Greetings. Welcome to the RF Industries First Quarter Fiscal 2021 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. [Operator Instructions] Please note this conference is being recorded. I will now like to turn the call over to your host Mr.

Todd Kehrli of MKR Investor Relations. Thank you. You may begin..

Thank you, operator. Good afternoon and welcome to RF Industries first quarter fiscal 2021 financial results conference call. With me on today's call are RF Industries' President and CEO, Rob Dawson; and Senior Vice President and Chief Financial Officer, Peter Yin. Before I turn the call over to Rob and Peter, I'd like to cover a few quick items.

This afternoon, RF Industries issued a press release announcing its first quarter fiscal 2021 financial results. That release is available on the company's website at rfindustries.com. This call is being broadcast live over the Internet for all interested parties and the webcast will be archived in the Investor Relations page of the company's website.

I want to remind everyone that during today's call, management will make forward-looking statements that involve risks and uncertainties. Please note that expect for historical statements, statements on this call today may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.

When use the words anticipate, belief, expect, intend, 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.

Actual results may differ materially from outcomes contained in any forward-looking statements.

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

RF Industries undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout this call, we will be discussing certain non-GAAP financial measures.

Today's earnings release and the related current report on Form 8-K describe the differences between our non-GAAP and GAAP reporting and present the reconciliation between the two for the periods reported in the release. With that, I'll now turn the call over to Rob Dawson, President and Chief Executive Officer.

Rob?.

Thank you Todd. Good afternoon everyone. Welcome to our first quarter fiscal 2021 earnings call. Thanks for joining us today. I hope that everyone is staying safe and healthy.

I'd like to start with some general comments, then I'll briefly discuss our first quarter results, and finally, I'll spend the bulk of my time on what we're seeing now and expect going forward before turning the call over to Peter to give more commentary on the financials.

Although last year has been challenging, we're optimistic about the future of RF Industries and our ability to thrive and return to growth. The recovery in our market segments is taking longer than we'd like and our sales haven't yet returned -- haven't yet returned to where we want them.

And while that means it hasn't been a straight line up into the right in our turnaround story that began at the end of 2017, we believe we set a new baseline of revenue as a platform for the next phase of our growth. And that baseline has nearly doubled the revenue where it was a few years ago.

As you saw in our earnings release this afternoon, sales for the fiscal first quarter came in just above $10 million. As I noted before, fiscal Q1 is always our seasonally toughest quarter, and this year was no exception. Q1 was also a shorter quarter with five less business days compared sequentially to Q4.

With that in mind, sales declined $2.4 million compared to last year's first quarter. But it's important to note that last year's first quarter included $2.7 million in hybrid fiber cable revenue to our large Tier 1 carrier customer, which didn't repeat this year.

So, while we saw an overall decline, we partially filled the revenue hole left by that very concentrated business with sales to a more diverse and long-term customer base.

In Q1, we continue to experience a challenging environment similar to previous quarters with projects and build plan delays on the carrier side of our business and with some OEM customers due to COVID.

Additionally, most venues are still shut down, which impacts our distributed antenna system project business and local and municipal approvals and permits continue to move very slowly impacting small cell and densification build plans. These dynamics continue to have an impact on our revenue in the quarter.

Despite the continuing global pandemic, we were able to serve our customers and continue to invest in new initiatives and manage expenses. Really, the story of the quarter was that a few delayed shipments dragged on our results.

As some orders in the Tier 1 carrier space that we'd expected would shift during the quarter were delayed in the last couple of weeks of January. At these orders shipped, our revenue in Q1 would have been close to last quarter as expected. So, it's really about timing.

With numbers like ours, small movements in shipping dates can cause short-term results to move around wildly. Our results are much easier to understand with a long-term view. One other note, despite having fewer business days in the quarter, our daily shipment average in Q1 was identical to our daily shipment average in Q4.

