Q2 2025 RF Industries Ltd Earnings Call

Okay.

Operator: Greetings. Welcome to RF Industries second quarter fiscal 2025 financial results conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Greetings and welcome to RF industries second 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.

Operator: 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. Please note, this conference is being recorded.

Donnie: Please note. This conference is being recorded I will now turn the conference over to your host <unk> Investor Relations at RF Industries, Donnie you may begin.

Donnie Case: I will now turn the conference over to your host, Donnie Case, Investor Relations at RF Industries. Donnie, you may begin. Thank you, Paul. And good afternoon, everyone. And welcome to RF industry second quarter 2025.

Speaker Change: Thank you Paul and good afternoon, everyone and welcome to RF Industries second quarter 2025 earnings Conference call with me today are RFID, Chief Executive Officer, Bob <unk> and CFO, Peter Yen, we issued a press release after market today and that release is available on our website at Arris industries Dotcom.

Donnie Case: With me today are RFI's Chief Executive Officer Rob Dawson and CFO We issued our press release after market today, and that release is available on our website at rfindv.org. I want to remind everyone that during today's call, management will make forward-looking that involve risk. Please note that information on this call today may constitute forward-looking statements When used, the words anticipate, believe, expect, future, and other similar expressions identified for These forward-looking statements reflect management's current with respect to future events and finance. and are subject to risk. Actual results may differ materially from the outcome. Factors that could cause these forward-looking statements to differ from actual results include the risk and the likelihood of failure.

Speaker Change: I want to remind everyone that during today's call management will make forward looking statements that involve risks and uncertainties. Please note that information on this call today may constitute forward looking statements under the Securities exchange lives.

Speaker Change: When used the words anticipate believe expect intend future and other similar expressions identified forward looking statements. These forward looking statements reflect management's current views with respect to future events and financial performance and are subject to risks and uncertainties.

Speaker Change: Results may differ materially from the outcomes contained any forward looking statements.

Speaker Change: Factors that could cause factors that could cause. These forward looking statements suggest were from actual results include the risks and uncertainties discussed in the company's reports on Form 10-K, and 10-Q and other filings with the SEC RF industry undertakes no obligation to update or revise any forward looking statements.

Donnie Case: Success in the Company's Reports have formed 10K. and other filings with the.

Donnie Case: RF industry undertakes no obligation to update, revise any for Additionally, throughout this call, we will be discussing certain non-GAAP financial Today's Earnings Relief and Related Current Report and Form 8-2-1. describe the differences between our GAP and our non-GAP.

Speaker Change: Throughout this call we will be discussing certain non-GAAP financial measures today's earnings release and related current report on form 8-K branded differences between our GAAP and our non-GAAP between with that I'll now turn the conference call over to Rob Johnson, Chief Executive Officer. Please go ahead.

Rob Dawson: With that, I'll now turn the conference call over to Rob Dawson, Chief Executive Officer. Please go ahead. Great. Thank you, Donnie.

Speaker Change: Rob.

Rob Johnson: Great. Thank you Dawn and welcome to our second quarter fiscal 2025 conference call.

Rob Dawson: And welcome to our second quarter fiscal 2025 conference call. I'll start with our second quarter highlights and some thoughts on the current environment and our CFO Peter Yin will cover our financials before opening the call up to your questions.

Rob Johnson: I'll start with our second quarter highlights and thoughts on the current environment and our CFO, Peter Yan, who will cover our financials before opening the call up to your questions.

Rob Dawson: Ray Bibisi, our president and COO, won't be joining us today as he's proudly attending his son's graduation. Now let's talk about the quarter. We followed our exceptionally strong first quarter with a very successful second quarter. Fiscal second quarter net sales grew 17% to $18.9 million year over year. and gross profit was 31.5% exceeding our target goal of 30%. For the third consecutive quarter, we delivered an operating profit, which was $106,000 versus an operating loss of $415,000 in the second quarter of 2024, and adjusted EBITDA was more than $1.1 million with a 6% margin, moving us closer to our 10% adjusted EBITDA margin goal.

Speaker Change: <unk> <unk>, our president and COO will be joining us today as he is proud to be attending his son's graduation.

Rob Johnson: Now, let's talk about the quarter, we followed our exceptionally strong first quarter with a very successful second quarter fiscal second quarter net sales grew 17% to $18 $9 million year over year.

Rob Johnson: And gross profit was 31, 5% exceeding our target goal of 30% for the third consecutive quarter. We delivered an operating profit, which was $106000 versus an operating loss of 415000 in the second quarter of 2024.

Rob Johnson: And adjusted EBITDA was more than $1 $1 million with a 6% margin.

Rob Johnson: Moving us closer to our 10% adjusted EBITDA margin goal.

Rob Dawson: We ended the quarter with a backlog of $15 million, and as of today, it stands at $18.4 million, a big increase from six weeks ago. To us, this seems like night and day compared to our results in the first half of fiscal 2024.

Rob Johnson: We ended the quarter with a backlog of $15 million and as of today. It stands at $18 4 million a big increase from six weeks ago.

Rob Johnson: To us it seems like night and day compared to our results in the first half of fiscal 2024.

Rob Dawson: I believe we've reached the inflection point where RFI's repositioning from a products company to an integrated solutions provider for diversified end markets is printing through in our financial results. Our results are now more diverse, both by product and customer, than ever before. We're driving growth in wireless, aerospace, public safety, and industrial OEM customers. While we're also identifying applications in markets like energy, transportation, wireline telecom, data centers, and new industrial use cases. We're seeing repeat and new customer wins across the board in our various product categories. Our expanded portfolio of innovative solutions has further diversified our end market.

Rob Johnson: I believe we have reached the inflection point, where RFID repositioning from a product company to an integrated solutions provider for diversified end markets is printing through in our financial results.

