Earnings Call Transcript - RFIL Q1 2021

Operator, Operator

Greetings. Welcome to the RF Industries First Quarter Fiscal 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the call over to your host Mr. Todd Kehrli of MKR Investor Relations. Thank you. You may begin.

Todd Kehrli, Host, MKR Investor Relations

Thank you, operator. Good afternoon and welcome to RF Industries' first quarter fiscal 2021 financial results conference call. With me on today's call are RF Industries' President and CEO, Rob Dawson, and Senior Vice President and Chief Financial Officer, Peter Yin. Before I turn the call over to Rob and Peter, I'd like to cover a few quick items. This afternoon, RF Industries issued a press release announcing its first quarter fiscal 2021 financial results. That release is available on the company's website at rfindustries.com. This call is being broadcast live over the Internet for all interested parties and the webcast will be archived in the Investor Relations page of the company's website. I want to remind everyone that during today's call, management will make forward-looking statements that involve risks and uncertainties. Please note that except for historical statements, statements on this call today may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. When we use the words anticipate, believe, expect, intend, future, and other similar expressions, these identify forward-looking statements. These forward-looking statements reflect management's current views with respect to future events and financial performance and are subject to risks and uncertainties. Actual results may differ materially from outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from actual results include delays in the development, marketing, or sales of products, and other risks and uncertainties discussed in the company's periodic reports on Form 10-K, 10-Q, and other filings with the Securities and Exchange Commission. RF Industries undertakes no obligation to update or revise any forward-looking statements. Additionally, throughout this call, we will be discussing certain non-GAAP financial measures. Today's earnings release and the related current report on Form 8-K describe the differences between our non-GAAP and GAAP reporting and present the reconciliation between the two for the periods reported in the release. With that, I will now turn the call over to Rob Dawson, President and Chief Executive Officer. Rob?

