RF Industries, Ltd. (NASDAQ:RFIL) Q4 2022 Earnings Call Transcript

Rob Dawson: So generally, there’s going to be a manufacturer of record on the bill of materials. So someone will be named or someone’s will be named as the spec position for antennas. So generally those are things that we’re told to use based on the carrier, the location, the region, the type of shroud that’s being deployed. So yes, we’re either buying them or we’re having them supplied to us to help integrate into those cabinets.

Orin Hirschman: Okay. And so finally on the gross margin, definitely on a component level things are improving across many, many, many companies that we speak to in the last month or two notably. This company on a gross margin basis even before it took in the higher gross margin Microlab, years ago had been higher in the mid-30s, you mentioned that for various competitive reasons, it may not get back there. But even if the base business gets back to a number with a three in front of it and you have Microlab’s on top of that. It would imply a gross margin we do get back to a more gross margin in the mid-30s. Can you see a path to do that again?

Rob Dawson: Yes, good question. So I think we absolutely see a path to getting to the mid-30s. I think product mix in the short term makes that harder to say specifically when. And I like to be able to give a pretty specific guidance on timing and numbers and quantify it when talking about those results. So we absolutely see it. I think the way you characterize it is correct. If our core business, if we start to see some things normalized there where some of the costs come down a hair, both on cost of goods and cost of labor, we can start to see better gross margins there and then with the new product areas, although that’s Microlab or others, if the mix starts to swing heavier in that direction, we absolutely believe there’s an opportunity to get those margins up into the mid-30s.

So I don’t expect it early in the year. I think if that’s something that’s possible this year, it’s going to be late in the year. And it may be something that we don’t see that kind of consistently happening till we get into fiscal €˜24. The only reason I say that is, when you look at our top line numbers, the better our top line does generally the better our gross margins go with it, because we absorb labor and then we start to see a much healthier gross margin as well as kind of every other profitability line. Historically, we’ve had discussions about how do we get consistently to $15 million a quarter than it was how do we get consistently to $20 million a quarter. We’re kind of there. And now it’s great. Let’s see those numbers — if we truly were putting up the exact same number every quarter, I’d be able to give a much clearer answer, because the mix moves around and therefore our top line moves around a bit with it.

It’s harder to say specifically when that is, but I don’t think it’s sort of a question in the mid-term to get some margin push back up into the mid-30s.

Orin Hirschman: Okay. And last question, some of the new products that you’re mentioning, when do we get a peek at those? And when do they expect revenues?