Exhibit 99.1
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FOR IMMEDIATE RELEASE
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Contacts:
RF Industries Ltd.
Mark Turfler
SVP/CFO
(858) 549-6340
rfi@rfindustries.com
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MKR Investor Relations
Todd Kehrli
Analyst/Investor Contact
(323) 468-2300
rfil@mkr-group.com
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RF Industries Reports Sales Increase
of 17% in First Quarter of Fiscal 2020
Declares Quarterly Cash Dividend of $0.02
per Common Share
SAN DIEGO, CA, March 12, 2020 – RF Industries,
Ltd, (NASDAQ: RFIL), a national manufacturer and marketer of interconnect products and systems, today announced its financial
results for the first quarter of fiscal 2020 ended January 31, 2020.
First Quarter Fiscal 2020 Highlights and Operating Results:
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Net sales increased 17% year over year to $12.4 million
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·
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Net income was $26,000, or $0.00 per diluted share
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Non-GAAP net income was $241,000, or $0.02 per diluted share
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Adjusted EBITDA was $471,000
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Declared $0.02 per share dividend, the Company’s 39th
consecutive quarterly dividend
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Robert Dawson, President and CEO of RF Industries, commented:
“Our first quarter is typically our lightest quarter,
though we did grow 17% over last year. In addition to the usual seasonal factors, the softer industry-wide spending by wireless
carriers contributed to lower project sales than originally expected. Fortunately, our distribution business continues to be diverse
and healthy and, while spend from the wireless carriers was extremely light during the quarter, we are seeing signs of improvement
in our second quarter. Our bookings have picked up across all divisions and backlog has increased in the second quarter to date.
Looking forward, we maintain a solid balance sheet with no debt and a strong cash position. While we are unsure of the full economic
impact of the coronavirus and we acknowledge that it may present a short-term speed bump in our growth, we are focused on mitigating
the impact. We will continue to execute on our long-term growth plan through active management and strong customer relationships.”
First Quarter Fiscal 2020 Results
Net sales in the first quarter of fiscal 2020 were $12.4 million,
an increase of 17%, or $1.8 million, compared to $10.6 million in the first quarter of fiscal 2019. The year-over-year increase
in net sales reflects sales contribution from the Company’s acquisition of Schroff Technologies and C Enterprises.
Gross profit for the first quarter was $3.3 million compared
to $3.1 million in the first quarter last year. Gross margins were 26.2% of net sales, compared to 29.5% of net sales in the fiscal
2019 first quarter. The decline in margins was primarily due to product mix at the Custom Cabling segment driven by lower margins
at the C Enterprises subsidiary.
Total operating expenses increased $0.9 million to $3.3 million
(26.2% of net sales) compared to $2.4 million (22.2% of net sales) in the first quarter last year primarily due to the absorption
of the additional selling and general expenses of newly acquired Schroff Technologies and C Enterprises. Total operating expenses
in the current quarter included 1) $187,000 in stock-based compensation expense, an increase of $73,000 over the first quarter
last year, due in part to compensation costs related to the Company’s recently hired Chief Revenue Officer, 2) $173,000 of
amortization expense, an increase of $104,000 over last year, as a result of the acquisition of Schroff Technologies and 3) acquisition-related
costs of $28,000, also due to the Schroff Technologies acquisition, an increase of $24,000 over last year.
Net income for the first quarter of fiscal 2020 was $26,000,
or $0.00 per diluted share, compared to $640,000, or $0.07 per diluted share, in the first quarter last year.
Non-GAAP net income for the first quarter fiscal 2020 was $241,000,
or $0.02 per diluted share, compared to $758,000, or $0.08 per diluted share in the first quarter last year. For the first quarter
fiscal 2020, non-GAAP adjustments included $187,000 in stock based compensation expense, an increase of $73,000 compared to $114,000
in the first quarter last year. Non-GAAP net income for the first quarter fiscal 2020 also included a $28,000 adjustment for acquisition
related costs and expenses associated with the acquisition of Schroff Technologies compared to $4,000 in the first quarter last
year.
Adjusted EBITDA for the first quarter fiscal 2020 was $471,000,
compared to $1,041,000 in the first quarter last year. For the first quarter fiscal 2020, adjusted EBITDA included $187,000 stock-based
compensation expense, and $28,000 in acquisition-related costs and expenses, as described above. Adjusted EBITDA for the first
quarter fiscal 2020 also included $173,000 amortization expense, an increase of $104,000 compared to $69,000 in the first quarter
last year primarily due to the impact of acquiring Schroff Technologies.
Balance Sheet Data; Dividends
At January 31, 2020, the Company reported working capital of
$23.8 million, including cash and cash equivalents of $14.4 million, a current ratio of 5.4-to-1 and no outstanding debt.
At its March 5, 2020 meeting, the Company’s Board of Directors
declared a quarterly cash dividend of $0.02 per common share, payable on April 15, 2020 to stockholders of record on March 31,
2020.
Cash dividends are made at the discretion of the Board of Directors,
subject to applicable laws, and depend on a number of factors, including the Company's financial condition, results of operations,
capital requirements, plans for future acquisitions, contractual restrictions, general business conditions and other factors considered
relevant by our Board of Directors.