Rob Dawson, President and CEO

Thank you Todd. Good afternoon everyone. Welcome to our first quarter fiscal 2021 earnings call. Thanks for joining us today. I hope that everyone is staying safe and healthy. I'd like to start with some general comments, then I'll briefly discuss our first quarter results, and finally, I'll spend the bulk of my time on what we're seeing now and expect going forward before turning the call over to Peter to give more commentary on the financials. Although last year has been challenging, we're optimistic about the future of RF Industries and our ability to thrive and return to growth. The recovery in our market segments is taking longer than we'd like and our sales haven't yet returned to where we want them. And while that means it hasn't been a straight line up into the right in our turnaround story that began at the end of 2017, we believe we've set a new baseline of revenue as a platform for the next phase of our growth. And that baseline has nearly doubled the revenue where it was a few years ago. As you saw in our earnings release this afternoon, sales for the fiscal first quarter came in just above $10 million. As I noted before, fiscal Q1 is always our seasonally toughest quarter, and this year was no exception. Q1 was also a shorter quarter with five fewer business days compared sequentially to Q4. With that in mind, sales declined $2.4 million compared to last year's first quarter. But it's important to note that last year's first quarter included $2.7 million in hybrid fiber cable revenue to our large Tier 1 carrier customer, which didn't repeat this year. So, while we saw an overall decline, we partially filled the revenue hole left by that very concentrated business with sales to a more diverse and long-term customer base. In Q1, we continued to experience a challenging environment similar to previous quarters with project and build plan delays on the carrier side of our business and with some OEM customers due to COVID. Additionally, most venues are still shut down, which impacts our distributed antenna system project business and local and municipal approvals and permits continue to move very slowly impacting small cell and densification build plans. These dynamics continue to have an impact on our revenue in the quarter. Despite the continuing global pandemic, we were able to serve our customers and continue to invest in new initiatives and manage expenses. The story of the quarter was that a few delayed shipments dragged on our results. As some orders in the Tier 1 carrier space that we'd expected would shift during the quarter were delayed in the last couple of weeks of January. If these orders had shipped, our revenue in Q1 would have been close to last quarter as expected. So, it's really about timing. With numbers like ours, small movements in shipping dates can cause short-term results to fluctuate significantly. Our results are much easier to understand with a long-term view. One other note, despite having fewer business days in the quarter, our daily shipment average in Q1 was identical to our daily shipment average in Q4. In other words, we continued to ship at healthier levels than where we were in the middle of last year. Now, versus continuing to talk about the obvious challenges that have slowed us down in our turnaround and growth, let's turn the page and talk about where we're heading. From a booking perspective, the good news is we're starting to see increased demand and positive momentum around new business as evidenced by our improved bookings in the quarter and the related growth in our backlog. At the end of Q1, our backlog was $7.1 million, up from $6.3 million at the end of the prior quarter. Subsequent to quarter-end, the backlog has continued to build and now stands at approximately $8.5 million as of today. While not all this backlog will ship immediately, it's a good indicator of future growth and it's now significantly higher than it was mid last year. While we continue to see slower than expected project spend from the major carriers, whether due to delays or their current reallocation of spend to other things, we believe there's pent-up demand that's starting to show. The growth in our bookings and backlog is evidence that the pent-up demand is getting more tangible and the pipeline is slowly building. Our conversations around new business are becoming more fruitful and the tone we're starting to hear from customers in the carrier ecosystem is more urgent around build timelines, though not always including exact dates. Specifically, we've been starting to see more customer discussions and potential scheduling of projects and CapEx related work as well as some new customer orders. For example, during the quarter, we saw a million-dollar order for hybrid fiber cable solutions from a new carrier customer that we've never done direct business with before. The sales and product team in New York has worked very hard on developing that relationship and it's nice to see real progress. Also, over the last month, we've physically met with all of the Tier 1 wireless carriers as well as some other key players in the space. Not only do we have relationships there, but we're executing on our sales plans and building on those relationships. We've been talking about specific projects and seeing some initial purchase orders against those discussions that in some cases just get us started. In other cases, position us as a trusted adviser and start to move us down the road a good bit further. In many cases, we've moved from discussions into providing first articles of products and solutions and trials in the network. This is progress that we believe can turn into hundreds of thousands or multi-millions of dollars of business over the coming years. We're happy to see the cadence moving in the right direction, although it's slower than what we all want. Our backlog doesn't show the impact of true carrier CapEx spend yet. We're just starting to see the first pieces of that, but we believe that the beginning of the CapEx spend is what will drive our second half revenue growth. Much of this new activity is because of our increased go-to-market efforts aimed at getting in front of end-user customers, influencing them to include us in their plans, and then allowing them to purchase through whatever channel makes the most sense for them. We're better aligned now with the carrier ecosystem and are actually going to visit with carriers in person that we probably couldn't have visited before, based on our standing in the market. Looking at our various product areas and market segments, our distribution business remained solid and grew during the quarter. Our RF coax, cable, and connector brands alongside our CR prices faster and fiber and copper brands together make up our primary offerings sold through distribution. Many of these products are providing an increasing baseline of sales. In the first quarter, distribution sales accounted for more than $6 million of our $10 million in total sales, and we were up about 15% or $800,000 from the first quarter last year. As I noted before, during the past few years, we've successfully strengthened and increased the diversity of our distribution channels, which has been a great benefit to us through this difficult period. Much of this progress has been masked by higher sales to some concentrated customers, but the healthy base that's been building here is a testament to our strategy. In our custom cabling business and wiring harness product areas, under the Cables Unlimited and Rel-Tech brands, we're starting to see some nice size blanket orders and continue to see recovery with our large blue-chip customer base, working to get back to more normalized levels. In this business, we build very involved harnesses and custom cabling designs primarily for large manufacturers, where our cables are used inside their equipment. Some of the key market segments included here are industrial