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1. Company Snapshot

1.a. Company Description

RF Industries, Ltd., together with its subsidiaries, designs, manufactures, and markets interconnect products and systems in the United States, Canada, Mexico, and internationally.The company operates through two segments, RF Connector and Cable Assembly and Custom Cabling Manufacturing and Assembly.The company's RF Connector and Cable Assembly segment designs, manufactures, and distributes various coaxial connectors and cable assemblies that are integrated with coaxial connectors.


The Custom Cabling Manufacturing and Assembly segment designs, manufactures, markets, and distributes custom copper and fiber cable assemblies, complex hybrid fiber optic and power solution cables, energy-efficient cooling systems for wireless base stations and remote equipment shelters, and custom designed pole-ready 5G small cell integrated enclosures.It also manufactures and sells custom and standard cable assemblies, hybrid fiber optic power solution cables, adapters, and electromechanical wiring harnesses for communication, computer, LAN, automotive, and medical equipment.In addition, the company designs and manufactures cable assemblies and wiring harnesses for blue chip industrial, oilfield, instrumentation, and military customers.


It also designs and manufactures quality connectivity solutions to telecommunications and data communications distributors.The company sells its products through warehousing distributors and in-house marketing and sales team.It serves telecommunications carriers and equipment manufacturers, wireless and network infrastructure carriers, and original equipment manufacturers.


The company was formerly known as Celltronics, Inc.and changed its name to RF Industries, Ltd.in November 1990.


RF Industries, Ltd.was incorporated in 1979 and is headquartered in San Diego, California.

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1.b. Last Insights on RFIL

RF Industries, Ltd.'s recent performance was driven by strong Q2 earnings and revenue beat, surpassing the Zacks Consensus Estimate of $0.04 per share with $0.07 per share. Net sales increased by 17.4% year-over-year to $18.9 million, driven by growing demand for interconnect products and systems. The company's ability to execute on its strategy and capitalize on the steady growth in semiconductor sales, particularly in the AI-driven market, contributed to its success.

1.c. Company Highlights

2. RF Industries' Q4 Results Exceed Expectations with 23% Sales Growth

RF Industries reported a strong Q4 with net sales growing 23% year-over-year to $22.7 million, accompanied by a gross profit margin of 37%, exceeding the company's target of 30%. The adjusted EBITDA margin was 11.5% of net sales, above the stated goal of 10%. For the full fiscal year, net sales were $80.6 million, a 24% increase compared to fiscal 2024, with a gross profit margin of 33% and adjusted EBITDA of $6.1 million. The actual EPS for the quarter came in at $0.2, beating estimates of $0.09.

Publication Date: Jan -15

📋 Highlights
  • Q4 Net Sales Growth:: Increased 23% year-over-year to $22.7 million, surpassing expectations.
  • Gross Margin Expansion:: Achieved 37% in Q4, exceeding the 30% target, driven by higher-margin product lines.
  • Full-Year Adjusted EBITDA:: $6.1 million with a 33% gross margin, reflecting 24% net sales growth to $80.6 million.
  • Liquidity Strength:: Maintained $5.1 million in cash and a current ratio of 1.7, supporting debt reduction and strategic initiatives.
  • Strategic Focus on Profitability:: Prioritizing debt reduction while targeting sustained EBITDA margins above 10% through product mix and market diversification.

Operational Highlights

The company's growth is attributed to its strategic transformation into a technology solutions provider, diversification of end markets, and new product launches. CEO Robert Dawson stated that the company is well-positioned for another year of sales growth and profitability in fiscal 2026. Dawson highlighted that once the company absorbs its fixed overhead and labor, it starts to generate a lot of cash, and he anticipates a similar approach to 2026, with a focus on keeping profitability high. As Dawson noted, "Having a better product mix with higher-value, more technology-centric product areas really helps. Once we cross $18-19, $20 million in sales, we start to see the impact on gross margins."

Financial Position and Capital Allocation

CFO Peter Yin discussed the company's financial position, noting that working capital and overall liquidity remain strong, with a total of $5.1 million in cash and cash equivalents and a current ratio of approximately 1.7 to one. The company's backlog stood at $15.5 million as of October 31 and currently stands at $12.4 million. Regarding capital allocation, Dawson stated that the priority is to pay down debt, with a goal to get the net debt as low as possible. The company's net debt to EBITDA ratio is currently 6.34, indicating a significant amount of debt relative to its earnings.

Valuation and Outlook

Analysts estimate next year's revenue growth at 4.9%. With a P/E Ratio of 1014.35 and an EV/EBITDA of 29.01, the company's valuation appears to be stretched. However, the company's strong growth prospects and improving profitability may justify the premium. The company's focus on debt reduction and its strong liquidity position are positives. As Dawson expects the public safety market to be an opportunity for the company going forward, despite being fragmented, the company's diversified product offerings and technology-centric approach may drive future growth.

3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.76%)

6. Segments

RF Connector and Cable Assembly

Expected Growth: 8.97%

RF Industries' RF Connector and Cable Assembly growth is driven by increasing demand for 5G infrastructure, IoT devices, and high-speed data transmission. The company's strong relationships with top OEMs, continuous product innovation, and expanding presence in Asia also contribute to its 8.97% growth.

Custom Cabling Manufacturing and Assembly

Expected Growth: 8.4%

RF Industries' custom cabling manufacturing and assembly growth of 8.4% is driven by increasing demand for high-reliability interconnects in 5G infrastructure, rising adoption of IoT devices, and growing need for customized cabling solutions in industrial automation, medical, and aerospace industries.

7. Detailed Products

RF Connectors

RF Industries offers a wide range of RF connectors, including SMA, SMB, SMC, N, TNC, and more, designed for high-frequency applications.

Coaxial Cables

RF Industries provides high-quality coaxial cables designed for high-frequency applications, including RG, RG/U, and semi-rigid cables.

RF Adapters

RF Industries offers a variety of RF adapters, including in-series, between-series, and within-series adapters, designed for flexible connectivity.

RF Cable Assemblies

RF Industries provides custom and standard RF cable assemblies, including jumper cables, patch cables, and pigtail cables.

DC Blocks

RF Industries offers DC blocks designed to prevent DC voltage from entering RF circuits, ensuring safe and reliable operation.

RF Switches

RF Industries provides high-reliability RF switches designed for high-frequency applications, including SPDT, SP3T, and SP4T switches.

RF Attenuators

RF Industries offers fixed and variable RF attenuators designed to reduce signal power levels in high-frequency applications.

8. RF Industries, Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

RF Industries, Ltd. faces moderate threat from substitutes due to the availability of alternative products in the market.

Bargaining Power Of Customers

RF Industries, Ltd. has a high bargaining power of customers due to the presence of large and established customers who can negotiate prices and terms.

Bargaining Power Of Suppliers

RF Industries, Ltd. has a low bargaining power of suppliers due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

RF Industries, Ltd. faces a moderate threat of new entrants due to the presence of barriers to entry and the company's established market position.

Intensity Of Rivalry

RF Industries, Ltd. operates in a highly competitive industry with many established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 27.99%
Debt Cost 3.95%
Equity Weight 72.01%
Equity Cost 8.60%
WACC 7.29%
Leverage 38.88%

11. Quality Control: RF Industries, Ltd. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 3.9/10

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

9.29$

Current Price

9.29$

Potential

-0.00%

Expected Cash-Flows