) Increased Dividend Payout a Clue to Consistent Growth?” We then added the stock to our GeoBargain list on 4/10/2013 at $6.46, however we are now removing RFIL from the list at the price of $9.50, or 47% higher than when it was added. The stock reached a 52-week high of $10.86, or 68% higher from our initial coding.
While RFIL has surpassed our near-term price target mentioned in our article of $8.75, it has not yet reached our higher end price target of $13.00. We do believe the industry that RFIL serves is a hot industry one. However, our reasons for removing RFIL at this time are due to:
Uncertainties we have with the company achieving above average growth due to tough quarterly EPS comparisons that the company will face in the coming quarters. Recall, one of the criteria we look for in our GeoBargains is EPS growth of around 25% in a year of year quarter-over-quarter comparisons.
More importantly, RFIL has disclosed that a legal issue in its last two 10-Q's could lead investors to question the integrity of management once the issues becomes more apparent.
“On May 24, 2013, a former employee of the Company filed a complaint with the San Diego, California office of the U.S. Department of Labor-OSHA alleging retaliatory employment practices in violation of the whistleblower provisions of the Sarbanes-Oxley Act. The complaint alleges that the former employee was terminated in November 2012 in retaliation for making disclosures relating to fraudulent accounting practices and lack of compliance with U.S. GAAP; violations of multiple Securities and Exchange Commission rules and regulations; and fraud against the shareholders. The complaint does not seek any specified amount of damages, but does seek various forms of relief, including the following: Reinstatement of the former employee’s employment, or in the alternative, an award for lost future wages, benefits and pension; back pay and bonuses; compensatory monetary damages in an amount to be determined; reasonable attorney’s fees; and all costs of litigation. The Company disputes the retaliation claim and has notified its employment practices liability insurance carrier of the demand.”
We will keep a close eye on the story to see if any new growth catalysts emerge that may give us a more insight into RFIL's future.
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Comments & Business Outlook
Third Quarter 2013 Results
For the quarter ended July 31, 2013, the Company reported record third quarter net sales of $9.6 million, an increase of 31%, compared to $7.3 million in the same quarter of fiscal 2012.
Income from continuing operations for the third quarter of fiscal 2013 was $1.2 million, or $0.15 per basic and $0.13 per diluted share, compared to $0.8 million or $0.11 per basic and $0.10 per diluted share in the third quarter of fiscal 2012.
Howard Hill, Chief Executive Officer, commented, “We are pleased to report record revenue for the fourth consecutive quarter and continued strong demand for our offerings across all end markets. In particular, we have been focused on growing our custom interconnect solutions to the wireless infrastructure industry. During the quarter, we continued to see the positive impact of this long term strategy with strong sales and profitability in our Cables Unlimited division. Our aim is to continue to provide customized solutions, such as our custom cable product, to new and existing customers that allow them to remain competitive in this space.”
Comments & Business Outlook
Second Quarter 2013 Results
Record second quarter net sales of $9.2 million, an increase of 37%, compared to $6.7 million in the same quarter of fiscal 2012.
Net income for the second quarter of fiscal 2013 was $1.2 million, or $0.15 per basic and $0.14 per diluted share, compared to net income of $0.6 million or $0.09 per basic and $0.08 per diluted share in the second quarter of fiscal 2012.
Howard Hill, Chief Executive Officer, commented, “We are pleased to report record revenue. Our strength lies in our ability to design and manufacture complex cable assembly products that meet or surpass the connectivity needs of our end users and, as a result, we’ve seen continued strong demand for our offerings. In particular, we have been focused on growing our position as a leading provider of full service, custom interconnect solutions to the wireless infrastructure industry. During the quarter, we saw the positive impact of this long term strategy with particularly strong sales from our Cables Unlimited division, which realized continued marketplace acceptance of its OptiFlex™ Hybrid Custom Fiber Optic and DC Power Cabling solution for wireless towers.”
Mr. Hill commented, “As expected, revenues at the RF Wireless segment decreased due to the winding down of the contract with the Los Angeles County Fire Department, which was entered into in November 2011. Accordingly, the completion of that contract will result in a decrease in revenues from that segment in future periods until other, larger contracts are entered into. Nonetheless, we saw very strong performance on a consolidated basis, with revenue growth at our remaining business segments. Our balance sheet, with a strong cash position and no debt, provides us with the ability to return capital to shareholders through a dividend while also supporting our long term growth strategy.”
Mr. Hill concluded, “Our Company is part of a dynamic industry where the demand for wireless connectivity is driving improvements to the wireless infrastructure and we believe that our customized solutions position us well to capitalize on new opportunities in this space.”
Investor Alert
On 3/28/2013, we published a report on RFIL for our Premium members and subsequently had it published on Seeking Alpha for the masses. An excerpt from the report...