manufacturers, transportation, energy, and defense, in addition to Telecom. We continue to see a recovery with these customers in the Northeast and we've seen a nice increase in our work with defense contractors and other related customers on projects in the last few months. We expect these opportunities to provide some new revenue streams in the coming quarters. In DAC and small cell, nothing has changed. Those remain huge opportunities and we expect they will convert into revenue in the second half of the year and beyond. Several carriers just spent a significant amount of money on new spectrum in the C band auction and they're going to need the infrastructure to make it all work. Eventually, the spend is going to happen. Has it taken longer than we expected? Yes, of course. But it's not a matter of if; it's a matter of when, especially on the network densification side. As I've discussed on the past couple of calls, the big U.S. carriers have been spending on other projects or deployment models over the last few quarters and the shift in network demand related to remote work has increased focus away from mobile densification plays like small cells. As a result, we haven't yet seen the large CapEx that we expect for small cell deployments. We believe that with the recent C band auction spending, there will be increased demand for network augmentation using these newly available frequencies to complement the millimeter-wave deployments that have been ongoing but have had their share of technical challenges. More than $81 billion was spent on C band spectrum. Several industry experts have noted that the millimeter wave performance issue and the C band auction has given carriers a reason to pause and reexamine their deployment plans. Carriers are also trying to determine how to monetize 5G. To date, 5G deployments have not always meant additional subscriber revenue, which has also delayed small cell spending. In the end, this could actually be a good thing for us because it's given us time to build out our offering and gain the right positioning with key players in the small cell ecosystem. We're in a much better position to capture small cell spending now than one to two years ago. Going forward, many industry analysts have an optimistic view of the small cell opportunity, despite the understanding that it may take a little longer for the widespread rollout to occur. We still believe heavily in the densification of the carrier networks with either 4G, 5G, or potentially even something else. But for all the reasons we've discussed, this process is taking longer than we originally anticipated. It's important to note that even with a longer rollout, we're still talking about a huge dollar opportunity. As I said, we're more strongly positioned now with both our offering and our customer relationships for long-term growth once the widespread rollout does occur. We continue to ship integrated small cell shrouds and installation kits into multiple carrier networks. Our sales activities have increased here, and we anticipate an increase in orders for small cell solutions. Finally, as I've been discussing the last few quarters, we're getting better at being a product company. To that point, we have a new small cell solution currently in the lab or field trials with multiple customers in the carrier ecosystem. These are exciting developments for us, but it's too early to share specifics. More to come on that. In addition to the substantial opportunity we see within small cell, our thermal cooling solutions enable us to operate a definitive value proposition, centered around better design and clear cost energy savings, allowing us to initiate a different kind of sales conversation with a new set of customers. We see a significant opportunity for this direct ambient cooling offering, which plays in both traditional wireline and the wireless carriers. We've recently been awarded an additional carrier approval for DAC upgrade kits for outdoor cabinets with a long-standing carrier customer, and we continue to receive new orders for similar kits from multiple other North American carriers. We’re also finding that our DAC solutions work well with MSOs or multiple service operators at the edges of their networks. As evidence of this, during the quarter, one of the largest MSOs that we had done zero business with previously placed an initial order for 20 a few sites using our DAC offering, which amounts to about $125,000 of new business. So, I think what we’re seeing right now is progress against the opportunities we referenced. But we haven't even started to scratch the surface in dollars. We expect the dollars to go up commensurate with approvals and the normal sales cycle. These are two week sales cycles; they are six to nine month sales cycles; then you get approval, and then orders start to flow, and those timeframes assume a normalized CapEx environment. Some of these have taken longer than we originally expected. Managing the energy needs of cooling enclosures, cabinets, and small buildings at the edges of networks can be incredibly inefficient and therefore, expensive. We can offer a much more cost-effective solution and can either start from scratch or retrofit existing designs. We’re seeing significant opportunities out there for both. We're also now aggressively pursuing thermal cooling opportunities across many new markets like oil and gas, utilities, wireless ISPs, and we're seeing relevant use cases. We're working to take our DAC offering through our distribution channel to multiple utilities, oil and gas, and transportation companies, and we currently have active discussions ongoing with two large regional utilities. All the opportunities that I mentioned are more good signs that we're starting to see real progress in our strategic sales areas. As I've said before, while not all these opportunities are producing dollars yet, we’re seeing our pipelines grow. With what we see today, we continue to expect that to lead to year-over-year revenue growth in our current fiscal 2021. On the M&A front, I’ve said before that our plan is to make an acquisition of a more meaningful size. We continue to review and add to a pipeline of potential candidates. We’re committed to M&A activity this year, and we’ve had some conversations that have progressed from where we were last quarter at this time. To underscore our commitment, we recently added a strategy and M&A committee to our Board, which is headed by our recently added new Board member Mark Holdsworth, who has extensive experience in M&A and investing. We set up the committee specifically focused on helping our M&A strategy, and we think the potential deal flow will continue to increase. In summary, while this quarter continued to be a challenge, we remained very focused on our long-term game plan to build a sustainable long-term engine for growth. Even through the disruptions, we've invested smartly in resources to accelerate our growth and come out stronger on the other side. As a result, we have more effectively positioned ourselves to drive demand creation and expand our participation in the different buckets of CapEx spent. Our long-standing and broad interconnect offer of coaxial, fiber, and copper solutions continues to be a workhorse, and where we add our newer integrated system offering and DAC and small cell, we see a growing opportunity to drive into new market segments and customers. We’re seeing these investments start to bear fruit and our overall sales pipeline continues to build in nearly all areas, which gives us confidence that things are getting better. It's tough to predict timing on certain larger orders and the related fulfillment, but with what we know today, we're still expecting to return to year-over-year revenue growth this year, with the majority of our growth coming in the back half of the year. With that, I will now turn the call over to Peter for a review and discussion of the financial results for the quarter. Peter?