Rob Johnson: Our results are now more diverse both by product and customer than ever before we're driving growth in wireless aerospace public safety and industrial OEM customers.

Rob Johnson: We're also identifying applications in markets like energy transportation wireline telecom data centers and new industrial use cases.

Rob Johnson: We're seeing repeat and new customer wins across the board in our various product categories. Our expanded portfolio of innovative solutions is further diversified our end markets as I mentioned on our last call. We won a large custom cabling project from a leading aerospace company.

Rob Dawson: As I mentioned on our last call, we want a large custom tabling project from a leading aerospace company. Since then, we've received multiple significant additional orders from this customer. This repeat business builds our credibility and reputation in an industry that demands the highest degree of precision. Our small cell solutions are gaining momentum as we finally start to see some larger deployments moving forward. Wireless DAS buildouts in stadiums and venues continue to be a growth opportunity, and we currently have over 100 opportunities in our sales pipeline. and our core custom and standard interconnect. Offer remains stable and strong.

Rob Johnson: Since then we've received multiple significant additional orders from this customer this repeat business builds our credibility and reputation and an industry that demands the highest degree of precision.

Rob Johnson: Our small cell solutions are gaining momentum as we finally start to see some larger deployments moving forward.

Rob Johnson: Ireland Das build outs and stadiums venues continue to be a growth opportunity and we currently have over 100 opportunities in our sales pipeline.

Speaker Change: At our core custom and standard interconnect.

Speaker Change: Also remained stable and strong.

Rob Dawson: Our direct air cooling, or DAC, systems are also gaining momentum in the market.

Rob Johnson: Our direct air cooling or Das systems are also gaining momentum in the market. In this category were continuing to push the boundaries with new innovations to enhance efficient cost effective cooling solutions.

Rob Dawson: In this category, we're continuing to push the boundaries with new innovations to enhance efficient, cost-effective cooling solutions that can cut energy consumption while reducing repair and replacement costs versus traditional HVAC systems. We recently launched a next-gen system that features advanced control capabilities and a NEMA 4 certification for more rugged environments. These new developments expand our opportunity set into wireline telecom, edge data centers, as well as energy and transportation applications. To elaborate on one example application that I've mentioned in recent calls, AI is driving the overall demand for data centers, and more equipment is being pushed to the edges of the network into the small buildings, cabinets, and enclosures that house equipment there.

Rob Johnson: It can cut energy consumption, while reducing repair and replacement cost versus traditional HVAC systems.

Rob Johnson: We recently launched the next Gen system that features advanced control capabilities at anemic for certification for more rugged environments.

Rob Johnson: These new developments expand our opportunity set into wireline telecom edge data centers as well as energy and transportation applications.

Rob Johnson: To elaborate on one example application that I've mentioned in recent calls AI is driving the overall demand for data centers and more equipment is being pushed to the edge of the network into the small buildings cabinet enclosures that house equipment there.

Rob Dawson: This equipment must be cooled to operate effectively and consistently, and our DAC systems offer high-efficient, climate-durable cooling that is both eco-friendly and at a lower cost than traditional systems. Our patented systems are built to stand the rigor of outdoor environment. Plus, they have state-of-the-art technology that can reduce operating expenses by up to 70% over conventional HVAC systems. as well as helping companies achieve their green Importantly, DAC systems are often funded by operating and maintenance budgets that are not correlated to CapEx spending. further diversifying our revenue. As I mentioned earlier, wireless buildouts in stadiums and venues are regaining the momentum that was lost during the COVID pandemic and coming back in both greater size and number.

Rob Johnson: This equipment must be cooled to operate effectively and consistently in our das systems offer high efficient climate durable cooling that has both eco friendly and at a lower cost than traditional systems. Our patented systems are built to stand the rigor of outdoor environments plus they have state of the art technology that can reduce operating expenses by us.

Rob Johnson: With 70% over conventional HVAC systems, as well as helping companies achieve their green initiatives.

Rob Johnson: Importantly, das systems are often funded by operating and maintenance budgets that are not correlated to capex spending.

Rob Johnson: Further diversifying our revenue sources.

Rob Johnson: As I mentioned earlier wireless build out and stadiums and venues are regaining the momentum that was lost during the COVID-19 pandemic and coming back in both greater size and numbers.

Rob Dawson: Today, who doesn't know a pro or college team looking for a new venue or to modernize their existing... Not to mention major upcoming events like the 2026 FIFA World Cup, where the US is scheduled to host games in cities like LA, New York, Dallas and Miami. and the 2028 Summer Olympics in L.A. As I mentioned, we have over 100 venues in our sales pipeline and an experienced sales team dedicated to further penetrating this market. We're a technology leader developing new solutions for Distributed Antenna Systems, or DAS. that are needed to enhance wireless capabilities in stadiums, as well as airports and other high-traffic venues.

Rob Johnson: Today, who doesn't know pro or college team looking for a new venue or to modernize their existing Betsy <unk>.

Rob Johnson: Not to mention major upcoming events like the 2026, FIFA World Cup or the U S is scheduled to host games in cities like La and New York, Dallas and Miami.

Rob Johnson: And the 2028 Summer Olympics in La.

Rob Johnson: As I mentioned, we have over 100 venues and our sales pipeline and an experienced sales team dedicated to further penetrating this market.

Rob Johnson: We are a technology leader developing new solutions for distributed antenna systems or das that are needed to enhance wireless capabilities in stadiums as well as airports and other high traffic venues.

Rob Dawson: On the business development front, we bolstered our sales team with seasoned and connected leaders. Through their efforts, we've migrated up the food chain with key customers and are now getting a larger share of their total purchase. And as previously mentioned, we're breaking into new markets with new customers.

Rob Johnson: On the business development front, we bolstered our sales team with seasoned disconnected leaders through their efforts we've migrated up the food chain with key customers and are now getting a larger share of their total purchases.