In other words, we continued to ship at healthier levels than where we were in the middle of last year. Now, versus continuing to talk about the obvious challenges that have slowed us down in our turnaround and growth. Let's turn the page and talk about where we're heading.

From a booking perspective, the good news is we're starting to see increased demand and positive momentum around new business as evidenced by our improved bookings in the quarter and the related growth in our backlog. At the end of Q1, our backlog was $7.1 million, up from $6.3 million at the end of the prior quarter.

Subsequent to quarter end, the backlog has continued to build and now stands at approximately $8.5 million as of today. While not all this backlog will ship immediately, it's a good indicator of future growth and it's now significantly higher than it was mid last year.

While we continue to see slower than expected project spend from the major carriers, whether due to delays or their current reallocation of spend to other things, we believe there's pent-up demand that's starting to show.

The growth in our bookings and backlog is evidence that the pent-up demand is getting more tangible and the pipeline is slowly building.

Our conversations around new business are becoming more fruitful and the tone we're starting to hear from customers in the carrier ecosystem is more urgent around build timelines, though not always including exact dates.

Specifically, we've been starting to see more customer discussions and potential scheduling of projects and CapEx related work as well as some new customer orders. For example, during the quarter, we saw a million dollar order for hybrid fiber cable solutions from a new carrier customer that we've never done direct business with before.

The sales and product team in New York has worked very hard on developing that relationship and it's nice to see real progress. Also, over the last month, we've physically met with all of the Tier 1 wireless carriers as well as some other key players in the space.

Not only do we have relationships there, but we're executing on our sales plans and building on those relationships. We've been talking about specific projects and seeing some initial purchase orders against those discussions that in some cases just get us started.

And in other cases, position us as a trusted adviser and start to move us down the road a good bit further. In many cases, we've moved from discussions into providing first articles of products and solutions and trials in network.

And this is progress that we think can turn into hundreds of thousands or multi millions of dollars of business over the coming years. We're happy to see the cadence moving in the right direction, although it's slower than what we all want. Our backlog doesn't show the impact of true carrier CapEx spend yet.

We're just starting to see the first pieces of that, but we believe that the beginning of the CapEx spend is what will drive our second app revenue growth.

Much of this new activity is because of our increased go-to-market efforts aimed at getting in front of end user customers, influencing them to include us in their plans, and then allowing them to purchase through whatever channel makes the most sense for them.

We're better aligned now with the carrier ecosystem and are actually going to visit with carriers in person that we probably couldn't have visited before, based on our standing in the market. Looking at our various product areas and market segments, our distribution business remained solid and grew during the quarter.

Our RF coax, cable, and connector brand and our CR prices faster and fiber and copper brand together make up our primary offer sold through distribution. And this business is providing an increasing baseline of sales.

In the first quarter, distribution sales accounted for more than 6 million of our 10 million in total sales and we were up about 15% or $800,000 from the first quarter last year.

As I noted before, during the past few years, we've successfully strengthened and increase the diversity of our distribution channels, which has been great benefit to us through this difficult period.

Much of this progress has been masked by higher sales to some concentrated customers, but the healthy base that's been building here is a testament to our strategy.

In our custom cabling, business and wiring harness product areas, at the Cables Unlimited and Rel-Tech brand, we're starting to see some nice size blanket orders and continue to see recovery with our large blue chip customer base, working to get back to more normalized levels.

In this business, we build very involved harnesses and custom cabling designs, primarily for large manufacturers, where our cables are used inside their equipment. Some of the key market segments included here are industrial manufacturers transportation, energy, and defense, in addition to Telecom.

We continue to see a recovery with these customers in the Northeast and we've seen a nice increase in our work with defense contractors and other related customers on projects in the last few months. We expect these opportunities to provide some new revenue streams in the coming quarters. In DAC and small sell, nothing has changed.

Those are still huge opportunities and we expect they will turn into revenue in the second half of the year and beyond. Several carriers just spent a ton of money on new spectrum in the C band auction and they're going to need the infrastructure to make it all work. And eventually, the spend is going to happen.