Peter Yin, CFO

Thank you, Rob, and good afternoon everyone. In Q1, we again saw a very challenging sales environment similar to previous quarters, which continued to impact our revenue. To add to that, our fiscal Q1 is seasonally our toughest quarter as we have fewer shipping days compared to our other fiscal quarters; five business days to be exact when comparing to our previous Q4. However, the good news is that we are starting to see increased demand and positive momentum around new business generation. Sales in the first quarter at $10 million were primarily impacted by orders that we had expected would ship but were pushed back. If these orders had gone out, our revenue in Q1 would have been similar to the last quarter, Q4 at $10.7 million, even with the lower number of shipping days in the period. When compared to the prior year's first quarter sales at $12.4 million, the decrease was primarily related to project revenue from a large Tier 1 carrier for a hybrid fiber cable offering, which did not recur in Q1 2021. However, Q1 sales were partially offset by an increase in our distribution revenue, which increased 15% year-over-year. Gross margin was 26% in Q1 compared to 28% in Q4. The decrease here relates to the lower sales we experienced. Comparing to Q1 last year, even with the lower sales, our gross margins remained relatively consistent. This is a result of us continuing to do a good job of operationally managing our expenses. Rather than continue to go through all the comparisons one-by-one, whether looking at net loss, EPS, or EBITDA, the primary reason for the decline in each of the comparisons can be explained by the decrease in sales we experienced in Q1. We could have made drastic changes to our business to minimize the impact of the lower sales number we experienced during our first quarter, but it would have meant sacrificing long-term capabilities for short-term results, which was not worth doing given the opportunity in front of us. We are better positioned in the marketplace today than we ever have been, and with the opportunities that we believe lie in front of us, it was and is critical for us to stay the course. While we experienced slower than expected project spend from major carriers in the quarter, we are starting to see momentum built around new business as evidenced by our improved bookings and growth in our backlog in the quarter. At the end of Q1, our backlog was $7.1 million, up from $6.3 million last quarter. During the quarter, we saw our first purchase order of $1.2 million from a brand new carrier customer for hybrid fiber solutions. Since the quarter-end, our backlog has continued to build and currently stands at approximately $8.5 million. To give an update on the Paycheck Protection Program or PPP loans of approximately $2.8 million that we applied for and received in May 2020, I'm pleased to note that subsequent to Q1, we have received good news from our lender and the SBA that these loans have been fully forgiven. We used these loans to cover eligible payroll costs, which helped us keep our team intact through this difficult operating environment. As a result of the PPP loans, our production capabilities have not been impacted and we've remained built for growth. Also, although we don't foresee a lot of CapEx needed for us to get to where we want to be when conditions improve and demand increases, we are always assessing the need for additional improvements. Should we see the need for CapEx spending to help improve our efficiencies and/or capacity, we will review those opportunities and assess whether additional spending is required. Our balance sheet remained strong and included cash and cash equivalents of $15.5 million and working capital of $25 million. We are seeing our overall sales pipeline continue to build in nearly all areas, which gives us confidence that things are getting better. With what we know today, we are expecting sequential growth in the second quarter over Q1 and a return to year-over-year revenue growth in fiscal 2021, with the majority of the growth coming in the back half of the year, as we have mentioned. Lastly, on the Investor Relations front, Rob and I will be presenting and conducting virtual one-on-one meetings at the 33rd Annual ROTH Conference next Tuesday, March 16th. We hope to see some of you virtually at the conference. That concludes my discussion. Operator, we're ready to take our first question.