Rob Johnson: And as previously mentioned, we are breaking into new markets with new customers. This diversity of huge for us.

Rob Dawson: This diversity is huge for us. It's also important to note that our prior acquisitions have been transformative in creating new opportunities with high value solutions. Well-established brands like Microlab have market currency, and the talented teams who've joined us in product engineering and sales are leading the charge to untapped potential.

Rob Johnson: It is also important to note that our prior acquisitions have been transformative and creating new opportunities with high value solutions.

Rob Johnson: Well established brands like micro lab have market currency and the talented teams who joined us in product engineering and sales are leading the charge to untapped potential.

Rob Dawson: While we're certainly set up to have a breakout year, a looming question is what to expect in the back half of the fiscal year given the uncertainty around the tariff situation and its impact on the supply chain. I think the summary is that so far we've handled it with our usual calm and pragmatic approach. In a bit more detail, for quite some time, we've been actively working to drive even greater diversification across our supply chain. and the majority of what we produce and deliver is domestically sourced. We do have some exposure to tariffs from certain products and components through certain suppliers in Asia, but it is limited.

Rob Johnson: While we're certainly set up to have a breakout year alumina question is what to expect in the back half of this fiscal year, given the uncertainty around the tariff situation and its impact on the supply chain.

Rob Johnson: I think the summary of that so far we've handled it with our usual calm and pragmatic approach.

Rob Johnson: A bit more detail for quite some time, we've been actively working to drive even greater diversification across our supply chain.

Rob Johnson: And the majority of what we produce and deliver to domestically source we.

Rob Johnson: We do have some exposure to tariffs, but from certain products and components through certain suppliers in Asia, but it is limited.

Rob Dawson: By all measures, RFI should be the poster child of what I think the tariffs are meant to accomplish. The majority of our products are produced in the United States by an entirely American workforce.

Rob Johnson: By all measures RFID can be the poster child of what I think the tariffs are meant to accomplish the majority of our products are produced in the United States by an entirely American workforce, we're very proud of our team and I believe in the integrity and quality of what we make and how we make it.

Rob Dawson: We're very proud of our team and I believe in the integrity and quality of what we make and how we make That said, what's happening with tariffs is beyond our control. We continue to tweak our supply chain and pricing policies to anticipate and manage any potential new cost pressure. And the RFI team has done a great job navigating this challenging and dynamic situation. I really appreciate their flexibility, resilience and positive attitude.

Rob Johnson: That said, what's happening with tariffs is beyond our control, we continue to tweak our supply chain and pricing policies to anticipate and manage any potential new cost pressures and the RFID team has done a great job navigating this challenging and dynamic situation.

Rob Johnson: I really appreciate their flexibility resilience and positive attitude, we see plenty of opportunity ahead and are prepared to see that.

Rob Dawson: We see plenty of opportunity ahead and are prepared to RFI has fought through some tough and confusing times in the past and emerged as a stronger and smarter organization. Right now we have a far greater set of opportunities than ever before, and we're focused on making steady progress in penetrating new end markets and winning more opportunities with T-Duster. So in summary, our results are now more diverse by product, market and customer than ever before. This evolution has also made our results more stable and more predictable. We have standing agreements and contracts with the who's who in our various markets.

Rob Johnson: RFID fought through some tougher confusing times in the past that emerge as a stronger and smarter organization.

Rob Johnson: Now, we have a far greater set of opportunities than ever before and we're focused on making steady progress in penetrating new end markets and winning more opportunities with key customers.

Rob Johnson: So in summary, our results are now more diverse byproduct market and customer than ever before.

Rob Johnson: This evolution has also made our results more stable and more predictable.

Rob Johnson: We have standing agreements and contracts with the who's who in our various markets RFID is a marquee list of customers and it's growing.

Rob Dawson: RFI has a marquee list of customers and it's growing. Our distribution channel is growing stronger as our reputation for quality products and dependable delivery also grows. We've redeveloped product lines and launched new products with a keen focus on managing R&D and CapEx spend. Our portfolio of innovative solutions is growing and making an impact both in the marketplace and in our results.

Rob Johnson: Our distribution channel is growing stronger as our reputation for quality products and dependable delivery also grows.

Rob Johnson: We've redeveloped product lines and launched new products with a keen focus on managing R&D and Capex.

Rob Johnson: Our portfolio of innovative solutions is growing and making an impact both in the marketplace and in our results.

Rob Johnson: Operationally, we've consolidated our footprint streamline the company and are continuing to identify other pockets of efficiency.

Rob Dawson: Operationally, we've consolidated our footprint, streamlined the company and are continuing to identify other pockets of efficiency. We're driving growth. We're driving profit growth through our strong operating leverage and through market Our financial position has greatly improved and it will continue to benefit from our intense focus on profitability. We're managing the impact of tariffs, and our ability to execute is our strength. 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.

Rob Johnson: We're driving growth, we are driving profit growth through our strong operating leverage and in market execution.

Rob Johnson: Our financial position has greatly improved and we will continue to benefit from our intense focus on profitability.

Rob Johnson: We're managing the impact of tariffs and.

Rob Johnson: And our ability to execute is our strength.

Rob Johnson: With what we know today, we expect our fiscal 2025 third quarter sales to be roughly in line with second quarter sales.

Rob Johnson: Which would be a significant increase over the $16 $8 million that we reported in the third quarter last year.

Rob Dawson: We're executing well and doing what we said we would do with enthusiasm and optimism. We've never had a greater team or platform for growth to realize RFI's full potential.

Rob Johnson: We're executing well and doing what we said, we would do with enthusiasm and optimism.

Rob Johnson: <unk> never had a greater team a platform for growth to realize <unk> full potential.

