Rob Dawson – President and Chief Executive Officer Mark Turfler – Chief Financial Officer.

Analysts:.

Ladies and gentlemen, thank you for standing by. Welcome to the RF Industries Fourth Quarter and Fiscal 2017 Results Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

[Operator Instructions] As a reminder, this conference call is being recorded today Wednesday January 24, 2018. Please note that except for the historical statements, statements in this release, may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.

When used, the words anticipates, beliefs, expects, intends, future and other similar expressions, identify forward-looking statements.

These forward-looking statements reflect management’s current views with respect to future events and financial performance and are subject to risks and uncertainties and actual results may differ materially from the outcomes contained in any forward-looking statements.

Factors that could cause these forward-looking statements to differ from actual results include delays in development, marketing or sales of new products and other risks and uncertainties discussed in the Company’s periodic reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission.

RF Industries undertakes no obligation to update or revise any forward-looking statements. I will now turn the conference over to Rob Dawson, President and Chief Executive Officer; and Mark Turfler, Chief Financial Officer of RF Industries. Rob, you may begin..

Thank you, Anna. Good afternoon everyone. Welcome to the first of what will be the company’s regular quarterly earnings calls. We are going to use this forum to communicate what we’re doing here at RFI and to keep investors, customers and employees up to date with our business developments.

With me is Mark Turfler, our CFO, who will review financial and other business highlights here in a few minutes. The company returned to profitability in fiscal 2017 achieving full year growth in net revenue, gross profit, operating and net income compared to 2016.

As a result, we achieved earnings of $0.04 per share for fiscal 2017 compared to a net loss in fiscal 2016. While sales increased modestly compared to fiscal 2016, selling and general expenses dropped 21% contributing to a $5 million improvements in operating profitability compared to fiscal 2016.

We finished the year with a solid fourth quarter with higher sales for the fourth consecutive quarter and year-over-year. Fourth quarter revenue increased 10% and gross profit increased to 30% of sales from 24% of sales in the fourth quarter last year.

Control of operating expenses significantly contributed to higher operating profits, which resulted in a $3.8 million swing in profitability, compared to the operating loss in the fourth quarter last year. By comparison, to our previous third quarter operating income jumped 161% and net income increased 59%.

Mark will have more details on the financials shortly. Fourth quarter net income improved to $0.03 per share over a loss of $0.34 per share in the final quarter of fiscal 2016. Cash flow increased and we finished the fiscal year with higher working capital, cash and cash equivalents than in fiscal 2016.

The Company also recently paid a regular quarterly dividend of $0.02 per share, our 30th consecutive quarterly dividend. For each quarter of fiscal 2017, the Company achieved successive sales increases over the previous quarter. The fourth quarter net sales of $8.9 million also represents the highest quarterly sales achieved by the Company since 2013.

Our focus here are at RF Industries has been to increase sales and maintain the cost controls that were implemented last year. We did that in the fourth quarter with improved operating margins and increased operating cash flows. I have reached my six month mark with RFI last week. It has been busy and eventful.

We’ve accomplished a lot and we are happy to have a chance to finally share some of that with you as we have been quite for a little while. I want to take a few minutes early in the call to share the key focus areas and strategies that we have been working on. In general, we are building a platform for long-term growth.

I’d like to take a long term view of what’s possible for the business and then build the culture and strategies to fuel that growth. This Company has been around for nearly 40 years and has a solid reputation for incredibly quality products, good people, flexible responsiveness to customers. So really this is about scaling the business.

The few areas where we are focused at the moment culture and a go-to-market strategy. Let me give a little detail on each of those. So culture, this is about a growth culture, we want positive energy and the right people in the right seats taking accountability to help us grow.

While accountability is a great word to say I think we feel pretty comfortable that for us that means aligning on a goal, deciding who owns it. The person who is accountable, deciding what success looks like, having a plan to achieve that success and then measuring against it frequently.

That has forced us into a world of communication and collaboration, which is working very well between the different groups within the business. Overall that gives us a desire to be one company.

We’ve over the years made some acquisitions, four different divisions and I think what we have seen in the last six months, we have an opportunity for great synergies between those groups, from a growth perspective. And more importantly, cross selling and sharing the successes between the groups as part of that platform for long-term growth.

On the go-to-market strategy side, this really is about defining the markets where we want to be, deciding on the best channels to get to that market, who owns the relationships to get us into that marketplace that back to that accountability commentaries.

Make sure the product offering is what it means to be to address that market, what are the resource needs the net invest to go after that market. And we’ve leveraged the channel very well to help us do that in the last six months and feel good about the momentum that we’ve built.

Additionally, we need to continue to refine our product strategy and then obviously need to continue to control costs, invest wisely to allow us to scale with the leverage we have in the business.

While today it’s about sharing our Q4 and fiscal 2017 results, as we mentioned in our press release this morning, with these focus areas we’ve built significant momentum in the last several months. It has really helped create a very positive energy within the company.

We remain optimistic about our ability to leverage new go-to-market strategies and channel models, deliver continued profitable growth. Related to that, since our October 31, 2017 fiscal year end, we’ve driven increased net sales across all divisions, which has led to a significant increase in our backlogs.