Operator, Operator

Our first question is from Aman Gulani of B. Riley FBR. Please state your question.

Aman Gulani, Analyst

Thank you for taking my question. It's great to see the backlog increase to $8.5 million today. I wanted to ask about the C band spectrum. Do you believe that development has accelerated discussions around investment activity, network coverage, and small cell deployment? What are your initial thoughts on that?

Rob Dawson, President and CEO

Yes, thanks Aman. So, yeah, I mean, this has been a long time coming to get some additional spectrum out there. I think today or yesterday was the day when carriers were actually able to start discussing their plans. Verizon, in particular, came out pretty aggressively and obviously, they spent a lot of money. They were $43 billion or more of the total spend there in the C band auction. I think what it does for them and for everyone is it provides more usable spectrum for both traditional tower applications, but also augmenting the millimeter wave and ultra-wideband small cell sites that have been going out there for some time. This gives us commitment and a serious level of investment that's already been made, and there are requirements attached to the spectrum. You have to build and get the network online within a certain period. Our expectation is this will elevate the conversations we've already been having, some of which were already geared around the idea of the C band or a different kind of radio, and just make those more tangible and start to happen more rapidly. We've noticed, or is it a year ago today, I guess, the pandemic was declared, and we've seen significant changes in traditional carrier CapEx on the wireless side. A lot of fiber infrastructure has been deployed, which is great. That's good backhaul, aiding solid network utilization by the carriers. That will help accelerate deployments of small cell and macro sites much more rapidly when that spend becomes tangible, which we think is certainly in the back half of this year; we expect that to accelerate.

Aman Gulani, Analyst

Got it, that's helpful. And then can you talk about some of the conversations you're having for your DAC deployment? Do you have maybe some better visibility in the timing from these deployments with the wins that you had last quarter? I know you had one customer that's looking to upgrade 5,000 sites and then you also mentioned some cross-selling opportunities for that customer. Any color on that front would be helpful.

Rob Dawson, President and CEO

Yes, sure. So, we started to see some of that already this quarter, as I mentioned in my comments, some of the orders that we've taken even in the last few months. I think the bigger expectation we have is that still this quarter and into Q3, new orders will be placed. It's not an overnight thing; you need to test it to ensure you have the right solution and that it works in the network. DAC is one of a couple of different ways to cool network infrastructure. So, I think the spending around it, and the lifespan of existing network equipment is coming due right around now with some of the big carriers. We anticipate a meaningful increase in new orders being placed and getting them turned around in network over the coming three to six months.

Aman Gulani, Analyst

Okay, got it. And then your distribution business has been a steady contributor to sales. Can you talk about how we should think about the cadence for that business for the rest of the fiscal year?

Rob Dawson, President and CEO

Yes, good question. We don't really have a built-in recurring revenue stream. We're not an as-a-service kind of company. Making tangible hardware pieces of equipment, the real key that we set out to achieve three-plus years ago was to develop a level of recurring revenue stream, and that's what I think distribution provides for us. We have several great distribution partners that are investing significantly in us and sharing go-to-market strategies and project opportunities, and then joint marketing plans. The big thing for us is a lot of the similar kinds of products are moving through that channel. So, we have stocking distributors all over the country. It enables someone who needs to perform physical work on the network in a given day to back a truck up and collect the equipment that they need immediately. We can also have equipment delivered on site where the work is going to take place, depending on the customer. For us, that's a reliable way to establish a baseline of recurring revenue from a consistent product set, whether that's fiber, coaxial, copper, or related components. We've built that business from what was probably around a $10 million or $11 million a year operation. That business is now doing in the low to mid-$20 million range and increasing. So, we’ve cultivated about $6 million or $7 million a quarter in distribution business at this point and it’s consistently going up. What stands out is that this has been relatively in the background. That's not what draws immediate attention to our business. Major wins that cause significant fluctuations in our numbers have been beneficial, but they potentially mask the steady work that’s been happening behind the scenes to build our channel and ensure a reliable base of recurring revenue.