Peter Yin: With that, I'll turn the call over to Peter. Thank you, Rob. And good afternoon, everyone. As Rob mentioned, we're pleased with our second quarter performance. 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. The 160 basis point improvement was driven by an overall increase in sales and also reflected a better product mix and our continued efforts to drive cost savings and operating efficiency. Second quarter operating income was $106,000, a significant improvement from the operating loss of $415,000 we reported last year.

Peter: With that I will turn the call over to Peter.

Peter: Thank you Rob and good afternoon, everyone as Rob mentioned, we're pleased with our second quarter performance.

Peter: Second quarter sales increased 17, 4% to $18 9 million.

Peter: Year over year, and slightly decreased one 6% on a sequential basis.

Peter: Second quarter gross profit margin increased to 31, 5% from 29, 9% year over year.

Peter: The 160 basis point improvement was driven by an overall increase in sales and also reflected a better product mix and our continued efforts to drive cost savings and operating efficiencies.

Peter: Second quarter operating income was $106000 a significant improvement from the operating loss of $415000, we reported last year.

Peter Yin: Consolidated net loss was $245,000, or $0.02 per diluted share, and our non-GAAP net income was $701,000, or $0.07 per diluted share, versus the comparable period's net loss of $4.3 million, or $0.41 per diluted share, and non-GAAP net income of $132,000, or $0.01 per diluted share. Second quarter adjusted EBITDA was $1.1 million, a significant improvement compared to adjusted EBITDA of $572,000 in Q2 2024. Moving to the balance sheet, we continue to manage our working capital to strengthen our liquidity and overall capital structure. As of April 30, We had a total of $3.6 million of cash-in-cash equivalents, and we had working capital of $12.1 million and a current ratio of approximately 1.6 to 1, with current assets of $32.7 million and current liabilities of $20.6 million.

Peter: Consolidated net loss was $245000 or <unk> <unk> per diluted share and our non-GAAP net income was $701 or <unk> <unk> per diluted share versus the comparable periods net loss of $4 3 million or <unk> 41 per diluted share.

Peter: Sure.

Peter: And non-GAAP net income of $132000 or <unk> <unk> per diluted share.

Peter: Second quarter, adjusted EBITDA was $1 1 million, a significant improvement compared to adjusted EBITDA of $572000 in Q2 2024.

Peter: Moving to the balance sheet, we continue to manage our working capital to strengthen our liquidity and overall capital structure.

Peter: As of April 30.

Peter: We had a total of $3 $6 million of cash and cash equivalents and we had working capital of $12 $1 million and a current ratio of approximately one six to one with current assets of $32 7 million and current liabilities of $20 6 million.

Peter Yin: As of April 30th, We have borrowed $8 million from our revolving credit facility. 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. We're pleased with the interest we have received from various lenders to explore more favorable terms that will reduce our cost of capital and enhance our liquidity. The strong demand to engage in discussions on our credit facility is a testament to the strength of our company and our position in the market.

Peter: April 30th.

Peter: We had borrowed $8 million from our revolving credit facility.

Peter: 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.

Peter: We're pleased with the interest we have received from various lenders to explore more favorable terms that will reduce our cost of capital and enhance our liquidity the.

Peter: The strong demand to engage in discussions on our credit facility is a testament to the strength of our company and our position in the market.

Peter Yin: Our inventory was $12.6 million, down from $14.7 million last year. The continued decrease in inventory reflects our ongoing improvements to streamline our procurement and supply chain processes. As we close our second quarter, some shipments of inventory were delayed as we worked through the tariff impact with our customers. During our Q2, it is important to note that we did not experience a material impact related to the tariffs or delayed shipments from our vendors. The majority of the delays were for inventory items where we had sufficient inventory quantities on hand to meet our current delivery dates to our customers.

Peter: Our inventory was $12 6 million down from $14 $7 million last year.

Peter: <unk> decrease in inventory reflects our ongoing improvements to streamline our procurement and supply chain processes.

Peter: As we close our second quarter, some shipments of inventory were delayed as we work through the tariff impact with our customers.

Peter: During our Q2 it is important to note that we did not experience a material impact related to the tariffs or delayed shipments from our vendors. The majority of the delays were for inventory items, where we had sufficient inventory quantities on hand to meet our current delivery dates to our customers we continue.

Peter Yin: We continue to work with our customers and to diversify our supply chain and we believe our efforts will help to minimize our exposure on the additional tariffs that were introduced. We believe our current inventory level supports our strategic business model of inventory availability and we continue to manage this closely as we expect to see continued demand in the second half of 2025 as discussed earlier in the call.

Peter: To work with our customers and to diversify our supply chain and we believe our efforts will help to minimize our exposure on the additional tariffs that were introduced.

Peter: We believe our current inventory level supports our strategic business model of inventory availability and we continue to manage this closely as we expect to see continued demand in the second half of 2025 as discussed earlier in the call.

Peter Yin: Moving on to our backlog. As of April 30. Our backlog stood at $15 million on bookings of $18.7 million.

Peter: Moving on to our backlog as of April 30, our backlog stood at $15 million on bookings of $18 $7 million and as of today. Our backlog currently stands at $18 4 million.

Peter Yin: And as of today, our backlog currently stands at $18.4 million.

Peter Yin: In closing, our team delivered a strong first half of fiscal 2025. And we are eager to capitalize on the opportunities before us to drive increasing value for our shareholders.

Peter: In closing our team delivered a strong first half of fiscal 2025, and we are eager to capitalize on the opportunities before us to drive increasing value for our shareholders.

Operator: With that, we'll open up the call for your questions. 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 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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 2. Again, that's star one.

Peter: With that we'll open up the call for your questions.

Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you'd 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.

Peter: For participants using speaker equipment that may be necessary to pick up your handset before pressing the star keys scan.

Peter: Again, Thats Star one if you wish to ask a question today and please hold while we poll for questions.

Operator: If you wish to ask a question today, and please hold while we pull for questions.