Has it taken longer than we expected? Yes, of course. But it's not a matter of if; it's a matter of when, especially on a network densification side. As I've discussed on the past couple of calls, the big U.S.

carriers have been spending on other projects or deployment models in the last few quarters and the shift in network demand related to remote work has increased this focus away from mobile densification plays like small cells. As a result, we haven't yet seen the large CapEx that we expect for small cell deployments.

We believe that with the recent C band auction spend, there will be increased demand for network augmentation using these newly available frequencies to complement the millimeter wave deployments that have been ongoing but have had their share of technical challenges. More than $81 billion was spent on C band spectrum.

Several industry experts have noticed that the millimeter wave performance issue and the C band auction have given carriers a reason to pause and reexamine their deployment plans. Carriers are trying to also determine how to monetize 5G. To-date 5G deployments have not always meant additional subscriber revenue. This is also delayed small cell spend.

In the end, this could actually be a good thing for us. It's given us time to build out our offering and gain the right positioning with key players in the small cell ecosystem. We're in a much better position to capture small cell spend now than one to two years ago.

Going forward, many Industry analysts have an optimistic view of the small cell opportunity. Despite the thinking that it may take a little longer for the widespread rollout to occur. We still believe heavily in densification of the carrier networks with either 4G or 5G or potentially even something else.

But for all the reasons we've discussed, it's taking longer than we originally anticipated. It's important to note that even with a longer rollout -- longer widespread rollout, we're still talking about a huge dollar opportunity.

And as I said, we're more strongly positioned now with both our offer and our customer relationships for long-term growth once the widespread rollout does occur. We continue to ship integrated small cell shrouds and installation kits into multiple carrier networks.

Our sales activities have increased here and we anticipate an increase in orders for small cell solutions. Finally, as I've been discussing the last few quarters, we're getting better at being a product company. To that point, we have a new small cell solution currently in the lab or field trials with multiple customers in the carrier ecosystem.

These are exciting developments for us, but too early to share specifics. More to come on that.

In addition to the substantial opportunity we see within small cell, our thermal cooling solutions enable us to operate a definitive value proposition, centered around a better design and clear cost energy savings and it's allowing us to initiate a different kind of sales conversation with a new set of customers.

We see a significant opportunity for this direct ambient cooling or DAC offering, which plays in both traditional wireline and the wireless carriers.

We've recently been awarded an additional carrier approval for DAC upgrade kits for outdoor cabinets with a long-standing carrier customer and we continue to receive new orders for similar kits from multiple other North American carriers.

We're also finding that our DAC solutions work well with MSOs, or multiple service operators at the edges of their networks. As evidence of this during the quarter, one of the largest MSOs that we had done zero business with previously, placed an initial order for 20 a few sites using our DAC offering, which amounts to about $125,000 of new business.

So, I think what we're seeing right now is progress against the opportunities we referenced. But we haven't even started to scratch the surface in dollars. We expect the dollars to go up commensurate with approvals and the normal sales cycle.

These are two weeks sales cycle, they are six to nine months sales cycles, then you get approval, and then orders start to flow and those timeframes assume a normalized CapEx environment, so some of these have taken longer than we originally expected.

Managing the energy needs of cooling enclosures, cabinets, and small buildings at the edges of networks can be incredibly inefficient and therefore, expensive. We can offer a much more cost effective solution and can either start from scratch or do a retrofit of existing designs. And we're seeing significant opportunities out there for both.

We're also now aggressively pursuing thermal cooling opportunities across many new markets like oil and gas, utilities, wireless ISPs, and we're seeing relevant use cases.

We're working to take our DAC offering through our distribution channel to multiple utilities, oil and gas, and transportation companies, and we currently have active discussions ongoing with two large regional utilities. All the opportunities that I mentioned are more good signs that we're starting to see real progress in our strategic sales areas.