Aman Gulani, Analyst

Yes, definitely. And then just looking into the numbers, SG&A was up about $200,000 sequentially. Just want to dig into that a little bit. Were you making some investments through the quarter to support growth later in the year? Any color on that?

Rob Dawson, President and CEO

Did you say G&A? Sorry, I lost you there?

Aman Gulani, Analyst

Yes. G&A, it was up sequentially.

Rob Dawson, President and CEO

Yes. Peter, do you want to comment on the $200,000 in G&A increase?

Peter Yin, CFO

Sure. Yes. Well, you touched on it there. We added some folks in Q1 and there was this timing of payments for professional services that also impacted that increase of $200,000 that you mentioned.

Aman Gulani, Analyst

Got it. Okay. Last question from me, and I'll jump back in the queue. But I want you to talk about M&A. I know you're interested, and your pipeline is growing. Do you think we could see an acquisition from RF Industries this fiscal year?

Rob Dawson, President and CEO

Yes, so I hope so. That's the plan. I think my intent was to have one done last year, and this one-year anniversary of the pandemic is a reminder that we had a lot of things thrown directly in front of us, and that was one of them. It became really hard to do the due diligence we need to do in a business like ours. It’s not a consumer or software business everyone knows about, where you can easily conduct due diligence online. So, you need to get out there, see the people, see the quality of what's happening, and meet everyone. That has been difficult, but it’s getting easier. I think we feel better about our capacity to move forward now. Our pipeline of M&A has strengthened. I certainly hope so. The other thing I mentioned in my comments was we added a specific subcommittee to our Board, led by Mark Holdsworth, our newest Board member, to focus completely on M&A. That’s the purpose of doing this, to get faster, better, more focused, and ensure that we are hitting on all cylinders. So, we hope to see at least a decent sized transaction this year.

Aman Gulani, Analyst

Okay, that’s helpful. I guess maybe if I could squeeze one more in. In terms of capabilities, what do you think you'd be interested in acquiring? Do you think it would be something that you'd want to expand in your direct air cooling offering or your small cell offering? Any color on that would be helpful?

Rob Dawson, President and CEO

Yes, sure. I think the biggest thing for us is to find related, but not duplicate product areas where we already have success. We're looking to add additional product lines that are similar or even things that could slightly overlap, but just buying another cable assembly production kind of business isn't really our plan. Now, if an exceptional opportunity comes along, sure, we'll consider it. However, we'd like to tap into additional distribution channels, focusing on product areas that help us complete the full build of materials for a lot of applications that we’re already observing. This involves passive components; we like passive components, as they fit nicely with what we do overall. There are a number of components that go inside an integrated solution, like a small cell cabinet that we currently don’t manufacture, so we’d like to potentially expand that build of materials, if possible.

Aman Gulani, Analyst

Thank you, gentlemen. I'll pass it on.

Rob Dawson, President and CEO

Thank you.

Operator, Operator

Our next question comes from Hal Granger of Great Quarter Research. Please state your question.

Hal Granger, Analyst

Thank you for taking my question. Rob, I was looking back at press releases, historical press releases for RF Industries, and I noted that June 20 of 2017, there was a press release announcing that you were hired. At that date, your stock closed at $1.51 and now it's quadrupled. I wanted to give you kudos for that. I think if the stock price suggests you're doing a good job, I would agree with that.

Rob Dawson, President and CEO

Well, thanks Hal. It feels like just yesterday. That's been really easy. I appreciate that.

Hal Granger, Analyst

Yes, and more to come. So, I was quickly looking through your Q and had a question about the statement of cash flows. So, I guess this might be for Peter. Your other current assets line was noteworthy. But I noticed that this relates to taxes, and perhaps with PPP. So, can you walk us through what's going on with your tax line in the other current assets?