Matt Maus: And the first question today is coming from Matt Maus from B. Reilly. Matt, your line is live. Hi, this is Matthew on for Josh taking my question. So to start, I was wondering, what would you credit for a lot of that backlog growth? How much of that business do you think will get recognized over the next year? And just what would you credit for that growth?

Matt Mouse: And our first question today is coming from Matt Mouse from B Riley, Matt Your line is live.

Peter: Hi, This is Matthew on for Josh taking my questions.

Speaker Change: Sure Hey, Matt Scott.

Peter: So to start I was wondering what would you credit for a lot of that backlog growth.

Peter: Nathan.

Peter: Okay.

Peter: That includes business at all.

Peter: How much of that.

Peter: Or do you think it will get recognized over the next year.

Peter: Where would you credit for that growth.

Rob Dawson: Yeah, thanks for the question, Matt. I think the increased backlog is really spread out across several different product areas. So I think that's the best news for us is there's not a concentration challenge in there. It's not one large order. It's several orders across several product lines of varying sizes. So we're encouraged by that. I think at any time, you know, our backlog, when people ask questions about it, we say, look, it's a good health indicator. But when it was, you know, 12, 13, 14 million, I wasn't worried about it being too low at, you know, 18 or 19 million kind of where it stands now.

Peter: Yes, Thanks for the question, Matt I think the.

Peter: The increased backlog is really spread out across several different product areas. So I think thats. The best news for US is there's not a concentration challenge and there is not one large order it's several orders across several product lines.

Peter: <unk> sizes. So we're encouraged by that I think at any time, our backlog when when people ask questions about it we say look at the good health indicator, but when it was $12 $13 14 million I wasn't worried about it being too low at 18 or $19 million kind of where it stands now.

Rob Dawson: I think it's a good indication that we've got a lot of good things going and we got a lot of business ahead of us. How much of that goes out in a short window of time really depends on the product line. You know, some of these things Come and go in a six-week window, other things maybe are projects that will be spread out over a few different quarters. So most of our backlog is really made up of those projects. What doesn't get reflected there is our book and ship business that can come and go in a day or two days, which is a material amount of our sales come in that way.

Peter: I think it's a good indication that we've got a lot of good things going and we got a lot of business ahead of us how much of that goes out in a short window of time really dependent upon the product line. Some of these things.

Peter: Come and go in a six week window. Other things maybe are projects that will be spread out over a few different quarters. So most of our backlog.

Peter: Is really made up of those projects what doesn't get reflected there is our book and ship business that can come and go in a day or two days, which is a.

Peter: A material amount of our sales come in that way. So I think the healthy thing for us is.

Rob Dawson: So I think that the healthy thing for us is... To my earlier point, we've got a mix of short- and long-term opportunities in there across a lot of customers and a lot of product areas.

Peter: To my earlier point, we've got a mix of short and long term opportunities and they are across a lot of customers and a lot of product areas.

Matt Maus: Great, thanks. Yeah, it's great to hear about the area.

Peter: Great. Thanks, Yeah, it's great to hear about.

Matt Maus: So I and Beau Howe https://www.youtube.com Matt, we're not getting any of you. You're getting cut in and out there. So maybe, I don't know, can you repeat that? Can you hear me now? I think so. Let's give it a try. Yeah, so thanks for the color on the wind being spread out across different areas of the business.

Peter: Yes.

Peter: Yes.

Peter: Thank you.

Peter: Fresh.

Peter: Okay between.

Peter: Yeah.

Peter: Like cell towers.

Peter: In terms of.

Peter: Right now we're not getting we're not getting any of your youre getting cutting in and out there. So maybe I don't know can you repeat that.

Peter: Can you hear me now.

Peter: I think so let's give it a try.

Speaker Change: Yeah. So thanks for that color on the women's being spread out across different areas of the business.

Rob Dawson: I was wondering if you could give a quick refresher on the split between things like products like the cell tower type, small cells, and DAT systems in terms of making a contribution. Yeah, sure. So we don't report specifically how much of those contribute.

Peter: I was wondering.

Peter: Quick refresher on the split things like products.

Peter: The cell towers small cells and that discount.

Peter: <unk> contribution.

Peter: Yes, sure. So we don't report specifically how much of those contribute.

Rob Dawson: I think the easier way for us to look at look at that is The markets where we've been able to build, I mean, the applications we've been able to build, the full bill of materials and things like small cell and things like distributed antenna systems, we do very well in the wireless space. On the MacroTower site, it's a pretty competitive side of things. We do have an offer there. You know, our very innovative hybrid fiber solution, which we've had a lot of success with, performs well in that space. Our basic coax jumpers and fiber jumpers also perform there.

Peter: But easier ways for us to look at it look at that is there.

Peter: The markets, where we've been able to build the applications, we've been able to build a full bill of materials things like small cells things like distributed antenna systems.

Peter: We do very well in the wireless space on the macro tower site is a pretty competitive side of things. We do have an offer there are very innovative hybrid fiber solution, which we've had a lot of success with performs well in that space.

Peter: Our basic coax jumpers and fiber jumpers also performed there we don't make that a priority I think as far as developing further into that bill of materials. We do heavily focus on venues where das is a big play.

Rob Dawson: We don't make that a priority, I think, as far as developing further into that bill of materials. We do heavily focus on venues where DAS is a big play. 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, and you start to see some of the delta year over year. That's certainly a contributor there.

Peter: Small cell continues to be a big play for US last year was a minimal contributor to sales. It becomes something this year that is more of a growth engine and you start to see some of the delta year over year. That's certainly a contributor there the other place that we're seeing nice growth as we mentioned is what we've historically called the OEM or.

Rob Dawson: The other place that we're seeing nice growth, as we mentioned, is in what we've historically kind of called the OEM or industrial market. We're starting to be able to break those out a little better into things like aerospace and defense, in addition to transportation, energy, you know, heavy manufacturing, some of these other markets, but I think the aerospace world, we've always serviced nice key customers there. We're continuing to add good blue chip customers. And we talked about some, you know, some meaningful orders that we've received from one in particular over the last handful of quarters.