Conference Call and Webcast
RF Industries will host a conference call and live webcast
today at 1:30 p.m. Pacific Time (4:30 p.m. ET) to discuss its first quarter 2020 financial results. To access the conference call,
dial 888-394-8218 (US and Canada) or 323-794-2591
(International). The conference ID is 2522210. In addition, a live and archived
webcast of the conference call will be accessible on the investor relations section of the Company’s website at www.rfindustries.com.
A phone replay of the conference call will also be available beginning approximately two hours after conclusion of the call and
will remain available for two weeks. To access the phone replay, dial 844-512-2921
(US and Canada) or 412-317-6671 (International). The replay conference ID is 2522210.
About RF Industries
RF Industries designs
and manufactures a broad range of interconnect products across diversified, growing markets including wireless/wireline telecom,
data communications and industrial. The Company's products include RF connectors, coaxial cables, data
cables, wire harnesses, fiber optic cables, custom
cabling, energy-efficient cooling systems and integrated small cell enclosures. The Company is headquartered
in San Diego, California with additional operations in Long Island, New York, Vista, California, Milford, Connecticut and North
Kingstown, Rhode Island. Please visit the RF Industries website at www.rfindustries.com.
Forward-Looking Statements
This press release contains forward-looking statements with
respect to future events, including higher sales, increased future demand for the Company's products, and future net sales goals,
which are subject to a number of factors that could cause actual results to differ materially. Factors that could cause or
contribute to such differences include, but are not limited to: changes in the telecommunications industry; the Company's reliance
on certain distributors and customers for a significant portion of anticipated revenues; the impact of existing and additional
future tariffs imposed by U.S and foreign nations; the Company's ability to execute on its new go-to-market strategies and channel
models; its ability to expand its OEM relationships; its ability to continue to deliver newly designed and custom fiber optic and
cabling products to principal customers; its ability to maintain strong margins and diversify its customer base; uncertainty regarding
the impact of the Coronavirus outbreak on its supply chain; and its ability to address the changing needs of the market.
Further discussion of these and other potential risk factors may be found in the Company's public filings with the Securities and
Exchange Commission (www.sec.gov) including its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. All forward-looking
statements are based upon information available to the Company on the date they are published and the Company undertakes no obligation
to publicly update or revise any forward-looking statements to reflect events or new information after the date of this release.
Note Regarding Use of Non-GAAP Financial Measures
To supplement our condensed financial statements presented
in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release and the accompanying tables and
the related earnings conference call contain certain non-GAAP financial measures, including adjusted earnings before interest,
taxes, depreciation, amortization (Adjusted EBITDA), non-GAAP net income and non-GAAP earnings per diluted share (non-GAAP EPS).
We believe these financial measures provide useful information to investors with which to analyze our operating trends and performance.
In computing Adjusted EBITDA, non-GAAP net income, and non-GAAP
EPS, we exclude stock-based compensation expense, which represents non-cash charges for the fair value of stock options and other
non-cash awards granted to employees, and acquisition related costs and expenses. For Adjusted EBITDA we also exclude depreciation,
amortization, and provision for income taxes. Because of varying available valuation methodologies, subjective assumptions, and
the variety of equity instruments that can impact a company's non-cash operating expenses, we believe that providing non-GAAP financial
measures that exclude non-cash expense and non-recurring costs and expenses allows for meaningful comparisons between our core
business operating results and those of other companies, as well as providing us with an important tool for financial and operational
decision-making and for evaluating our own core business operating results over different periods of time.
Our Adjusted EBITDA, non-GAAP net income, and non-GAAP EPS
measures may not provide information that is directly comparable to that provided by other companies in our industry, as other
companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual
items. Our Adjusted EBITDA, non-GAAP Net income, and non-GAAP EPS are not measurements of financial performance under GAAP, and
should not be considered as an alternative to operating or net income or as an indication of operating performance or any other
measure of performance derived in accordance with GAAP. We do not consider these non-GAAP measures to be a substitute for, or superior
to, the information provided by GAAP financial results. A reconciliation of specific adjustments to GAAP results is provided in
the last two tables at the end of this press release.