As I've said before, while not all these opportunities are producing dollars yet, we're seeing our pipelines grow. And with what we see today, we continue to expect that to lead to year-over-year revenue growth in our current fiscal 2021. On the M&A front, I've said before that our plan is to make an acquisition of a more meaningful size.

We continue to review and add to a pipeline of potential candidates. We're committed to M&A activity this year and we've had some conversations that have progressed from where we were last quarter at this time.

To underscore our commitment, we recently added a strategy and M&A committee to our Board, which is headed by our recently added new Board member Mark Holdsworth, who has extensive experience in M&A and investing. We set up the committee specifically focused on helping our M&A strategy and we think the potential deal flow will continue to increase.

In summary, while this quarter continued to be a challenge, we remained very focused on our long-term game plan to build a sustainable long-term engine for growth. Even through the disruptions, we've invested smartly in resources to accelerate our growth and come out stronger on the other side.

As a result, we have more effectively positioned ourselves to drive demand creation and expand our participation in the different buckets of CapEx spent.

Our long standing and broad interconnect offer of coaxial, fiber, and copper solutions continues to be a workhorse and where we add our newer integrated system offering and DAC and small cell, we see a growing opportunity to drive into new market segments and customers.

We're seeing these investments start to bear fruit and our overall sales pipeline continues to build in nearly all areas, which gives us confidence that things are getting better.

It's tough to predict timing on certain larger orders and the related fulfillment, but with what we know today, we're still expecting to return to year-over-year revenue growth this year, with the majority of our growth coming in the back half of the year.

With that, I'll now turn the call over to Peter for a review and discussion of the financial results for the quarter.

Peter?.

Thank you, Rob and good afternoon everyone. In Q1, we again saw a very challenging sales environment similar to previous quarters, which continue to have an impact on our revenue.

To add to that, our fiscal Q1 is seasonally our toughest quarter as we have less shift days compared to our other fiscal quarters; five business days to be exact when comparing to our previous Q4. However, the good news is that we are starting to see increased demand and positive momentum around new business generation.

Sales in the first quarter at $10 million, were primarily impacted by orders that we had expected would ship, but were pushed up. Has these orders gone out, our revenue in Q1 would have been similar to the last quarter Q4 at $10.7 million, even with the lower amount of shift days in the period.

When compared to the prior year first quarter sales at $12.4 million, the decrease was primarily related to project revenue from a large Tier 1 carrier customer for a hybrid fiber cable offering, which did not recur in Q1 2021. However, Q1 sales were partially offset by an increase in our distribution revenue, which increased 15% year-over-year.

Gross margin was 26% in Q1 compared to 28% in Q4. The decrease here relates to the lower sales we experienced. Comparing to Q1 last year, even with the lower sales, our gross margins remained relatively consistent. This is a result of us continuing to do a good job operationally in managing our expenses.

Rather than continue to go through all the comparisons one-by-one, whether looking at net loss, EPS, or EBITDA, the primary reason for the decline in each of the comparisons can be explained by the decrease in sales we experienced in Q1.

We could have made drastic changes to our business to minimize the impact of the lower sales number we experienced during our first quarter, but it would have meant sacrificing long-term capabilities for short-term results, which was not something worth doing given the opportunity in front of us.

We are better positioned in the marketplace today than we ever happen and what the opportunities that we believe lie in front of us, it was and is critical for us to stay the course.

While we experienced slower than expected project spend from major carriers in the quarter, we are starting to see momentum built around new business as evidenced by our improved bookings and growth in our backlog in the quarter. At the end of Q1, our backlog was $7.1 million, up from $6.3 million last quarter.

During the quarter, we saw our first purchase order of $1.2 million from a brand new carrier customer for hybrid piper [ph] solutions. And since the quarter end, our backlog continues to build and currently stands at approximately $8.5 million.

To give an update on the Paycheck Protection Program or PPP loans of approximately $2.8 million that we applied for and receive in May 2020, I'm pleased to note that subsequent to Q1, we have received good news from our lender and the SBA that these loans have been fully forgiven.