Peter Yin, CFO

Yes, like you mentioned, a majority of that is related to the PPP loan and the shift from long-term to short-term. The other piece of that is just associated with taxes that we're managing. Part of that is there were some rulings related to how we can treat the PPP and certain deductions we can take; that we couldn't take; subsequently, the rules changed around that, so we cannot take a different stance on it. So, you hit the nail on the head about taxes and PPP.

Hal Granger, Analyst

Okay. Thank you. I really like the addition of Mark Holdsworth to Sherry Cefali and the establishment of a subcommittee of the Board focused on acquisitions. I think acquisitions can be a powerful tool to grow a company, but it's also tricky, so it's important to get it right. Can you talk about your guidance regarding revenues for fiscal 2021 compared to fiscal 2020? It sounds like more of the revenue ramp up will occur in the second half of fiscal 2021. We've already entered one quarter under our belts, which was down year-over-year. Can you kind of walk us through what you're thinking sequentially, maybe quarter-by-quarter? How will that play out?

Rob Dawson, President and CEO

Yes, sure. So, as you noted, our first quarter is traditionally our toughest for holiday reasons and fewer business days. We expect to get better from here. We're anticipating sequential growth as we progress throughout the year. The way we see it today is sequential growth happening from quarters 1, 2, 3, 4, exactly as laid out. Also, I’d note that little movements in shipping orders can significantly influence short-term changes in our results due to our results' overall size. So, it's harder to provide immediate guidance than it is to say, we expect a nice growth trajectory over the year. We believe there will be a more normalized build season and, based on our discussions with distributors and many of our manufacturer partners, they sense the same trend. Unless you’re in data centers or broadband radio sectors, many have seen stellar results in the past year due to the network topology shift. However, we think that the normal wireless spending should return in the next couple of quarters, which should project our results along a traditional growth trajectory.

Hal Granger, Analyst

Okay. In the past, you've provided a sales revenue target going out. Can you update that revenue target?

Rob Dawson, President and CEO

Yes, we set a goal several years ago for a combination of organic and inorganic growth. We aimed to grow from the $23 million in sales we had in 2017 to $100 million over the following few years. As you know, we've experienced some setbacks, including a year-over-year decline in 2020 compared to 2019, which has complicated that trajectory. We're regaining organic growth. Our M&A strategy intends to bring us closer to that $100 million mark. While the timing may have shifted, I’m driven to achieve growth and we are laser-focused on restoring organic growth as a major priority. We believe we have a path towards this and that’s how we are guiding for this year — aiming for growth and then supplementing that with acquisitions.

Hal Granger, Analyst

Great. So, the addition of Mark Holdsworth along with Sherry Cefali on the Board, both possessing extensive M&A experience, should suggest to us a continuation of the previous plan? Or does that imply that the M&A aspect of your business is now planned to be much larger than it had previously been?

Rob Dawson, President and CEO

Yes, good question. I don’t want to suggest that our plan is different than it has been. I think this adds fuel to our efforts from an expertise perspective and enhances focus. The intent of forming a Board subcommittee focused on M&A is to ensure we have the right expertise to help guide us on this front as we evaluate opportunities, promptly review various deals, engage in financing discussions, and ensure we’re considering creative approaches for those transactions. Having experts available for insight, as we explore M&A, is a big deal. Additionally, Mark's role as a significant shareholder aligns well with the interests of our shareholders. My commitment remains to deliver the best results and focus on maximizing shareholder value. We’ve encountered challenges in organic results, yet we’re motivated to pursue the inorganic side aggressively. The additional resources on our Board will help us effectively evaluate prospects moving forward.

Hal Granger, Analyst

Great. Thank you very much.

Rob Dawson, President and CEO

Thanks, Hal.

Operator, Operator

There are no more questions at this time. We have reached the end of the question-and-answer session and I will now turn the call over to Robert Dawson for closing remarks.

Rob Dawson, President and CEO

Great. Thanks Hilary and thanks everyone for joining our call today. We appreciate your support of RF Industries. Peter and I look forward to recording our second quarter results in June and we'll speak to some of you next Tuesday at the ROTH Virtual Conference. Thank you again for joining and have a great day.

Operator, Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.