# # #
(tables attached)
RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) (In thousands, except share and per share amounts)
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Three Months Ended
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January 31,
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2020
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2019
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Net sales
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$
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12,414
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$
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10,647
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Cost of sales
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9,161
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7,502
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Gross profit
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3,253
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3,145
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Operating expenses:
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Engineering
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596
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320
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Selling and general
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2,656
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2,039
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Total operating expenses
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3,252
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2,359
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Operating income
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1
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786
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Other income
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11
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22
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Income before provision/(benefit) for income taxes
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12
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808
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Provision/(benefit) for income taxes
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(14
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)
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168
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Net income
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$
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26
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$
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640
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Net income per share - Basic
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$
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0.00
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$
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0.07
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Net income per share - Diluted
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$
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0.00
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$
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0.06
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Weighted average shares outstanding:
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Basic
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9,564,533
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9,309,454
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Diluted
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9,873,336
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9,838,154
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RF INDUSTRIES, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
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Jan. 31,
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Oct. 31,
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2020
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2019
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ASSETS
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(unaudited)
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(audited)
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CURRENT ASSETS
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Cash and cash equivalents
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$
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14,390
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$
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12,540
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Trade accounts receivable, net
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5,745
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12,190
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Inventories, net
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8,390
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8,245
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Other current assets
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721
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685
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TOTAL CURRENT ASSETS
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29,246
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33,660
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Property and equipment, net
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867
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839
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Right of use asset, net
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2,024
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--
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Goodwill
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2,753
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1,340
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Amortizable intangible assets, net
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3,700
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1,092
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Non-amortizable intangible assets
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1,174
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657
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Other assets
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68
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112
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TOTAL ASSETS
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$
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39,832
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$
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37,700
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
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Accounts payable
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$
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1,220
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$
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2,406
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Accrued expenses
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3,311
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3,653
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Income taxes payable
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--
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21
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Other current liabilities
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933
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--
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TOTAL CURRENT LIABILITIES
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5,464
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6,080
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Deferred tax liabilities
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18
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--
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Operating lease liabilities
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1,191
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--
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Other long-term liabilities
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1,215
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87
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TOTAL LIABILITIES
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7,888
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6,167
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS' EQUITY
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Common stock, authorized 20,000,000 shares of $0.01 par value;
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9,745,135 and 9,462,267 shares issued and outstanding at
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January 31, 2020 and October 31, 2019, respectively
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98
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95
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Additional paid-in capital
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22,524
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21,949
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Retained earnings
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9,322
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9,489
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TOTAL STOCKHOLDERS' EQUITY
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31,944
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31,533
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$
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39,832
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$
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37,700
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RF INDUSTRIES, LTD. AND SUBSIDIARIES
Unaudited Reconciliation of GAAP to non-GAAP Net Income
(In thousands, except per share amounts)
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Three Months Ended January 31,
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2020
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2019
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Net income
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$
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26
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$
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640
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Stock-based compensation expense
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187
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114
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Acquisition-related costs
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28
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4
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Non-GAAP net income
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$
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241
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$
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758
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Non-GAAP net income per share:
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Basic
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$
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0.03
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$
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0.08
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Diluted
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$
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0.02
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$
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0.08
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Weighted average shares outstanding
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Basic
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9,565
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9,309
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Diluted
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9,873
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9,838
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RF INDUSTRIES, LTD. AND SUBSIDIARIES
Unaudited Reconciliation of Net Income to Adjusted EBITDA
(In thousands)
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Three Months Ended January 31,
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2020
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2019
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|
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Net income
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$
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26
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|
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$
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640
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Stock-based compensation expense
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187
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|
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114
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Acquisition-related costs
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28
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4
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Amortization expense
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173
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69
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Depreciation expense
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82
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68
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Other income
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(11
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)
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(22
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)
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Provision for income taxes
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(14
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)
|
|
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168
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|
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Adjusted EBITDA
|
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$
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471
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|
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$
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1,041
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Exhibit 99.1
© RF Industries Ltd. | 1 Leading Designer and Manufacturer of Interconnect Products NASDAQ: RFIL
© RF Industries Ltd. | 2 Forward - looking statements contained in this presentation involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward - looking statements . Forward - looking statements may include, but are not limited to, statements relating to our outlook or expectations for earnings, revenues, expenses, asset quality, volatility of our common stock, financial condition or other future financial or business performance, strategies, expectations, or business prospects, or the impact of legal, regulatory or supervisory matters on our business, results of operations or financial condition . Forward - looking statements can be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions . Forward - looking statements reflect our judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward - looking statements . Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in our Form 10 - K filed with the SEC and any subsequent filings under the Exchange Act and in our other SEC filings . Additionally, there may be other factors that could preclude us from realizing the predictions made in the forward - looking statements . We operate in a continually changing business environment and new factors emerge from time to time . We cannot predict such factors or assess the impact, if any, of such factors on our financial position or results of operations . All forward - looking statements included in this presentation speak only as of the date of this presentation and you are cautioned not to place undue reliance on any such forward - looking statements . Except as required by law, we undertake no obligation to publicly update or release any revisions to these forward - looking statements to reflect any events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events . This presentation does not constitute an offer to sell or buy securities, and no offer or sale will be made in any state or jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction . Safe Harbor Statement
© RF Industries Ltd. | 3 Executive Team Mark Turfler Senior Vice President and CFO ▪ Joined: June 2013 Robert Dawson President and CEO ▪ Joined: July 2017 ▪ Added to Board: July 2018 Prior Industry Experience 2014 - 2016 President and CEO, Vision Technology Services 2007 – 2013 TESSCO Technologies, VP of Sales 2000 – 2007 NetForce Solutions (acquired by TESSCO) Finance Experience 35 years of accounting and finance experience PricewaterhouseCoopers Certified Public Accountant Wireless/Telecom industry experience
© RF Industries Ltd. | 4 We’ve Seen A Significant Improvement In Our Results! $21.6 $23.0 $50.2 $55.3 2016 2017 2018 2019 Revenue (in millions) ($4.1) $0.4 $5.8 $3.5 2016 2017 2018 2019 Net Income (in millions)
© RF Industries Ltd. | 5 : RFIL Headquarters San Diego, CA 5 production locations (3 Northeast, 2 Southwest) Corning Gold, ISO 9001: 2008 Certified Founded 1979 IPO 1984 Employees 300 Statistics 3/11/20 Stock Price $5.26 52 Week Low - High $5.25 / $8.89 Avg. Vol. (3 months) 34K Shares Outstanding 9.6M EV to Sales (TTM) .83x Insider Holdings 14% Institutional Holdings 37% Market Cap $58M Return on Capital (TTM) 8% Return on Equity (TTM) 12% Customers: Distribution 4,000 – 5,000 OEM 450+ Dividend: 39 consecutive quarterly dividends o f at least $0.02 / share Fiscal Year End Oct. 31
© RF Industries Ltd. | 6 RF Coaxial Connectors RF Coaxial Adapters Low PIM Products Passive Components Coaxial Cable Assemblies Fiber Optic Cable Assemblies FTTA Cable Assemblies Wiring Harnesses
© RF Industries Ltd. | 7 Cell Tower Site Materials Cable assemblies and components for small cell applications to support densification of 4G and 5G Networks. Small Cells Distributed Antenna System (DAS) Design, Engineer and Build Hybrid Fiber & Power Cables for 4G and 5G Network Deployment (You can’t buy this stuff “off the shelf”!) Our components are used to provide enhanced wireless coverage in commercial office buildings, offices, hotels, hospitals, stadiums, and more.
