RF Industries2.pptx

RF INDUSTRIES
Management Presentation
1
Prepared by
Disclaimer: This is a purely hypothetical situation created by AG Consulting for marketing purposes only.
Sources of Data: All data is publicly available mainly from Bishop & Associates & 10-K filings, websites of respective
companies. PE data is from company websites.

2
Corporate Profile, History &
Selected Financial Information
RF INDUSTRIES

Corporate Profile & Transaction
RF Industries
3
Founding Est. 1979 by current CEO Howard Hill
Headquarters San Diego, CA with facilities in NV & NY
Products Connectors & Cable Assemblies
Clients Wireless Carriers (AT&T, Verizon), healthcare, military & aerospace
Key Events
• In 2011 acquired Cables Unlimited, a large NY company, and
significantly expanded its capabilities
• Over past two years, sold off poorly performing wireless division
Employees 178 people (Admin/sales-57, Operations-116, Engineers-5)
Awards Forbes Best 200 Small Companies & Forbes Best 100
Transaction RFIL is looking to sell itself completely to company or investor

4
Management
•Successfully competed for 30yrs against ultra-low cost Asian
manufacturers as well as domestic conglomerates with billion dollar
budgets
•Very experienced and stable management in place since company’s
founding in 1979
•Consistently created value via organic growth and acquisitions
Operations
•Off shored manufacturing to Asia and concentrated on competitive
advantages in designing, development and marketing
•Strategically acquired specializations to gain access to sensitive,
specialized and high margin clients
•Developed the blockbuster product Optiflex that has proven to be a
runaway hit with clients
Financial
Performance
•Remained profitable for 20 straight years even through tough times
•Acquired Cables Unlimited for only $5.6mn which has already paid
itself off
•Has remained debt free
•Produced industry leading profitability
Key Highlights
A Story of Success

5
Sales
11,200
13,100
15,200
14,800
17,695
14,213
16,322
19,434
30,233
2004 2005 2006 2007 2008 2009 2010 2011 2012
EBITDA
2,217
962
2,700
1,970
2,725
1,146
2,218
1,528
4,675
2004 2005 2006 2007 2008 2009 2010 2011 2012
Geographical Sales Industry Sales (Est.)
Key Financial Information
USA
94%
Canada
1%
Mexico
3%
Israel
2%
Communica
tion
88%
Medical
11%
Military
1%

Company Products
• Cables are wires that transfer data, power etc. from one point to
another (e.g.- internet cable)
• They consist of thin wire that actually transmits the signal
surrounded by layers
• The inner wire can be either copper (older) or fiber (newer)
• Connectors are plugs that connect cables to end points and enable
transfer of signal
• End points are computers, servers or telephone sets etc.
Cables
Connectors
Description
6
Cable
Assemblies
• When connectors and cables are put together, it is called a cable
assembly
• It’s generally made according to client’s requirements
• The company offers more than 100,000 combinations of cable
assemblies
• This is the company’s best selling product branded “Optiflex”

Company Divisions
• Deals in copper connectors and cable assemblies for wireless firms
• Outsources manufacturing of products to Asia & US firms
• Design and final assembly done in San Diego
• Specializes in cables for aerospace and military
• Designs & manufactures all products internally in Las Vegas
Traditional
Cables &
Connectors
Aviel
Electronics
Activity
7
Bioconnect
• Specializes in products for healthcare industry
• Like Aviel does everything in-house
Cables
Unlimited
• Newest & fastest growing division of the company
• Makes fiber optic cables for wireless carriers
• Procures inputs from 3rd parties but assembles itself
• Makes the ‘Optiflex’ blockbuster product
Oddcables
.com
• Sells cables etc. from store front in San Diego & website
• Serves individuals and local companies mostly