As a result, we expect double digit growth in net sales for the current quarter ending January 31, 2018, compared to the same period last year. With that I will now turn the call over to Mark for review and discussion of the financial results for the quarter in more detail.

Mark?.

Good afternoon and thank you Rob. As Rob mentioned, our fourth quarter consolidated net sales increased 10%, reaching $8.9 million, compared to $8.1 million in the fourth quarter last year.

The sales growth was primarily led by the RF Connectors segment and resulted in a $0.6 million, or 22% increase to $3.4 million, compared to $2.7 million in the fourth quarter last year.

Over to Custom Cabling, segment sales increased 4% to $5.5 million, from $5.3 million in the fourth quarter of last year, where demand for this segment’s products accelerated appreciably than in the second half of fiscal 2017. Overall gross profits for the fourth quarter increased 37% to $2.7 million from $2.0 million in the same quarter last year.

Most of this increase was related to sales gains during the fourth quarter, which helped raise overall gross margins to 30% of sales from 24% of sales in the same quarter last year.

This improvement was achieved due to higher sales at the Custom Cabling segment, with a modest 4% increase in revenue helped raise gross margin as a percentage of sales to 23% compared to only 14% in the fourth quarter last year.

Gross margins declined modestly at the RF Connector segment to 41% of sales from 43% of sales in the fourth quarter last year, related to higher sales. Setting aside one-time noncash impact of the goodwill and intangible impairment on total operating expenses in the fourth quarter last year.

Operating expenses were positively affected by lower selling and general expenses. Fourth quarter’s selling and general expenses declined, despite the 10% sales gain by $286,000 or 12% to $2 million compared to $2.3 million in the fourth quarter last year and to 23% of sales compared to 28% of sales in the same period last year.

Savings were primarily as a result of cost cutting measures taken during the latter part of fiscal year 2016. The increase in sales, gross margin and lower operating expenses raised operating income by $3.9 million to an operating profit of $0.5 million, compared to an operating loss of $3.4 million in the fourth quarter last year.

Net income for the fourth quarter was $305,000 or $0.03 per diluted share compared to a net loss of $3 million or $0.34 per share. Now turning to the full fiscal year 2017, our net sales for fiscal 2017 increased 2% to $31 million, compared to $30.2 million in fiscal 2016.

RF Connector sales increased 23% to $11.5 million, compared to $9.3 million in fiscal 2016. Although, Custom Cabling sales for fiscal 2017 declined 7% to $19.5 million compared to $20.9 million in fiscal 2016, second half 2017 sales increased $1.3 million or 14% over the first half sales of $9.1 million.

Our overall fiscal 2017 gross margin was essentially unchanged from fiscal 2016 at 28% of sales. This reduction in operating expenses coupled with higher sales, resulted in a $5.1 million swing in operating profit to $0.4 million from an operating loss of $4.7 million in fiscal 2016.

Excluding the one-time goodwill and intangible impairment write off in fiscal 2016, operating income increased $2.2 million to $0.4 million from an operating loss of $1.8 million in fiscal 2016. Net income for fiscal 2017 improved to $0.4 million, or $0.04 per diluted share, compared to a net loss of $4.1 million, or $0.47 per share in fiscal 2016.

Now turning to the balance sheet, we finished fiscal 2017 with over $6 million in cash an increase of $800,000 over the cash balance at the end of fiscal 2016 and an increase of $1.7 million in cash over the second half of 2017.

As of October 2017, our working capital was $13.2 million compared to $12.9 million at the end of fiscal 2016, and the current ratio improved 4.7-to-1 from 4.3-to-1 in fiscal 2016. In addition, we have no outstanding debt or long-term liabilities. This concludes my discussion of the fourth quarter and fiscal 2017 financial results.

Rob?.

Thanks, Mark. To review we see positive results in revenue gross profit and earnings in Q4 and for the full year 2017 compared to a net loss to prior year. Our forth quarter revenue increased for the fourth consecutive quarter and year-over-year. Gross profit improved and operating income also improved compared to the fourth quarter last year.

We’ve achieved improved cash flow, higher working capitals, recently paid our 30th consecutive quarterly dividend. We feel positive about the direction of the business. And as I mentioned earlier in the call, we will continue to focus on our growth culture and go-to-market strategies.

So far the hard work that’s seen in these areas is providing strong momentum as we wrap up out first quarter. And as we discussed, we expect to show double-digit growth over Q1 of last year. With that, Anna, I’d like to open the floor to questions please..

Yes, sir. [Operator Instructions] And there are no questions at this time. [Operator Instructions] And it appears there are no telephone questions..

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All right. Well, thank you, Anna, I appreciate that. And thanks to everybody for giving me a pass on the hard questions on the first call. We’re excited to be able to share what’s going on at the company. We’ve been working very hard. And I appreciate everybody taking the time to join the call this afternoon.

And as always feel free to reach out to us directly if you have other questions or things that you’d like to hear more about. Thanks again for supporting our industry and we look forward to sharing first quarter results mid of March. Have a good day..

Once again, that does conclude today’s conference. We thank you all for your participation. You may now disconnect..