© RF Industries Ltd. | 8 Advanced Oilfield Technology Aerospace Build control wiring for drilling equipment Build & test control stick wiring for flight control stick for military helicopters Transportation Transit doors and gates - designed for light and heavy rail applications
© RF Industries Ltd. | 9 N.A. Cable Assembly Market = $33.4B ₂ Global Connector Market = $80.4B by 2023 ₁ 5G Build - Out Spend = $130B in 2024 ₃ DAS Market = $8B growing to $18B in 2026 ⁴ 1 Source: Lucintel , February 2018, 2 Source: Bishop & Associates, May 2017, 3 Source: Deloitte, July 2017, 4 Source: Transparency Market Res ear ch, August 2018, 5 Source: CTIA Small Cell= 80% of future infrastructure deployments will be small cells. 5 “5G will transform industries and should be viewed as a business strategy for all.” - Steve Mollenkopf, CEO, Qualcomm
© RF Industries Ltd. | 10 Distribution – 60% Biggest opportunities are in distribution centric markets (force multiplier) • Access to thousands of customers • No A/R collection issues (99% of sales are in US and Canada) • No inventory obsolescence issues • Focus on what we do best Direct/OEM – 40% • Highly customized cable assemblies and wiring harnesses that “disappear” into other people’s products • Leverage our long standing relationships with these blue chip customers to be a part of their long - term business
© RF Industries Ltd. | 11 Distribution Partners OEM Customers
Our Value Proposition and Differentiation Who’s Our Competition? Large Competitors Small Competitors Local/Regional ▪ Fast – Faster lead times than larger competitors ▪ Flexible – Customized product (labor intensive; can’t buy off the shelf) ▪ High Quality – High quality product (ISO 9001 certified; Corning Gold House certified, no failures in the field) ▪ Competitive Pricing – Typically has similar or lower pricing than the competition © January 9, 2019 RF Industries Ltd. | 12 Multinational with Broad Offering
© RF Industries Ltd. | 13 Annual Financial Performance (ended Oct. 31) $21.6 $23.0 $50.2 $55.3 2016 2017 2018 2019 Revenue (in millions) ($4.1) $0.4 $5.8 $3.5 2016 2017 2018 2019 Net Income (in millions) - 4% +6% +118% +10% Year - over - Year Growth Rate - 19.0% 1.7% 11.6% 6.3% Net Margin ($0.46) $0.04 $0.61 $0.36 2016 2017 2018 2019 Diluted EPS from Net Income - 518% +109% +1425% - 41% Year - over - Year Growth Rate
© RF Industries Ltd. | 14 Quarterly Revenue Trend $4.8 $5.3 $5.9 $7.0 $8.0 $20.5 $11.8 $9.9 $10.6 $13.6 $15.5 $15.5 $12.4 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Revenue (in millions) 0.0% - 1.9% +5.4% +20.7% +66.7% +286.8% +100.0% +41.4% +32.5% - 33.7% +31.4% +56.6% +17.0% Year - over - Year Growth Rate
© RF Industries Ltd. | 15 Q1 Financial Performance $4.8 $8.0 $10.6 $12.4 2017 2018 2019 2020 Revenue (in millions) ($194) $454 $640 $26 2017 2018 2019 2020 Net Income (in thousands) +1.9% - 0.3% +66.1% +33.6% Year - over - Year Growth Rate - 4.4% 3.8% 6.0% 0.2% Net Margin ($0.02) $0.05 $0.07 $0.00 2017 2018 2019 2020 Diluted EPS - 50% +350% +40% - 100% Year - over - Year Growth Rate
© RF Industries Ltd. | 16 Q1 Financial Performance (Non - GAAP Net Income and Adjusted EBITDA) ($303) ($143) $529 $758 $241 2016 2017 2018 2019 2020 Non - GAAP Net Income (1) (in thousands) ($482) ($140) $671 $1,041 $471 2016 2017 2018 2019 2020 Adjusted EBITDA (2) (in thousands) - 259.5% +52.8% +469.9% +33.6% - 68.2% Year - over - Year Growth Rate - 359.0% +71.0% +579.3% +55.1% - 54.8% Year - over - Year Growth Rate (1) See reconciliation to net income on slide #32. (2) See reconciliation to net income on slide #33
© RF Industries Ltd. | 17 $5.2 $16.3 $12.5 $14.4 2017 2018 2019 Q1 2020 Cash Balances (in millions) Balance Sheet Supports Growth $ in millions Oct.31, 2018 Oct. 31, 2019 Jan. 31, 2020 Cash $16.3 $12.5 $14.4 Total Assets $32.5 $ 37.7 $39.8 Stockholders’ Equity $27.8 $ 31.5 $31.9 Total Debt $0 $0 $0