Peter: Real markets.

Peter: We're starting to be able to break those out a little better into things like aerospace and defense. In addition to transportation energy heavy manufacturing some of these other markets, but I think the aerospace World. We've always service nice key customers. There, we're continuing to add good blue chip customers and we talked some about some some meaningful orders that we've received from one of <unk>.

Peter: <unk> over the last handful of quarters.

Rob Dawson: We're hopeful those continue, I think the team's performing really well.

Peter: We're hopeful those continue I think the team is performing really well so a part of that I think that the.

Rob Dawson: So so part of that, I think the thesis behind your question is, we're getting pretty diverse in the applications we're addressing, and they're all starting to produce some meaningful contributions to total sales, in addition to kind of our core run rate that goes through distribution that we don't always know where that's going to end up. Sometimes we can tell, a lot of times it's, we're relying upon our great distribution channel to drive market positioning, you know, for themselves and for us, and we don't always know where that ends up. But it's getting, it's getting pretty spread out across, you know, several applications and markets and customers.

Peter: This is behind your question is we're getting pretty diverse in the applications, we're addressing and they are all starting to produce some meaningful contributions to total sales. In addition to kind of our core run rate that goes through distribution that we don't always know where that's going to end up sometimes we can tell a lot of times. It's we're reliant upon our great distribution channel.

Peter: To drive market positioning.

Peter: For themselves and for Us and we don't always know where that ends up but it's getting it's getting pretty spread out across several applications in markets and customers.

Matt Maus: Great.

Peter: Great and then.

Rob Dawson: And then, at this point, I know you have over a hundred opportunities, what is the expected rate and how soon do you expect that to contribute meaningfully? Yeah, so on the on the distributed antenna side, which again, when we look at that, it's all different kinds of venues. So it's what we talk a lot about stadiums, because those are usually the big ticket items. But you're also looking at, you know, office and education campuses, you've got medical campuses, you have regular, you know, regular facilities that require things like public safety dash to go in, in addition to several other different kind of size, you know, multi tenant living opportunity kind of buildings as well.

Peter: At that point I know you.

Peter: Over 100 opportunities what is the expected.

Peter: Great and announced.

Peter: That activity meaningfully.

Speaker Change: Yes, so on the on the distributed antenna side, which again when we look at that it's all different kinds of venues. So we talked a lot about stadiums because those are usually the big ticket items, but youre also looking at office and education campuses, you've got medical campuses you have regular regular facilities that require things like public safety.

Speaker Change: Dash to go in in addition to several other different kind of size.

Speaker Change: Multi tenant living opportunity and kind of buildings as well. So we were always tracking a pretty healthy number of those I think we've done a good job of adding to that theyre contributing all the time. So you could say that some of our backlog increase certainly is driven by an increase in success in that market our expectation of.

Rob Dawson: So, we, we're always tracking a pretty healthy number of those. I think we've done a good job of adding to that. They're contributing all the time. So you could say that some of our backlog increase certainly is driven by an increase in success. In that market, our expectation of how we perform in the second half of the year and going forward is is certainly rooted in the fact that we feel confident in how we're performing. In that application, we have the right integrators as as, you know, influencer customers, many of them buy through our distribution channel, which is great.

Speaker Change: How we perform in the second half of the year and going forward as certainly rooted in the fact that we feel confident in how we're performing.

Speaker Change: In that application, we have the right integrators as as.

Speaker Change: Influencer customers many of them buy through our distribution channel, which is great.

Rob Dawson: We've gotten approvals on the right kinds of products with the carriers and the neutral host companies. So I think for us, it's, it's always contributing. which is a, you know, a helpful piece of it. And that 100 is, you know, it hasn't always been at that level. It's kind of ebbed and flowed. But I think we feel like there's certainly an increase of opportunities there. And the bill of materials for us can, you know, it can be a small venue that's $50,000, or it could be a huge stadium build from scratch that's, you know, over a million bucks.

Speaker Change: Gotten approvals on the right kinds of products with the carriers and the neutral host companies. So I think for US it's it's always contributing.

Speaker Change: Which is.

Speaker Change: Helpful piece of it and that 100 is it hasn't always been at that level, it's kind of ebb and flow, but I think we feel like there is certainly an increase of opportunities there and the bill of materials for us it can be a small venue that $50000 or it could be a huge stadium built from scratch thats over million Bucks you know those are the kinds of things that we.

Rob Dawson: You know, those are the kinds of things that we appreciate kind of the diversity of those different opportunities and how they're structured.

Speaker Change: We appreciate kind of the diversity of those different the different opportunities out of our structure.

Matt Maus: Awesome, thank you for that.

Speaker Change: Awesome. Thank you for that and I guess last one for me I was hoping you could expand on the on the wireless provider, making up about 11% of revenue for the quarter.

Rob Dawson: And I guess last one for me, I was hoping you could expand on the wireless provider A making up about 11% of revenue for the quarter. What has that been like? How much more runway do you see there? It looks like last year was at that level about this time last year. Yeah, so I think that you know, when you look at our disclosures in the in the queue around concentration, I think the interesting thing to note is that the top customer in Q2 was different from the top customer in Q1, which was different from who it would have been at the end of last year, you know, this is the sort of project based nature of certain applications where we get a nice win, that, that application or that deployment may happen during one quarter, maybe sprout over a few quarters.

Speaker Change: Is that right.

Speaker Change: And like how much more runway you see there.

Speaker Change: It looks like.

Speaker Change: Does that level was about this time last year.

Speaker Change: Yes, So I think when you look at our disclosures in the Q around concentration I think the interesting thing to note is the top customer in Q2 was different from the top customer in Q1, which was different from what would've been at the end of last year. This is the sort of project based nature of certain applications, where we get a nice win that.