We use these loans to cover eligible payroll costs, which helped us keep our team intact through this difficult operating environment. As a result of the PPP loans, our production capabilities have not been impacted and we've remained built for growth.

Also, although we don't see a lot of CapEx needed for us to get to where we want to be when conditions improve and demand increases, we are always assessing the need for additional improvements.

Should we see the need for CapEx spend to help improve our efficiencies and/or capacity, we will review those opportunities and assess whether additional spend is required and wanted. Our balance sheet remained strong and included cash and cash equivalents of $15.5 million and working capital of $25 million.

We are seeing our overall sales pipeline continue to build in nearly all areas, which gives us confidence that things are getting better.

With what we know today, we are expecting sequential growth in the second quarter over Q1 and they returned to year-over-year revenue growth in fiscal 2021 with the majority of the growth coming in the back half of the year as we have mentioned.

Lastly, on the Investor Relations front, Rob and I will be presenting and conducting virtual one-on-one meeting at the 33rd Annual ROTH Conference next Tuesday, March 16th. We hope to see some of you virtually at the conference. That concludes my discussion. Operator, we're ready to take our first question..

[Operator Instructions] Our first question is from Aman Gulani of B. Riley FBR. Please state your question..

Hey, guys, thanks for taking my question. Nice to see the increase in backlog to $8.5 billion today.

But I wanted to ask regarding the C band spectrum, do you think that has -- since that happened, do you think that has maybe accelerated some conversations in regards to the investment activity and network coverage and small cell deployment? What are your initial thoughts on that?.

Yes, thanks Aman. So yeah, I mean, this has been a long time coming to get some additional spectrum out there. And I think today or yesterday was the day when carriers were actually able to start talking really about their plans. And Verizon, in particular, came out pretty aggressively and obviously, they spent a lot of money.

They were $43 billion or more of the total spend there in the C band auction. I think what it does for them and for everyone is it gives some more usable spectrum both on traditional tower kind of applications, but also augmenting the millimeter wave and ultra-wideband small cell sites that have been going out there for some time.

So, what this does for us is it obviously shows commitment and a serious level of investment that's already been made and there's strings attached to the spectrum you have to build. And you got to get network on site -- I mean online in a in a certain period.

So our expectation is it will take the conversation that we've already been having, some of which were already geared around the idea of C band or a different kind of radio and just to make those more tangible and start to happen more rapidly.

We've been, or is it a year ago today, I guess, the pandemic was declared and we've seen some pretty different spend in traditional carrier CapEx on the wireless side. A lot of fiber infrastructure has been laid, which is great. That's good backhaul, good solid network utilization by the carriers.

That will really help in deployments of small cell and macro sites much more rapidly when that spend becomes tangible, which we think is in the certainly the back half of this year, we expect that to accelerate..

Got it, that's helpful.

And then can you talk about some of the conversations you're having for your DAC deployment? Do you have maybe some better visibility in the timing from these deployments with the wins that you had last quarter? I know you had one customer that's looking to upgrade 5,000 sites and then you also mentioned some cross selling opportunities for that customer.

So, that any color on that front would be helpful..

Yes, sure. So, we started to see some of that already this quarter, talked about in my comments, some of the orders that we've taken, even in the last few months, I think that the bigger expectation we have is that still this quarter and into Q3 from new orders being placed.

It's not an overnight thing, you got to test it, make sure that you have the right solution that it works in network. DAC is one of a couple of different ways you can cool network infrastructure.

So, I think that the spend around it and the lifespan of some of the existing network equipment that's out there is coming due right around now with some of the big carriers. So, we expect the orders to keep moving. We're two or three quarters into some of these conversations, which is the right timeframe to start to have decisions made.

It's encouraging to see things like a different kind of carrier network on a traditional MSO or cable company, as people would think of it, recognizing the power of DAC as well. So, that's an order that came in. The bulk of that's already gone back out, the remaining amounts still going to go out probably this quarter or into next.

