This article first appeared on GuruFocus .
-
Revenue:Record quarterly revenue of $24 million, up 21% year-over-year and 16% sequentially; nine-month sales up 10% to $63.6 million.
-
Gross Profit:Q3 gross profit rose 27% to $8.5 million; nine-month gross profit up 19% to $21.9 million.
-
Gross Margin:Q3 gross margin expanded 160 basis points to 35.6% from 34% a year ago; nine-month gross margin 34.5% versus 31.8%.
-
Operating Income:Q3 operating income of $1.8 million versus $720,000 a year ago; nine-month operating income of $3 million versus $882,000.
-
Operating Margin:Q3 operating margin improved to 7.3% from 3.6% last year.
-
Net Income:Q3 consolidated net income of $1.4 million, or $0.12 per diluted share, versus $392,000, or $0.04 per diluted share, a year ago.
-
Non-GAAP Net Income:Q3 non-GAAP net income of $2.2 million, or $0.19 per diluted share, versus $1.1 million, or $0.10 per diluted share, last year.
-
Adjusted EBITDA:Q3 adjusted EBITDA of $2.7 million, up approximately 71% year-over-year, at 11.1% of sales versus 7.9% last year; nine-month adjusted EBITDA up 61% to $5.7 million from $3.5 million.
-
Bookings:Q3 bookings of $22.5 million, a book-to-bill ratio of approximately 0.94 times; year-to-date bookings ahead of year-to-date sales.
-
Backlog:Backlog of $18.6 million at July 31, 2026; backlog of $19.8 million as of the call date.
-
Cash and Liquidity:Cash and cash equivalents of $4.5 million; working capital of $18.3 million; current ratio of approximately 2.0:1; cash increased approximately $1.1 million during the quarter.
-
Debt:$5.7 million outstanding on the revolving credit facility, down from $6.1 million at the end of Q2, with revolver borrowings declining approximately $400,000.
-
Inventory:Inventory of $13.2 million versus $14.4 million at the end of Q2 and $13.7 million at the beginning of the fiscal year.
-
Segment Performance:Custom Cabling continued to lead; Interconnect stepped up from Q2; Integrated Systems continued to gain traction, with every segment contributing meaningfully.
-
Q4 Outlook:Sales expected to be roughly the same or above Q3 levels.
Release Date: September 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Record quarterly revenue of $24 million, up 21% year-over-year and 16% sequentially, marking a new high watermark for RF Industries Ltd ( NASDAQ:RFIL ).
-
Gross profit margin expanded to 35.6%, exceeding the 30% target for the sixth time in seven quarters, reflecting strong execution and higher-value offerings.
-
Operating income rose to $1.8 million with operating margin improving to 7.3% from 3.6% last year, demonstrating significant operating leverage.
-
Adjusted EBITDA increased 71% to $2.7 million, or 11.1% of sales, surpassing the long-term goal of 10%.
-
Diversification efforts are paying off, with every segment contributing meaningfully and growth in aerospace, edge data centers, AI infrastructure, and other markets.
Negative Points
-
Book-to-bill ratio was approximately 0.94 times, indicating bookings of $22.5 million were below sales, which could signal potential softening in demand.
-
Small cell business, while improving, has been a tough market with unpredictable deployments and dollars delivered are behind initial expectations for the year.
-
Carrier CapEx on the wireless side is projected to remain largely flat, which could limit growth opportunities in traditional telecom markets.
-
Backlog at $18.6 million at quarter-end and $19.8 million currently may not provide sufficient visibility for sustained growth if order timing fluctuates.
-
Inventory levels may fluctuate due to timing of receipts and shipments, and potential supply chain delays could impact operations.
Q & A Highlights
Q: On the Integrated Systems small cell business, did it improve as expected, and are the first-half disruptions now fully behind the company? A: CEO Robert Dawson said the small cell market had been tough due to unpredictable deployments, but it started performing as expected in Q3 and is gaining momentum into Q4 and fiscal 2027. While dollars delivered are behind original expectations, the business is now accelerating, and management is bullish heading into fiscal 2027.
Q: Can you size the DAC business for this fiscal year and discuss growth expectations into next fiscal year? A: CEO Robert Dawson noted that DAC was immaterial a couple of years ago but is now delivering millions of dollars per quarter, with expectations to be north of $10 million in sales and accelerating. He views DAC as a key growth engine that is sticky, expanding beyond traditional telecom/wireless into new markets, with both short- and long-term opportunity.