Speaker Change: That application or that deployment may happen during one quarter, maybe sprout over a few quarters, but as we start to see better execution I think within our sales team and our technology team, we're getting into more of these kinds of.

Rob Dawson: But as we start to see better execution, I think within our sales team and our and our technology team, we're getting into more of these, these kinds of, you know, mid to long term deployments that have large dollars attached to them. So that the growth that we're seeing in our business is certainly attributed to some of these larger wins. And the great thing I think is, you know, in the past, we've had, we've had some great wins and high sales numbers. And when you looked at it, our concentration was with one customer, maybe, and, you know, a bigger chunk of total sales than what we're talking here at this 11%.

Speaker Change: Mid to long term deployments that add large dollars attached to them. So that the growth that we're seeing in our business is certainly attributed to some of these larger wins.

Speaker Change: And the Great thing I think as you know in the past we've had we've had some great wins in high sales numbers and when you looked at it our concentration was with one customer maybe.

Speaker Change: A bigger chunk of total sales than what we're talking here at this 11%.

Rob Dawson: That, that same customer in, you know, Q1 was a much smaller number. And we do expect repeat purchases from that customer. I think we're also starting to see a list of several customers every quarter putting up a million bucks in kinds of sales with us, which is, that's a new, that's a new world for us to have that many customers in addition to our distributors performing as a big piece of the total sales mix. So, yeah, look, it's a, it's something to take note of. But I think if you look at the, you know, if we were disclosing the list of all the customers that we're selling to, for a company our size, it's a who's who list of who you want to do business with.

Speaker Change: That.

Speaker Change: That same customer in Q1 was a much smaller number and we do expect to repeat purchases from that customer I think we're also starting to see a list of several customers every quarter, putting up a million bucks in kinds of sales with us which is a new it's a new world for us to have that many customers. In addition to our distributors performing ads is a big.

Speaker Change: Piece of the total sales mix so.

Speaker Change: Yes look.

Speaker Change: It's something to take note of but I think if you look at the.

Speaker Change: We were disclosing the list of all the customers that we're selling too.

Speaker Change: For a company our size, it's a who's who list of who you want to do business with and it's really a testament to how great. Our team is at the building products designing and building them getting them out the door and the relationships that we've built to bring.

Matt Maus: And it's really a testament to how great our team is at building products, you know, designing and building them, getting them out the door and the relationships that we've built to, you know, to bring us up market into a different world. Got it. That was very helpful. Thank you.

Speaker Change: Bring us up market into a different world.

Speaker Change: Yes.

Speaker Change: Got it that was very helpful. Thank you I'll jump back into the queue.

Matt Maus: I'll jump back into the queue. Thanks, Matt.

Matt Mouse: Thanks, Matt.

Operator: Thank you.

Speaker Change: Thank you and once again, if you did have a question today. Please press star one on your phone at any time to enter the queue. Our next question is coming from Stephen Cole from mangrove Steven Your line is live.

Stephen Kohl: And once again, if you did have a question today, please press star one on your phone at any time to enter the This question is coming from Stephen Kohl from Mangrove. Thank you.

Stephen Cole: Thank you good evening I guess from here, but good afternoon there.

Stephen Kohl: Good evening, I guess, from here. But good afternoon there, Rob and Peter. A couple of quick questions.

Stephen Cole: Peter.

Matt Mouse: Steve.

Matt Mouse: Couple of quick questions.

Peter Yin: I guess I wanted to talk to Peter for a second just on the credit facility because I suspect as you alluded to that things are getting better. Can you kind of wrap a little bit more color around that in terms of when when can we expect another agreement in place and what kind of savings on the bottom line we might see? Yeah, so I think that is, you know, we expect to have that here in the current Q3, if not definitely by our year end. I think that we'll share more detail there as we finalize, but we expect, you know, obviously an interest rate decrease there and savings there we think will be meaningful.

Matt Mouse: I guess I wanted to pocket for Peter on for a second just on the.

Matt Mouse: Credit facility, because I suspect as you alluded to the things are getting better can you.

Matt Mouse: Kind of a ramp a little bit more color around that in terms of one when can we expect another agreement in place on what Thomas.

Matt Mouse: What kind of savings on the bottom line where mindset.

Matt Mouse: Yes, so I think that is.

Matt Mouse: We expect to have that here in the current Q3, if not definitely by year end I think that we will share more detail Darren we finalized, but we expect.

Matt Mouse: Obviously, an interest rate decrease here in savings there, we think will be meaningful.

Peter Yin: And let me turn to another question if I could. So you guys have a 10% on EBITDA target, but your gross margin I think was 31 and change. I'm just curious if you could maybe tie out how do we get from the 6 to the 10 because I would imagine 31 and a half is pretty decent.

Matt Mouse: Now, let me turn to another question if I could so you guys have a 10% EBITDA target.

Speaker Change: Gross margin on a total of 41 and change I'm just curious if you can maybe tie.

Matt Mouse: How do we get from six to the Tam because I would imagine.

Matt Mouse: What do you want to have somebody do some.

Peter Yin: Unknown Executive, Peter Yin, Margaret Boyce, Ray Bibisi, RF Ind, Unknown Executive, Peter Yeah, good question. So I think I mean, look, you hit on the on the key levers in this, which one is mix, we do think there's room for mix to get a little better. The bigger thing for us there is also continuing to take out costs and be more efficient in the way we we do our production and manufacturing. The you know, the tariff changes make that a little funky, and making sure that we can manage through the drama around those items has been important to us.

Matt Mouse: You've been making some cuts mass channel. So how do we reconcile that and how much was absorption versus continued improvements in Maxim.

Matt Mouse: Room to actually see what would have to happen to be September sorry per pound target.