So, I think we expect there to be a meaningful increase in the coming three to six months of getting those orders placed and getting them turned around in network..

Okay, got it. And then your distribution business has been a pretty steady contributor to sales.

Can you talk about how should we think about that, the cadence for that business for the rest of the fiscal year?.

Yes, good question. So, we don't really have a recurring -- built-in recurring revenue stream. We're not an as-a-service kind of company. So, making tangible hardware pieces of equipment, the real key that we set out to do three-plus years ago was, was get to some level of recurring revenue stream and that's what I think distribution provides for us.

We have a handful of great distribution partners that are spending a lot of money with us and sharing go-to-market strategies and projects opportunities, and then joint marketing plans. But the big thing for us is, a lot of the similar kinds of products are moving through that channel. So, we have stocking distributors all over the country.

It's the enablement of someone who needs to go do network -- physical work on the network in a given day, they can back a truck up and get the equipment that they need right away. We can also have equipment dropped right on site where they're going to do the work depending on the on the customer.

So, for us, that's a -- it's a good way to get a baseline of recurring revenue from a consistent product set, whether that's fiber, coaxial, copper, or related components.

But keeping those on the shelf with our distributors and having replenishment orders that come in, in a certain cadence whether that's weekly or monthly depending on the on the distributor, it really lets us make sure we have the right inventory. We've got the right inventory out there.

And we've built that business up from it was probably certainly prior to the acquisition of C enterprises, most of our coax business was that which was a $10 million or $11 million a year business. That business is now doing in the in the low to mid $20s million and increasing.

So, we've built kind of this -- call it $6 million or $7 million a quarter in distribution business at this point and going up consistently. And I think that the thing that stands out to me is it's been in the background. That's not what gets people to really notice what's going on in our business.

Big wins that caused our numbers to swing around wildly were great for us. But I think they mask some of the good kind of grinded out work that was happening in the background of a building a channel that could give us that sort of baseline of recurring revenue as a backstop..

Yes, definitely. And then just looking into the numbers, SG&A was up about $200,000 sequentially.

Just want to dig into that a little bit, were you making some investments through the quarter to support growth later on the year? Yes, any color on that?.

Did you say G&A, sorry, I lost you there?.

Yes. G&A, it was up sequentially..

Yes.

Peter, do you want to comment on the $200,000 in G&A increase?.

Sure. Yes. Well, you touched on it there. We added some folks in Q1 and there was this timing of payments for professional services also that played impact on that increase of $200,000 that you mentioned..

Got it. Okay. Last question from me and I'll jump back in the queue. But I want you to talk about M&A, I know you're interested and your pipeline is growing.

Do you think we could maybe see an acquisition from RF Industries this fiscal year?.

Yes, so I hope so. That's the plan. I think my intent was to have one done last year. And this, this one year anniversary of the pandemic is as reminded me that we a lot of things that had initially thrown directly in front of them and that was one of them. It became really hard to do the kind of due diligence we need to do in a business like ours.

It's not a not a software business or consumer business that everyone knows about. So, you got to get out, see the people, see the quality of what's going on and meet everyone. And that's something that's been tough to do. It's getting easier. I think we feel better about our ability to do that now. And our pipeline of M&A has gotten stronger.

So, I certainly hope so. The other thing I mentioned in my comments was we added a specific subcommittee to our Board, led by Mark Holdsworth, our newest Board member, focused completely on M&A. That's the whole purpose of doing that to get faster, better, even more focus and make sure that we're hitting on all cylinders there.

So, our hope is certainly that we can still do at least a decent sized transaction this year..

Okay, that’s helpful. I guess maybe if I could squeeze one more in.

In terms of capabilities, what do you think you'd be interested in acquiring? Do you think it would be something that you'd want to expand on your direct air cooling offering or your small cell offering? Any color on that would be helpful?.