Key Personnel
• Founder & CEO since 1979
• Has over 58 years experience in
electronics industry
• Joined ‘06; President in ‘11
• Experienced in finance/acct.
• CFO since ‘13
• 35 yrs. Experience in finance &
accounting
• More than 20yrs. Experience in
banking at Union Bank
• Head of business banking, VP
• CEO, Cables Unlimited for 20y
• Key manager of company
Howard Hill
CEO
James Doss
President
Experience
8
Mark Turfler
CFO
Joseph Benoit
Board of
Directors
Darren Clark
Board of
Directors
ExpertiseEducation
None
Mentioned
Business
Operations
BS Finance
San Diego St.
Finance
Accounting
BS, CPA
Syracuse
Finance
Accounting
BS. SDSU
MBA, Nat Uni.
Finance
Accounting
None
Mentioned
Business
Operations

9
Industry Overview
RF INDUSTRIES

Industry Overview
• Both cables and connectors are a critical part of any technological infrastructure
• Virtually every industry uses these in one way or another
• Industry cyclical due to nature of customer industries
• Experienced major declines during dot-com bust and the recent recession
• Communications firms lumpy due to massive once-in-decade rollouts for 3G, 4G etc.
• Clients are highly susceptible to sudden, disruptive changes in technologies (iPhones)
• However, industry itself is much more stable as cables/connectors are only changed
slowly over time
Net Profit Margin Sales Growth ROE & ROA
9%
-17%
13%
13%
12%
13%
2008 2009 2010 2011 2012 2013
11.0%
18.0%
7.5%
13.0%
7.6%
2.7%
-22.0%
28.0%
6.5%
-3.0%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
15%
-20%
12%
13%
11%
8%
-10%
7% 7% 6%
2008 2009 2010 2011 2012
ROE ROA
10

Industry Overview
• Global market size for connectors is about $45-46bn (management estimates)
• Since 2002 global connector sales have increased at a 6% CAGR, cables at 6.8%
• By 2017, projected global cable spending $8bn, connectors $60bn
• US biggest consumer of cable assemblies, China for connectors
• China biggest driver of growth, US share fell 12% points in past decade
• Major customers include auto, telecom, healthcare, tech
Sales by Country Sales by Industry World Sales ($bn)
$10
$10
$6
$11
$8
$3
North
America
Europe Japan China Rest of
Asia
ROW
4.50%
3.10%
3.30%
3.20%
6.40%
5.00%
1.50%
3.20%
$9
$17
$34
$46 $47
1980 1990 2000 2010 2012
11

Industry Overview
• Market fragmented
with 1000s of
manufacturers
• China alone has 500-
600 suppliers, most of
them homegrown
• Below, number of Top
10 companies by
various classifications
Fragmentation
• Only 1 company has
>15% share
• But smaller players
can establish niches
• Below, global market
share of Top 5
companies
• Top 10 companies
fairly strong and
consolidating more
• >300 M&As since
1980
• Graph: Combined
market share of
Top 10
Market Power Top 10 Players
29
38
34
Geography Industry Product 40%
43%
51%
53%
60%
1980 1990 2000 2010 2012
18%
9%
7%
5%
5%
TE Conn. Amphenol Molex Foxconn Delphi 12

Industry Overview
• We’ve already seen competitors are consolidating
• Customers are too:
– Wireless carriers shrink from 7 major players to 4 in
the last 10 years
– Further consolidation underway
• So, both competitors and clients are becoming stronger,
more coordinated and with more bargaining power
Consolidation Trend
• Meanwhile the industry
is also facing falling
connector prices
• $1 in 2005 only worth
$0.89 in 2012
• This plus rising
commodities & wages
Pricing Pressure
ATT
14%
Verizon
24%
TMobile
13%
Sprint
10%
Nextel
8%
Cingular
15%
Alltel
8%
Others
8%
ATT
30%
Verizon
32%
TMobile
12%
Sprint
18%
Others
8%
2002 2012
13
-4%
-3%
-2%
0%
-2%
-3%
3%
0%
2005 2006 2007 2008 2009 2010 2011 2012
Price Erosion

