RF Industries second quarter net sales increase 16% to $4,392,000

RF INDUSTRIES, LTD. (NASDAQ:RFIL) today announced that for the period ended April 30, 2011, net income increased 23% to $407,000, or $0.06 per diluted share, compared to $330,000, or $0.05 per diluted share, in the second quarter last year. Net sales increased 16% to $4,392,000, compared to $3,778,000 in the same period last year.

RFI also announced today that its Board of Directors declared a 25% increase in the Company's quarterly cash dividend, from $0.02 per share to $0.025 per share, payable July 15, 2011 to shareholders of record on June 30, 2011.

"The continuing strength of the Company led the Board to raise RFI's quarterly dividend, increasing the annualized equivalent common stock dividend to $0.10 per share. Our Board will continue to monitor the Company's business and dividend policy in light of corporate cash requirements and with regard to RFI's ongoing acquisition strategy," said Howard Hill, President and CEO of RF Industries.

Second Quarter Review

"Our second quarter benefited from a strong performance at Bioconnect, where sales increased 63%. RF Connector and Cable Assembly sales gained 6% and the RF Wireless Division posted a 188% increase in sales for the quarter. Net income gained 23% despite a 57% increase in engineering expenses, primarily associated with RF Wireless product development, and significant expenses related to the pending acquisition of Cables Unlimited, Inc. announced earlier today, for our ongoing merger and acquisition efforts," said Hill.

RF Connector and Cable Assembly Division sales increased 6% to $3,463,000 compared to $3,271,000 in the second quarter last year. Operating income for this business segment benefited from a 64% sales gain at the Aviel Electronics connector manufacturing Division.

Medical Cabling and Interconnect product sales increased 62% to a quarterly record $691,000 compared to $425,000 in the same quarter last year. Improved productivity and a reduction in sales and administrative expenses to 14%, compared to 17% of sales in the same quarter last year, raised operating income 81% to $172,000 from $95,000 in the second quarter last year.

RF Wireless Segment sales increased 188% to $238,000 from $82,000 in the second quarter last year. Operating losses for this business segment narrowed to $159,000 from $191,000 in the second quarter last year.

"During the second quarter, our RF Neulink Division finalized engineering and development expenses for its NL900S wireless transceiver, which received FCC Certification and has commenced initial production. While the RF Wireless segment continues to lose money, we are encouraged by new orders at Neulink and a significant increase in requests for product and system installation pricing from a number of domestic and international firms. We will continue to evaluate the future of this operation on a quarterly basis," said Hill.

First Half Review

For the six months ended April 30, 2011, net sales increased 20% to $8,532,000 compared to $7,091,000 for the first half of fiscal 2010. Net income increased 60% to $758,000, or $0.11 per diluted share, compared to $473,000, or $0.07 per diluted share, in the same period last year.

RFI's gross profit increased 23% to $4,407,000, or 52% of sales, from $3,587,000, or 51% of sales in the second half last year. Operating income advanced 44% to $1,150,000 from $797,000 for the first half last year. Operating expenses declined to 38%, from 39%, as a percent of sales, despite a 55% increase in engineering expenses to $629,000 from $406,000 for the first half last year and higher expenses for ongoing merger and acquisition efforts.

RF Connector and Cable Assembly sales increased 11% to $6,870,000 in the first half of fiscal 2011 compared to $6,173,000 in the same period last year. A 71% increase in sales at the Company's Aviel connector manufacturing division supported improved gross margins and a 12% increase in operating profits for this segment.

Medical Cabling and Interconnect product sales increased 66% to $1,298,000 from $783,000 in the first six months last year, raising gross margin to 38% from 36% of sales in the same period last year. The improvement in gross margin, combined with lower general and administrative expenses, as a percent of sales, increased operating income 113% to $306,000 compared to $143,000 in the same period last year.

RF Wireless segment sales increased 168% to $363,000 from $135,000 for the same period last year. Higher engineering expenses for the development of new products increased operating expenses, resulting in an operating loss of $391,000, compared to a loss of $363,000 for the same period last year.

As of April 30, 2011, RFI reported cash and cash equivalents of $3,387,000, investments in certificates of deposits of $5,573,000 and long-term investments in certificates of deposit of $1,696,000 for a total of $10,656,000 in liquid, short-term and long-term capital resources, working capital of $16,006,000, a 11 to 1 current ratio, no long-term debt and stockholders' equity of $18,044,000, or $2.99 per share. The company expects to use approximately $2,800,000 of its cash and cash equivalents to fund the cash portion of the purchase price and other closing costs related to the pending acquisition of Cables Unlimited, which is scheduled to close on June 15, 2011.

Source RF Industries