Matt Mouse: Yes. Good question. So I think I mean look you hit on the.

Matt Mouse: On the key levers in that which one is mix. We do think there's room for mix to get a little better the bigger thing for US. There is also continuing to take out cost and be more efficient in the way, we do our production and manufacturing.

Matt Mouse: The tariff changes make that a little funky and making sure that we can manage through the drama around those items has been important to us I think we've done it but it is something that has to be noted on the last piece is just we're absorbing all labor Knapp and we're putting up the numbers that we're putting up with the existing cost infrastructure, which youll notice.

Peter Yin: I think we've done it, but it's something that has to be noted. The last piece is just, you know, we're absorbing all labor now, and we're putting up the numbers that we're putting up with the existing cost infrastructure, which you'll notice, our SC&A really isn't going up commensurate with the way sales are going up, we're managing that very well, and doing a good job. So I think if we have room to push sales higher, as we continue to perform in, you know, these product lines with the great customers that we've managed to line up good relationships with and do a good job of managing those kind of ongoing projects.

Matt Mouse: Our SG&A really isn't going up commensurate with the way sales are going up we're managing that very well and doing a good job. So I think if we have room to push sales higher.

Matt Mouse: As we continue to perform.

Matt Mouse: These product lines with the great customers that we manage.

Matt Mouse: <unk> managed the lineup good relationships with and do a good job of managing those cut.

Matt Mouse: Kind of ongoing projects.

Peter Yin: We think sort of a combination of those three things. We'll help push that up. You know, Peter mentioned working on a credit facility to take some additional costs out there. There's other levers that we're working on as well to try to try to bolster that profitability, both the gross profit line, but then below the line, which will, at this point, all fall straight through.

Matt Mouse: We think sort of a combination of those three things.

Matt Mouse: He will help push that up Peter mentioned working on our credit facility to take some additional cost out there. There's other levers that we're working on as well to try to.

Matt Mouse: To bolster that profitability both the gross profit line, but then below the line, which will at this point I'll fall straight through.

Peter Yin: Right.

Rob Dawson: And another one just on I know you've got to be happy with DAC and small cell and You know, are we seeing, I know you've talked about even broader coverage there, but what is the, as you look out to this year, the back half of this year is a comfort. I don't know. Obviously, I know you don't break out in the back percentage areas, but I presume we've seen pretty good growth in both of those areas. Is that the case? And again, is that being facilitated by multiple and customers, or could you give them a little bit more color there?

Matt Mouse: Alright.

Tom: One just Tom I know, you've got to be happy with that and small cell.

Matt Mouse: Are we seeing I know you've talked about even broader coverage there.

Matt Mouse: But what is the as we look out for this year or.

Matt Mouse: The back half of this year.

Matt Mouse: I don't know I know you don't break out backlog percentage areas, but I presume, we've seen pretty good growth on both of those areas of application.

Matt Mouse: Is that being facilitated by multiple.

Matt Mouse: Customers or can you give us a little bit more color there.

Rob Dawson: And it sounds like a lot more comfortable than you have been, or at least. I'm just going to pull through better. Yeah, so I think both those product lines, both DAC and small cell are meaningful contributors to sales. To the earlier question around, you know, customer concentration, we don't have any concerns there. These are happening across several different customers and several regions. And as we've talked about in the past, these larger customers in particular, in many cases, have regional budgets that are deployed by more localized management who are overseeing, you know, deployment of, you know, hundreds or thousands of sites, whether that's small cell or DAC.

Matt Mouse: It sounds like it's a lot more comfortable when you have done or at least.

Matt Mouse: Roberto.

Matt Mouse: Yes, so I think both those product lines. Both back end small cell are meaningful contributors to sales.

Matt Mouse: To the earlier question around customer concentration.

Matt Mouse: Don't have any concerns there these are happening across several different customers and several regions and as we've talked about in the past. These larger customers in particular in many cases have regional budgets that are that are deployed by more localized management, who are overseeing deployment of hundreds of thousands of sites, whether that's small seller DAC.

Rob Dawson: So we feel good about the diversity, not just across multiple customers, but even within the customers, where there's, you know, several regions that operate somewhat independently when it comes to budget. You know, we have to get wins in each of those markets once we've gotten the overall corporate technology approval. So both product lines are contributing. which is at a material level, which is now helpful to us. And I think we expect those to continue being some of the drivers of our growth into the back half of the year. And we're hopeful that kind of momentum can continue into fiscal 26.

Matt Mouse: So we feel good about the diversity not just across multiple customers, but even within the customers where there is several regions that operate somewhat independently when it comes to budget, we have to get wins in each of those markets.

Matt Mouse: Once we've gotten the overall corporate technology approval so.

Matt Mouse: Both product lines are contributing.

Matt Mouse: Which is.

Matt Mouse: At a material level, which is now helpful to us and I think we expect those to continue being.

Matt Mouse: Some of the drivers of our growth into the back half of the year and we're hopeful that kind of momentum can continue into the fiscal 'twenty six.

Matt Mouse: Sounds good thank you very much guys.

Operator: Thank you very much, guys. Thank you. There were no other questions in queue at this time.

Speaker Change: Good morning.

Speaker Change: Thanks, Steve.

Speaker Change: Thank you there were no other questions in queue. At this time I will now hand, the call back to Rob Dawson for closing remarks.

Rob Dawson: I will now hand the call back to Rob Dawson for closing remarks. Great. Thank you, Paul. And thanks everyone for participating in today's call. We truly appreciate your support. Have a fantastic and safe summer, and we look forward to talking with you in the fall. Have a good day. Thank you.

Rob Dawson: Great. Thank you Paul and thanks, everyone for participating in today's call. We truly appreciate your support.

Matt Mouse: Fantastic and safe summer and we look forward to talking with you in the fall have a good day.

Speaker Change: Thank you. This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Operator: This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.