© RF Industries Ltd. | 18 ▪ Organic ▪ Run rate business ▪ Core fast - turn production ▪ 10 - 15% annual growth ▪ Project business transitioning to long - term relationships ▪ Get our product spec’d in customer projects and included on customer BOMs ▪ Deliver a quality, customized solution where others cannot ▪ Convert this into run rate business ▪ Inorganic ▪ Active M&A mode ▪ Diversify customer base ▪ Good cultural fit with management talent ▪ Reliable proprietary product that does not overlap what we currently sell ▪ Relevant customer base/market segment
© RF Industries Ltd. | 19 C Enterprises – Acquisition announced March 11, 2019 ; Based in Vista, California ▪ West coast fiber optic manufacturing capabilities ▪ Corning Gold certificate member ; 2019 revenues of $ 7.2M (for 7 ½ months) ▪ Expected to be accretive to earnings in fiscal 2020 ; Brings strong fiber optic and copper product offering that is scalable and complementary ; Strengthens our small cell product offer to wireless carrier market
© RF Industries Ltd. | 20 Schroff Tech – Acquisition announced November 4, 2019 ; Based in Rhode Island ▪ Manufacturer of products serving the high growth wireless, telecom and cable markets ▪ Two primary products: ▪ Energy efficient cooling system for wireless base stations ▪ Family of custom designed, pole ready 5G small cell integrated enclosures ; 2019 unaudited first nine - months revenues of $5.8M ▪ Expected to be immediately accretive to earnings ; Strengthens our small cell product offer to wireless carrier market
© RF Industries Ltd. | 21 ; Building a platform for long term growth ; Deliver more consistent and predictable results ; 3 - year plan to grow to $100 million in sales ; Organic growth – low to mid - teens annual revenue growth – leveraging distribution and OEM relationships ; Inorganic growth – remain committed to adding another $20 - $30 million in sales through further strategic M&A
© RF Industries Ltd. | 22 ; Our products are everywhere and make lots of things work ; Recent results have delivered revenue growth plus a long - standing dividend ; Our new sales model is driving growth ; We’re faster and more flexible while delivering high quality customized products and solutions ; We have the promise of 5G ahead of us in the wireless market
© RF Industries Ltd. | 23 RF Industries, Ltd. Mark Turfler SVP/CFO (858) 549 - 6340 rfi@rfindustries.com MKR Investor Relations Todd Kehrli Analyst/Investor Contact (323) 468 - 2300 rfil@mkr - group.com
© RF Industries Ltd. | 24
© RF Industries Ltd. | 25
Income Statement © January 9, 2019 RF Industries Ltd. | 26 2020 2019 2018 2017 2016 Q1 Full Year Full Year Full Year Full Year (in millions) Unaudited Audited Audited Audited Audited Net sales 12.4$ 55.3$ 50.2$ 23.0$ 21.6$ Cost of sales 9.2 39.7 33.1 16.0 15.3 Gross profit 3.2 15.6 17.1 7.0 6.3 Operating expenses: Engineering 0.6 1.5 1.5 0.8 0.8 Selling and general 2.6 9.6 8.1 6.0 7.9 Goodwill and other intangible asset impairment - - - - 2.8 Total operating expenses 3.2 11.1 9.6 6.8 11.5 Pretax income (loss) - 4.5 7.5 0.2 (5.2) Provision (benefit) for income taxes - 1.0 1.5 - (0.7) Income (loss) from continuing operations - 3.5 6.0 0.2 (4.5) Income (loss) from discontinued operations, net of tax - - (0.2) 0.2 0.4 Consolidated net income (loss) - 3.5 5.8 0.4 (4.1) Diluted earnings per share Continuing operations -$ 0.36$ 0.63$ 0.02$ (0.51)$ Discontinued operations - - (0.02) 0.02 0.05 Net income (loss) per share -$ 0.36$ 0.61$ 0.04$ (0.46)$ Weighted average shares outstanding Diluted 9,873,336 9,854,604 9,593,066 8,915,764 8,786,510
