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

Aaron Martin: Hi, Rob. Congratulations on a strong EPS for the year. You mentioned some costs around consolidation on the West Coast, East Coast and then savings. Is this consolidation, manufacturing, operations, this is a first question. And then can you sort of quantify the amount of expenses around that? And then the amount of cost savings down the line?

Rob Dawson: Sure. I’ll tackle the general concept, the consolidation, I’ll let Peter give some sense of the cost and then I’ll come back and maybe share what we think that’s going to be longer term. So the consolidation is, its operation, its production, its inventory. We’re starting with the West Coast, we’re combining our legacy RF Industries product line that offer and the fast turn fiber offer that we acquired from the enterprises a few years ago. So those who are being combined production offices, corporate staff and then our corporate headquarters is moving there as well to one new facility to help us, I think, take advantage of our scale and maybe take some synergies out as well. Peter, maybe you can share a little bit on what we think the one-time costs are related to the relocation?

Peter Yin: Hey, Martin. Thanks for the call. So the one-time cost, a big chunk of that is going to be just the moving expenses associated with that. Am I coming through okay here?

Aaron Martin: Yes.

Peter Yin: Okay. I’m getting a lot of feedback on my end. So just moving costs related to that. That’s the biggest probably onetime charge we see. And then there’s going to be some leasehold improvements that will — as we’re getting into there, having that kind of get a fix from a cost savings perspective, Aaron, I don’t think there’s much to share quite yet. We look forward to be being able to share that kind of once we get into the building and things iron out a little bit more. So I think those cost savings would be a little bit premature to share here on the call.

Rob Dawson: Yes. The one thing I’ll add to that Peter is just I think from a production team perspective and some of the higher level roles, what do we really need when we get two large operations hold into one. We have 130 people, call it, in Southern California, 135, I think our expectation is that we can get better at doing our production in a slightly more lean scenario and handling inventory maybe in a healthier way also. So I think as we get into the first quarter and talk again in March, I think you’ll hear more quantification of what those dollars are, but we think they’re material to the business as we go on.

Aaron Martin: Okay. And on the expense side, you are talking about a couple hundred thousand less than that.

Rob Dawson: Yes, I think we’re talking about between, call it, $250,000 and $500,000 from a move expense. It could be a little higher than that if — things don’t always go perfectly with the relocation. So it’s not a crazy number, but it’s not free. So I think we’re expecting to spend several hundred thousand dollars to get relocated into these facilities where we can really recognize some savings from that.

Aaron Martin: Okay. Thank you. We’ll continue the conversation.

Rob Dawson: Thank you.

Operator: And the next question is coming from David Wright with Henry Investment Trust. Please proceed.

David Wright: Rob, Peter, good afternoon.

Rob Dawson: Hey, David.

David Wright: Looking at your — well, take the midpoint of your revenue guidance for next year as revenues up 8%, can you talk at all about how pricing is factored into those projections?