Yes, sure. So, I think the biggest thing for us is a related, but not duplicate product area where we already have success. I think we're looking to add additional product areas that are similar or even things that could slightly overlap, but not just buying another cable assembly production kind of business, isn't really what we're planning to do.

Now, if an amazing one were to come across, sure, we're going to take a look at it. But we'd like to get into additional distribution channels, additional product areas that help us fill out the full build of materials in a lot of the applications that we're already seeing. And that may take us into some related, but parallel market segments.

That's really the big push. So, it's passive components.

We like passive components; they fit well with what we do overall and there's a lot of things that go inside an integrated solution, like a small cell cabinet that we don't currently have that we -- that we're a manufacturer of, so we'd like to potentially fill out more of that build of materials, if possible..

Thank you, gentlemen. I'll pass it on..

Thank you..

[Operator Instructions] Our next question comes from Hal Granger of Great Quarter Research. Please state your question..

Thank you for taking my question. Rob, I was looking back at press releases, historical press releases for RF Industries and I noted that June 20 of 2017, there was a press release announcing that you were hired. And at the time at that date, your stock closed at $1.51 and now it's quadrupled. So, I wanted to give you a kudos for that.

I think if the stock price suggests you're doing a good job, I would agree with that..

Well, thanks Hal. It feels like just yesterday. That's been really easy. I appreciate that..

Yes, and more to come. So, I was quickly taken a look through your Q and had a question about the statement of cash flows. So, I guess this might be for Peter. Your other current assets line was noteworthy. But I noticed that that has to do with taxes, and perhaps with PPP.

So, can you walk us through what's going on with your -- with a tax line on the other current assets?.

Yes, like you mentioned there, a majority of that is with the PPP loan and the shift from -- coming from long-term to short-term. The other piece of that is just related to taxes that we're dealing with.

So, part of that is there were some at the end of last year, when we filed -- did our provision there for the Q4, there were some rulings related to how we can treat the PPP and certain deductions we can take -- that we couldn't take, that has subsequently been rules have changed around that and we cannot take a different stance on it.

So, you hit the nail on the head there related to taxes and PPP there..

Okay. Thank you. I really like the addition of Mark Holdsworth addition to Sherry Cefali and putting together a subcommittee of the Board focused on acquisitions. I think acquisitions can be a really powerful tool to grow a company, but also it's something that's tricky, so it's important to get it right.

And so I think you've got a lot of firepower there on the Board. So, I think that's -- so that looks really good to me.

Can you talk about your guidance regarding revenues for fiscal 2021 compared to fiscal 2020? And it sounds like it's going to be more the second half of fiscal 2021 where revenues ramp up, of course, we've already had one quarter under our belt, so to speak, which was down year-over-year.

But can you can you kind of walk us through what you're thinking quarter -- maybe quarter-by-quarter, like second quarter? How will that be -- and will things will get better and better as the as the year progresses?.

Yes, sure. So, yes, I think you just described it the way we look at it. As we think the -- as is sort of typical in our history is our first quarter is always our toughest for holiday reasons and less business days and timing. We expect to get better from there. So, we are expecting sequential growth as you go throughout the year.

The way we see it today, it would be sequential 1, 2, 3, 4, exactly the way it's laid out with growth happening over the course of that time.

It's -- the other thing I'll note there is I mentioned in my comments about the little tiny movements of orders by a day or two can cause the short-term change in a pretty significant way to our results because of the size of our results.

And so I think that's the other piece of this is it's harder to give immediate guidance for us than it is to say, here's what our expectation is for the year. We think we're going to have a nice growth over what we did last year. Last year was a bizarre year; we've started this year and kind of the same position.

So, we think as the recovery gets better and as CapEx starts to flow, we might get a more normalized build season, which to anybody who has been in wireless for more than a few of these cycles, there's a normal spring/summer kind of build that you start to see happening. And we've been talking about 5G for I don't know how many years.