Balance Sheet © January 9, 2019 RF Industries Ltd. | 27 January 31, 2020 2019 2018 2017 2016 (in millions) Unaudited Audited Audited Audited Audited ASSETS: Current assets: Cash and cash equivalents 14.4$ 12.5$ 16.3$ 5.2$ 4.3$ Trade accounts receivable, net 5.7 12.2 4.3 2.9 2.5 Inventories 8.4 8.3 7.1 5.6 5.4 Other current assets 0.7 0.7 0.8 0.5 1.5 Current assets held for sale - - - 2.6 3.2 Total current assets 29.2 33.7 28.5 16.8 16.9 Non-current assets: Property and equipment, net 0.9 0.8 0.6 0.6 0.6 Operating lease ROU assets, net 2.0 - - - - Goodwill 2.7 1.3 1.3 1.3 1.3 Intangibles, net 3.7 1.1 1.4 1.6 1.9 Non-amortizable intangibles 1.2 0.7 0.7 0.7 0.7 Other LT assets 0.1 0.1 - 0.1 0.1 Noncurrent assets held for sale - - - 4.0 4.4 Total Assets 39.8$ 37.7$ 32.5$ 25.1$ 25.9$ LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable 1.2$ 2.4$ 1.3$ 1.0$ 0.6$ Accrued expenses 3.3 3.7 3.4 1.8 2.3 Other current liabilities 1.0 - - - - Current liabilities held for sale - - - 0.8 1.1 Total current liabilities 5.5 6.1 4.7 3.6 4.0 Non-current liabilities: Deferred tax liabilities - - - 0.1 0.4 Operating lease liabilities 1.1 - - - - Other long-term liabilities 1.3 0.1 - - 0.1 Total liabilities 7.9 6.2 4.7 3.7 4.5 Equity: Common stock 0.1 0.1 0.1 0.1 0.1 Additional paid-in capital 22.5 21.9 21.0 19.7 19.4 Retained earnings 9.3 9.5 6.7 1.6 1.9 Total Equity 31.9 31.5 27.8 21.4 21.4 Total Liabilities & Stockholders' Equity 39.8$ 37.7$ 32.5$ 25.1$ 25.9$ October 31,
Statement of Cash Flows © January 9, 2019 RF Industries Ltd. | 28 January 31, 2020 2019 2018 2017 2016 (in millions) Unaudited Audited Audited Audited Audited Operating Activities: Consolidated net income (loss) -$ 3.5$ 5.8$ 0.4$ (4.1)$ Net income from discontinued operations - Comnet -$ -$ (0.2)$ 0.2$ 0.4$ Net income (loss) from continuing operations -$ 3.5$ 6.0$ 0.2$ (4.5)$ Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 0.2 0.5 0.5 0.5 0.6 Goodwill impairment - - - - 2.8 Inventory write-off - - - - 0.2 Gain on Disposal of fixed assets - - - - 0.1 Stock based compensation expense 0.2 0.3 0.2 0.2 0.2 Deferred Income Taxes 0.1 - (0.1) (0.3) (0.3) Excess tax benefits from stock based compensation - - - - (0.1) Changes in operating assets and liabilities: Trade accounts receivable 6.7 (6.7) (1.3) (0.4) 0.3 Inventories 0.6 (0.6) (1.5) (0.2) 0.6 Other current assets - 0.3 (0.3) 0.9 (0.7) Right of use assets 0.1 - - - - Other long-term assets - - - 0.1 (0.1) Accounts payable (1.3) 0.1 0.3 0.4 (0.4) Income tax receivable/payable - - - - 0.2 Accrued expenses (0.9) (0.2) 1.5 (0.5) - Other long-term liabilities (0.1) 0.1 - (0.1) (0.2) Net cash provided by (used in) operating activities from continuing operations 5.6 (2.7) 5.3 0.8 (1.3) Net cash provided by operating activities from discontinued operations - - 0.9 0.8 0.1 Investing Activities: Proceeds from notes receivable from stockholder - - - - 0.1 Proceeds from sale of inventory - - - - 0.3 Capital expenditures - (0.5) (0.2) (0.2) (0.3) Proceeds from sale of Comnet - - 4.2 - - Acquisition of business (C Enterprises), net of cash acquired - (0.4) 4.2 - - Acquisition of business (Schrofftech), net of cash acquired (3.9) - - - - Net cash provided by (used in) investing activities from continuing operations (3.9) (0.9) 8.2 (0.2) 0.1 Net cash provided by (used in) investing activities from discontinued operations - - (0.3) - (0.1) Financing Activities: Proceeds from exercise of stock options 0.4 0.6 1.1 - - Purchase of treasury stock - - - - (0.2) Excess tax benefits from stock based compensation - - - - 0.2 Dividends paid (0.2) (0.8) (0.7) (0.7) (1.1) Net cash provided by (used in) financing activities 0.2 (0.2) 0.4 (0.7) (1.1) Net increase (decrease) in cash and cash equivalents 1.9 (3.8) 10.3 0.7 (2.3) Cash and cash equivalents at beginning of period 12.5 16.3 6.0 5.3 7.6 Cash and cash equivalents at end of period 14.4 12.5 16.3 6.0 5.3 Less: cash and cash equivalents of discontinued operations - Comnet - - - 0.8 1.0 Cash and cash equivalents at end of period 14.4$ 12.5$ 16.3$ 5.2$ 4.3$ October 31,