Q: On the large aerospace customer, is the strength sustainable into next year, and has success there opened conversations with other aerospace customers? A: CEO Robert Dawson said the relationship is strong, with most work performed by the Long Island team, and the design/engineering content makes it a deeply connected, long-term relationship with no expected pockets of weakness beyond normal order timing. He added that wins in new markets act as a "tip of the spear" to pursue other opportunities, and the aerospace success is opening new customer conversations, with hopes to share more wins in coming quarters.
Q: A wireless carrier was about 17% of sales this quarter. Is that the outdoor build season kicking in, and does that level of carrier activity carry into Q4? A: CEO Robert Dawson said top customer rankings shift based on project timing, but the company is comfortable with continued meaningful contributions because it sells four or five critical items into different applications, markets and budgets. While predicting any single customer's 90-day spend is difficult, annual growth is expected as RFI expands into more applications and locations, supporting continuation into Q4 and fiscal 2027.
Q: When do DAC trials and NEMA 4 opportunities become a real revenue contributor, and what is the timeline? A: CEO Robert Dawson said DAC is seeing significant growth across several customer types, and while NEMA 4 is one specific product for edge/wireline/data center/AI applications, the broader edge cooling opportunity is proving successful. Material contribution from these customers is not expected this fiscal year, but deployment schedules are set to accelerate into fiscal 2027, adding to traditional DAC markets.
Q: Does industry news like the Verizon-Google Edge deal translate into demand for your DAC and edge products? A: CEO Robert Dawson said it is not always one-for-one, but directionally such deals are encouraging and validate growing demand at the edge of networks. He noted local pushback on hyperscale data center builds and the cost advantages of edge cooling (70%-80% more cost effective) are accelerating edge deployments, and RFI is being included in more discussions across several customer types, including those involved in the deal.
Q: How should we think about carrier CapEx/OpEx spend trending over Q4 and fiscal 2027 compared to the past year? A: CEO Robert Dawson said wireless carrier CapEx is projected to be largely flat, but RFI is less focused on 4G/5G/6G generations and more on densification, filling network gaps and fiber. He emphasized that RFI does not tie one-for-one to carrier CapEx, as the company grew across those customers this year and last despite no significant CapEx increase, and some product lines are OpEx-based. He is comfortable there is enough spend to support growth as RFI takes share and enters new areas.
Q: What drove the record Q3 revenue and profitability, and how sustainable is the operating leverage? A: CEO Robert Dawson said Q3 revenue of $24 million was a record, up 21% year-over-year and 16% sequentially, with operating income of $1.8 million, non-GAAP net income of $2.2 million ($0.19 per diluted share) and adjusted EBITDA of $2.7 million (11.1% of sales), above the 10% goal. Gross margin of 35.6% exceeded the 30% objective for the sixth time in seven quarters, and he attributed the results to higher-value integrated systems and custom cabling solutions driving operating leverage.
Q: What is the outlook for Q4 sales? A: CEO Robert Dawson said that with one quarter to go, the company is on target for a strong second half and expects fiscal Q4 sales to be roughly the same or above the Q3 level of $24 million.
Q: Can you discuss bookings, backlog and demand visibility entering Q4? A: CFO Peter Yin said Q3 bookings were $22.5 million, a book-to-bill ratio of approximately 0.94 times, with backlog of $18.6 million at July 31 and $19.8 million as of the call date. He noted year-to-date bookings are ahead of year-to-date sales, reflecting strong demand across end markets, and the current backlog and pipeline provide a solid foundation entering the final quarter, though backlog can fluctuate with order timing.
Q: What were the year-to-date financial results and balance sheet position? A: CFO Peter Yin reported that for the first nine months, sales rose 10% to $63.6 million, gross profit rose 19% to $21.9 million with margin expanding to 34.5% from 31.8%, operating income increased to $3 million from $882,000, and adjusted EBITDA rose 61% to $5.7 million. As of July 31, 2026, cash was $4.5 million, working capital was $18.3 million, the current ratio was about 2.0:1, and revolver borrowings declined to $5.7 million from $6.1 million, with cash up about $1.1 million and net debt improving.
Q: What organizational changes were made in engineering and product management, and why? A: Ray Bibisi said the company unified engineering and product line management teams under a single integrated structure within the Interconnect and Integrated Systems segments. The move is intended to speed decisions, resolve trade-offs sooner, create clear
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