I like the densification play related to 5G and I think that's going to add some serious steroids to a typical season. We're hitting springtime here, we're starting to see things get better from a CapEx perspective, but I wouldn't say it's back to any kind of normalcy.

We kind of hear that same thing from our -- both our distributors and a lot of our manufacturer partners that we talked to that everyone's kind of experiencing the same thing of unless you're in the data center or bulk fiber or broadband radio space that they've all done very, very well in the last year as the shift in topology of the network.

For us, we think that the more normalized wireless spend starts to return in the next couple of quarters, which should take our results on kind of a traditional sequential trajectory of growth..

Okay. In the past, you've given us a sales revenue target going out.

I forget what a few years, can you update that revenue target?.

Yes, so we put a we put a goal out there a few years ago of a combination of organic and inorganic growth taking us from where we had been, which, in 2017, was $23 million in sales with a goal of $100 million over the next few years. We've obviously seen a little bit of a setback in that.

We didn't expect to have a year-over-year decline in 2020 over 2019. So, that's part of the part of the challenge with that as we took a step back, for all the reasons that everyone already knows. We're getting back to organic growth.

Part of the M&A strategy is we've been looking for a larger deal for some time that would take us closer to that $100 million number.

So, we still have a still have a significant growth goal out there, the timing of it's become a little muddy, but I'm a growth guy, I don't do very well sitting back and saying lifestyle, this is great, we're doing fine. I'm as motivated to grow as anybody you're going to find in a company this size.

And so we're heavily focused on returning organic growth, which I think we see a pathway to doing and that's kind of the way we're guiding this year is getting back to growth and then adding in an acquisition or two in this year and in coming years.

I still think for us to get to a meaningful size and have any kind of -- more strength, let's say over a build of materials in the market, we're going to need to ask some scale and whether $100 million is the right number or not to define scale, it's the next big milestone for us. So, we need to get to that number and then then we can look beyond..

Okay, great. So, the addition of Mark Holdsworth adding to Sherry Cefali on the Board, who -- both of whom have -- I guess everybody has M&A experience, right. But they both have lots and lots of M&A experience.

So, the addition of Mark, does that suggest to us a continuing involvement of the previously existing plan? Or does that suggest -- should that suggest to us that the M&A piece of your business you're now planning on being much larger than it had -- the plan had been in the past?.

Yes, good question. So, I don't know that the plan is any different than it was. I think this adds some fuel to it from an expertise level and a focus.

And really the purpose of forming a subcommittee of the Board focused on that is to make sure that we've got the right people in the right seats, helping me and helping Peter guide us towards this M&A and when deals present themselves, faster review of the meaningful ones, and we talk about financing and being creative on how to do certain kinds of deals.

I think having folks like that available to us on our side, it's a -- that's a big deal. And it's important to note that in the case of Mark Holdsworth, he is a meaningful size shareholder as well. And so having that on our Board, aligns him perfectly with what shareholders would want anyway.

I mean I'm obviously every day in my life spent trying to deliver the best results possible and a return to shareholders and you talked about that over the last few years, we've done an okay job of providing an increase. We've hit a tough spot in the last year around the organic results.

But the inorganic piece has always been a major focus and it's nice to have some additional firepower on our Board and heavily focused on the right way for us to do M&A.

And it's an endorsement from not just the Board when we find the right deal, but -- again, you have a good alignment with what shareholders would want to see with someone like Mark to help us make sure we're doing the right thing that we're staying focused on the right areas..

Great. Yes, that sounds great. Thanks very much..

Thanks Hal..

[Operator Instructions] There are no more questions at this time. We have reached the end of the question-and-answer session and I will now turn the call over to Robert Dawson for closing remarks..

Great. Thanks Hilary and thanks everyone for joining our call today. We appreciate your support of RF Industries. Peter and I look forward to recording our second quarter results in June and we'll speak to some of you next Tuesday at the ROTH Virtual Conference. Thank you again for joining and have a great day..

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