Income Statement (Quarterly) © January 9, 2019 RF Industries Ltd. | 29 2020 Q1 Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD (in millions) Unaudited Audited Audited Net sales 12.4$ 10.6$ 13.6$ 15.5$ 15.6$ 55.3$ 8.0$ 20.5$ 11.8$ 9.9$ 50.2$ Cost of sales 9.2 7.5 9.5 11.2 11.5 39.7 5.5 12.9 7.8 6.9 33.1 Gross profit 3.2 3.1 4.1 4.3 4.1 15.6 2.5 7.6 4.0 3.0 17.1 Operating expenses: Engineering 0.6 0.3 0.3 0.4 0.4 1.4 0.3 0.6 0.3 0.3 1.5 Selling and general 2.6 2.0 2.4 2.6 2.6 9.6 1.8 3.1 1.7 1.5 8.1 Total operating expenses 3.2 2.3 2.7 3.0 3.0 11.0 2.1 3.7 2.0 1.8 9.6 Pretax income - 0.8 1.4 1.3 1.1 4.6 0.4 3.9 2.0 1.2 7.5 Provision for income taxes - 0.2 0.3 0.3 0.3 1.1 - 0.8 0.4 0.3 1.5 Income (loss) from continuing operations - 0.6 1.1 1.0 0.8 3.5 0.4 3.1 1.6 0.9 6.0 Income from disc. operations, net of tax - - - - - - 0.1 0.1 0.1 (0.5) (0.2) Consolidated net income (loss) - 0.6 1.1 1.0 0.8 3.5 0.5 3.2 1.7 0.4 5.8 Diluted earnings per share Continuing operations -$ 0.07$ 0.11$ 0.11$ 0.08$ 0.36$ 0.04$ 0.33$ 0.16$ 0.09$ 0.63$ Discontinued operations - - - - - - 0.01 0.01 0.01 (0.04) (0.02)$ Net income (loss) per share -$ 0.07$ 0.11$ 0.11$ 0.08$ 0.36$ 0.05$ 0.34$ 0.17$ 0.05$ 0.61$ Weighted average shares outstanding Diluted (in thousands) 9,873 9,838 9,838 9,873 9,869 9,854 9,099 9,386 9,730 9,876 9,593 2018 Unaudited 2019 Unaudited
Balance Sheet (Quarterly) © January 9, 2019 RF Industries Ltd. | 30 2020 Jan. 31 Jan. 31 Apr. 30 Jul. 31 Oct. 31 Jan. 31 Apr. 30 Jul. 31 Oct. 31 (in millions) Unaudited Audited Audited ASSETS: Current assets: Cash and cash equivalents 14.4$ 14.0$ 13.9$ 13.3$ 12.5$ 4.9$ 7.1$ 10.5$ 16.3$ Trade accounts receivable, net 5.7 5.6 7.9 9.9 12.2 4.0 10.9 5.1 4.3 Inventories 8.4 8.2 7.9 8.1 8.3 6.3 6.6 6.3 7.1 Other current assets 0.7 0.8 0.7 0.7 0.7 0.7 0.5 0.8 0.8 Current assets held for sale - - - - - 2.9 2.8 2.5 - Total current assets 29.2 28.6 30.4 32.0 33.7 18.8 27.9 25.2 28.5 Non-current assets: Property and equipment, net 0.9 0.6 0.7 0.8 0.8 0.5 0.5 0.5 - Operating lease ROU assets, net 2.0 - - - - - - - - Goodwill 2.7 1.3 1.3 1.3 1.3 1.3 1.3 1.3 0.6 Intangibles, net 3.7 1.3 1.2 1.2 1.1 1.6 1.5 1.4 1.3 Non-amortizable intangibles 1.2 0.7 0.7 0.7 0.7 0.7 0.7 0.7 1.4 Other LT assets 0.1 - 0.1 0.1 0.1 - - - 0.7 Noncurrent asset held for sale - - - - - 3.9 3.8 3.8 - Total Assets 39.8$ 32.5$ 34.4$ 36.1$ 37.7$ 26.8$ 35.7$ 32.9$ 32.5$ LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable 1.2$ 1.7$ 1.6$ 2.4$ 2.4$ 1.6$ 5.7$ 1.4$ 1.3$ Accrued expenses 3.3 2.1 3.1 3.0 3.7 2.4 4.1 3.2 3.4 Other current liabilities 1.0 - - - - - - - - Current liabilities held for sale - - - - - 0.8 0.6 0.7 - Total current liabilities 5.5 3.8 4.7 5.4 6.1 4.8 10.4 5.3 4.7 Non-current liabilities: Deferred tax liabilities - - - - - 0.1 0.1 0.2 - Operating lease liabilities 1.1 - - - - - - - - Other long-term liabilities 1.3 - 0.1 0.1 0.1 - - - - Total liabilities 7.9 3.8 4.8 5.5 6.2 4.9 10.5 5.5 4.7 Equity: Common stock 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Additional paid-in capital 22.5 21.4 21.5 21.6 21.9 19.9 20.2 20.9 21.0 Retained earnings 9.3 7.2 8.0 8.9 9.5 1.9 4.9 6.4 6.7 Total Equity 31.9 28.7 29.6 30.6 31.5 21.9 25.2 27.4 27.8 Total Liabilities & Stockholders' Equity 39.8$ 32.5$ 34.4$ 36.1$ 37.7$ 26.8$ 35.7$ 32.9$ 32.5$ Unaudited 2018 Unaudited 2019