Three Industries in Focus
• Most important client,
by far, for RFIL
• Record spending driven
by LTE/4G expansion
• By 2017, projected to
spend:
– $37bn in capex
– $56bn in opex
• Key driver of growth
• Outlook: Very Positive
• Ageing population and
threat of product
liability lawsuits driving
demand
• Obamacare expected to
provide a boost
• Hospitals, equipment
companies prime
spenders
• Projected to spend
$4.0tr by 2017
• Outlook: Positive
• Primary customers,
directly or indirectly is
the government
• But declining due to
sharp budget cuts and
winding down of wars
• Defense spending
expected to fall by
$280bn over next 5 yrs.
• Outlook: Negative
Wireless Telecom Healthcare Mil/Aerospace
14
Industry Overview

15
Company Financial Highlights
RF INDUSTRIES

• Since 2002, EBITDA has grown at a CAGR of 8.6%, Sales at 11%
• Company has been on an impressive 19 year profit streak
• Remained profitable even during the Great Recession and dot-com bust
• Gross margins consistent at 50% and considerably better than industry
• Management strives to keep SG&A costs low especially during the current
period of very high growth
Gross Margin EBIT Margin
12%
12%
-13%
12%
13%
14%
6%
12%
6%
13%
2008 2009 2010 2011 2012
Industry Firm
27%
31% 30% 30%
32%
52% 50% 51% 50%
46%
2008 2009 2010 2011 2012
Industry Firm
16
Income Statement

17
Receivables, Days Inventory, Days
Payables, Days • Cash flows little constrained
• Expenses, payables have very
low time delay before payments
• Customers however have 30 day
payment terms
• Inventories kept high to maintain
shorter delivery times
43
58 57
49
62
2008 2009 2010 2011 2012
14
12
25
20
32
2008 2009 2010 2011 2012
253 257
212
233
155
2008 2009 2010 2011 2012
Cash Flow

Book Value
Assets Breakdown
• Healthy balance sheet, no debt
• Strong growth in book value,
limited intangibles
• Gives flexibility for large
acquisitions or capex
• Financing substantial dividends,
including a special dividend
16,122 15,253
16,914
19,464 20,230
2008 2009 2010 2011 2012
18
0 5,000 10,000 15,000 20,000 25,000
Cash
Receivables
Inventories
Othercurrent assets
PPE, net
Goodwill
Intangibleassets
Otherlong-termassets
Total assets
Balance Sheet

19
Division Contribution to Revenue
95% 93% 79%
9%
86%
9%
86%
10%
72%
11% 14%
47%
9%
36%
TradC&C TradC&C TradC&C Medical TradC&C Medical TradC&C Medical TradC&C Medical FiberOp. TradC&C Medical FiberOp.
2006 2007 2008 2009 2010 2011 2012
Division Pretax Income Margins
16%
10%
15%
17%
13%
9%
20%
17%
10%
20%
0%
12%
25%
16%
2006 2007 2008 2009 2010 2011 2012
Division Profitability: Asset Turnover
2.4x 2.7x 2.6x
4.0x
2.7x
4.3x
3.3x
5.7x
2.7x
3.5x
0.3x
2.6x
4.3x
1.6x
2006 2007 2008 2009 2010 2011 2012
Divisional Breakdown

Comparative Financial Performance
• RFIL has consistently been more profitable more often than larger, more
resourceful competitors
• Industry leading ROE is much higher than peers despite zero debt
• This understates the outperformance of RFIL as its best division hasn’t
been fully integrated yet
• This also highlights the superior management of RFIL and the value of
product specialization versus plain economics of scale
Performance Analysis of RFIL Competitors
Company EBITDA Operating Net Income Assets Equity
Alliance Fiber Op. Prod. 16.0% 20.0% 26.0% 0.0 21.0% 26.0%
Amphenol Corp 22.0% 19.0% 13.0% 70.1 10.0% 24.0%
Belden Inc 11.0% 3.0% 2.0% 160.0 5.0% 6.0%
Bel Fuse 7.0% 3.8% 2.2% 5.6 2.6% 3.3%
Molex Inc 17.0% 6.0% 9.0% 14.0 6.0% 10.0%
Optical Cable Corp. 8.0% 5.0% 3.0% 39.0 1.4% 1.4%
Average 13.5% 9.5% 9.2% 48.1 7.7% 11.8%
Median 13.5% 5.5% 6.0% 26.5 5.5% 8.0%
RF Industries 15.0% 13.0% 9.0% 0.0 17.0% 23.0%
LTM Margins
Debt/Equity
Return on
20