"By now GeoInvesting followers should know that our team has a strong track record of exploiting hidden clues telegraphed by management teams of micro-cap gems before the masses do. On March 18, 2013 we disclosed our long position in Rf Industries (NASDAQ:RFIL) to GeoInvesting premium members at $6.39. We believe that RFIL is one of those gems and could rise to a range of $8.75 to $13.00 from its current share price in the upper $6 per share range. We have noticed significant volume coming into the stock over the past couple of trading sessions, making shares poised for a breakout move."
Please see our report here.
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Research
Our first alert sent to members on 9/10/2012 when the stock was trading at $4.25:
We have begun tracking Rf Industries (NASDAQ:RFIL) and Optical Cable (NASDAQ:OCC) since both reported strong third quarter 2012 results. We are coding both as GeoBargains on the Radar and will conduct more due diligence on each company. The main issue for these companies is that the visibility beyond the next one or two quarters is unclear, as is evident from referencing historical financials.
Alert sent on 3/12/2013
Reported strong firs quarter 2013 results
For the first quarter ended January 31, 2013, the Company reported net sales of $10,509,000 , an increase of $4,950,000 , or 89% , as compared to $5,559,000 in the same quarter of fiscal 2012 .
Consolidated net income for the quarter was a record $1,482,000 , or $0.21 per basic and $0.19 per diluted share, compared to consolidated net income of $115,000 or $0.02 per basic and diluted share in the first quarter of 2012.
We think shares We think shares will move higher but uncertainty exists regarding the sustainability of the 1st quarter results; 2012 1st quarter results benefited from the completion of a large order. Regardless, we believe that the company will continue to report solid growth comparisons for its next 2 quarters.
Alert Sent to Members on 3/18/2013
GeoBargain on the radar Rf Industries (NASDAQ:RFIL) ($6.39) announced a 40% increase in its quarterly dividend and declared a special dividend of $0.07 per share. Over the last several months similar dividend news has helped propel shares in GeoBargain Orchids Paper Products Co. (NYSE AMEX:TIS) and Ex-GeoBargain on the radar Ceco Environmental (NASDAQ:CECE).
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Comments & Business Outlook
Third Quarter 2012 Results
Net sales increased 51% to a quarterly record $7,472,000 compared to $4,948,000 in the same quarter last year.
Consolidated net income was a quarterly record $735,000 , or $0.10 per diluted share, compared to consolidated net income of $65,000 , or $0.01 per diluted share in the same quarter last year.
"Our focus in the acquisition of Cables Unlimited (CU) in June 2011 was to capitalize on RFI's strong product distribution to the wireless industry. Working closely with our distributors, Cables Unlimited designed and introduced the new OptiFlex™ power and fiber optic cabling system for high-speed wireless antenna towers. Multiple larger orders for OptiFlex supports our strategy of leveraging RFI's wireless product line by incorporating fiber optic and power components.
"Total operating profits increased to $1,094,000 compared to breakeven in the same period last year. We anticipate that strong performance from all business segments should lead to record sales in the fourth quarter ending October 31, 2012 ," said Howard Hill, RFI's CEO.
RF Connector and Cable Assembly segment sales increased 18% to a record $3,871,000 compared to $3,274,000 in the same quarter last year. Operating income for this segment was $669,000 , compared to an operating loss of $99,000 in the same period last year. The segment's loss in the third quarter last year was due to the total of $562,000 in non-recurring acquisition related and other expenses, as discussed above.
Cables Unlimited's third quarter sales were a record $2,728,000, compared to sales of $909,000 for the 46 day period after its acquisition on June 15, 2011 last year. Gross margin was 35% compared to 37% of sales in the same quarter last year, while operating profitability significantly improved to $446,000, or 16% of sales, compared to $97,000, or 11% of sales in the same quarter last year.
"During the third quarter, CU announced receipt of orders totaling $1,400,000 for its newly designed OptiFlex™ Hybrid Custom Fiber Optic & DC Power Cabling solution and shipped a significant portion of these orders during the quarter. We are extremely encouraged by the subsequent receipt of additional similar-sized orders for this new product," said Hill.
Bioconnect sales increased 12% to a third quarter record $570,000 compared to $510,000 in the same period last year. Gross margin declined to 39% from 41% of sales due to higher raw materials costs. Operating income declined slightly to $116,000 compared to $121,000 in the same quarter last year as Bioconnect increased hiring and invested in the development of new products for the coming year.
RF Wireless sales increased 19% to $304,000 from $255,000 in the same quarter last year. A change in product mix, combined with customer requested rescheduling of RadioMobile product shipments to a public service organization lowered segment gross margin to 26% compared to 39% of sales in the same quarter last year. The operating loss for this segment was $138,000 compared to $118,000 in the same quarter last year.
"RadioMobile's product shipments associated with its $2,600,000 contract with the Los Angeles County Fire Department have been rescheduled for delivery in the current fourth quarter and remainder of calendar 2012. We anticipate significant improvement in RF Wireless sales and profitability in the next two quarters," said Hill.
As of July 31, 2012, RFI reported cash and cash equivalents of $5,630,000, working capital of $13,719,000, a current ratio of 6 to 1, no long-term debt and stockholders' equity of $19,094,000, or $2.77 per outstanding share.