Statement of Cash Flows (Quarterly) © January 9, 2019 RF Industries Ltd. | 31 2020 Q1 Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD (in millions) Unaudited Audited Audited Operating Activities: Consolidated net income (loss) -$ 0.6$ 1.1$ 1.0$ 0.8$ 3.5$ 0.5$ 3.2$ 1.7$ 0.4$ 5.8$ Net income from discontinued operations - Comnet -$ -$ -$ -$ -$ -$ 0.1$ 0.1$ 0.1$ (0.5)$ (0.2)$ Net income (loss) from continuing operations -$ 0.6$ 1.1$ 1.0$ 0.8$ 3.5$ 0.4$ 3.1$ 1.6$ 0.9$ 6.0$ Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 0.2 0.2 0.1 0.1 0.1 0.5 0.1 0.1 0.2 0.1 0.5 Stock based compensation expense 0.2 0.1 0.1 0.1 - 0.3 0.1 - 0.1 - 0.2 Deferred Income Taxes 0.1 - - - - - - - 0.1 (0.2) (0.1) Changes in operating assets and liabilities: Trade accounts receivable 6.7 (1.4) (1.0) (2.0) (2.3) (6.7) (1.1) (6.9) 5.8 0.9 (1.3) Inventories 0.6 (1.0) 0.7 (0.2) (0.1) (0.6) (0.8) (0.3) 0.3 (0.7) (1.5) Other current assets - 0.1 0.1 - 0.1 0.3 (0.2) 0.2 (0.3) - (0.3) Right of use assets 0.1 - - - - - - - - - - Accounts payable (1.3) 0.4 (1.1) 0.8 - 0.1 0.6 4.1 (4.3) (0.1) 0.3 Income tax receivable/payable - - - - - - - 0.4 (0.5) 0.1 - Accrued expenses (0.9) (1.3) 0.5 (0.1) 0.7 (0.2) 0.6 1.3 (0.5) 0.1 1.5 Other long-term liabilities (0.1) - - 0.1 - 0.1 - - - - - Net cash provided by (used in) operating activities from continuing ops. 5.6 (2.3) 0.5 (0.2) (0.7) (2.7) (0.3) 2.0 2.5 1.1 5.3 Net cash provided by operating activities from discontinued ops. - - - - - - 0.1 0.4 0.5 (0.1) 0.9 Investing Activities: Capital expenditures - (0.1) (0.1) (0.2) (0.1) (0.5) - - (0.1) (0.1) (0.2) Proceeds from sale of Comnet - - - - - - - - - 4.2 4.2 Acquisition of business (C Enterprises), net of cash acquired - - (0.4) - - (0.4) - - - - - Acquisition of business (Schrofftech), net of cash acquired (3.9) - - - - - - - - - - Net cash used in investing activities from continuing operations (3.9) (0.1) (0.5) (0.2) (0.1) (0.9) - - (0.1) 4.1 4.0 Net cash used in investing activities from discontinued operations - - - - - - - - - (0.3) (0.3) Financing Activities: Proceeds from exercise of stock options 0.4 0.3 0.1 - 0.2 0.6 0.2 0.3 0.5 0.1 1.1 Dividends paid (0.2) (0.2) (0.2) (0.2) (0.2) (0.8) (0.1) (0.2) (0.2) (0.2) (0.7) Net cash provided by (used in) financing activities 0.2 0.1 (0.1) (0.2) - (0.2) 0.1 0.1 0.3 (0.1) 0.4 Net increase (decrease) in cash and cash equivalents 1.9 (2.3) (0.1) (0.6) (0.8) (3.8) (0.1) 2.5 3.2 4.7 10.3 Cash and cash equivalents at beginning of period 12.5 16.3 14.0 13.9 13.3 16.3 6.0 5.9 8.5 11.6 6.0 Cash and cash equivalents at end of period 14.4 14.0 13.9 13.3 12.5 12.5 5.9 8.4 11.7 16.3 16.3 Less: cash and cash equivalents of discontinued operations - Comnet - - - - - - 1.0 1.3 1.2 - - Cash and cash equivalents at end of period 14.4$ 14.0$ 13.9$ 13.3$ 12.5$ 12.5$ 4.9$ 7.1$ 10.5$ 16.3$ 16.3$ 2018 Unaudited 2019 Unaudited
© January 9, 2019 RF Industries Ltd. | 32 2020 2019 2018 2017 2016 (in thousands) Net income 26$ 640$ 454$ (194)$ (354)$ Stock-based compensation expense 187 114 75 51 51 Acquisition-related costs 28 4 - - - Non-GAAP net income 241$ 758$ 529$ (143)$ (303)$ Non-GAAP net income per share: Basic 0.03$ 0.08$ 0.06$ (0.02)$ (0.03)$ Diluted 0.02$ 0.08$ 0.06$ (0.02)$ (0.03)$ Weighted average shares outstanding Basic 9,565 9,309 8,880 8,835 8,717 Diluted 9,873 9,838 9,099 8,835 8,717 Q1 Unaudited Reconciliation of GAAP to Non - GAAP Net Income
Reconciliation of Net Income to Adjusted EBITDA © January 9, 2019 RF Industries Ltd. | 33 2020 2019 2018 2017 2016 (in thousands) Net income 26$ 640$ 454$ (194)$ (354)$ Stock-based compensation expense 187 114 75 51 51 Acquisition-related costs 28 4 - - - Amortization expense 173 69 69 69 94 Depreciation expense 82 68 58 58 90 Other income (11) (22) (2) (20) - Provision for income taxes (14) 168 56 (87) (256) Income from discontinued operations - - (39) (17) (107) Adjusted EBITDA 471$ 1,041$ 671$ (140)$ (482)$ Q1 Unaudited