21
Strengths
• Experienced managers have proven skill with consistent growth & profitability
• Financial stability due to no debt gives room for risk-taking and expansion
• Optiflex has gained enormous traction quickly highlighting an underserved need
Weakness
• Geographical reach is limited to only North America which limits future growth
• Industry concentration in wireless telecom will pinch as LTE spending moderates
• No vertical integration forces high inventory and bottleneck cash flow
Opportunities
• Repeat Optiflex’s success in foreign markets ala Xerox
• Expanding in newer markets such as healthcare when 4G party is over
• New products like low PIM connectors might have potential
Threats
• Rip-off Optiflex substitutes from China can cut into sales
• Boom decade ending- the last 15 years was especially profitable starting with dot
com boom->3G expansion->smartphone revolution->4G expansion
SWOT Analysis

22
Valuation
RF INDUSTRIES

Valuation: DCF
• Sales driven primarily by wireless industry expansion on 4G/LTE
• In past, revenues have strongly correlated with wireless industry capex
• Gross margins historically at 50%; but will fall as margins at Cables
Unlimited in the 30-40% range
• Inventories will continue to be high to maintain quick turnaround times
• Depreciation assumed equal to capex
Assumptions
RFIL Sales - Wireless CapexWACC
2008 2009 2010 2011 2012
Sales WirelessCapex 23
• Beta=1.0
• Risk Premium=6%
• Risk-free=0%
• D/E=0
• WACC=6%

Valuation: DCF & Perpetuity Growth
2013 2014 2015 2016 2017
Sales $34,767,551 $39,982,684 $45,980,086 $52,877,099 $60,808,664
EBITDA 4,772,334 5,488,184 6,311,412 7,258,124 8,346,842
Less: D & A -839,698 -932,653 -1,039,551 -1,162,483 -1,303,856
EBIT 3,932,636 4,555,532 5,271,861 6,095,641 7,042,987
Less: Taxes 1,376,423 1,594,436 1,845,152 2,133,474 2,465,045
Post-Tax EBIT 2,556,214 2,961,096 3,426,710 3,962,166 4,577,941
Plus: D & A 839,698 932,653 1,039,551 1,162,483 1,303,856
Less: Capex -619,698 -712,653 -819,551 -942,483 -1,083,856
Change in Working Cap -4,519,363 -2,089,705 -2,403,160 -2,763,634 -3,178,180
Unlevered FCF -1,743,149 1,091,391 1,243,550 1,418,532 1,619,762
Projected
Discounted Cash Flow Model
• Using the perpetuity growth formula and a 6% WACC
– Present Value of Cash flows= $2.7mn
– Present Value of Terminal Value= $41.5mn
– Enterprise Value= $45mn (approx.)
– Equity Value=$50mn (approx.)
24

Valuation: Exit Multiple
Precedent Transactions in Industry
• As is evident from above table, a
multiple of sales is very stable
across many deals
• Using a 2.0x sales multiple, we
get a Equity Value of about
$100mn
Exit Multiple: Sales
Molex/Koch Ind. 2013 $3,600.0 $7,200.0 2.0x
Affinity/Molex 2012 29.0 55.0 1.9x
PPC/Belden 2012 240.0 510.0 2.1x
Thermax/Carlisle 2012 112.0 265.0 2.4x
Cinch/Bel Fuse 2010 60.0 40.0 0.7x
FCT/Molex 2013
Array/Bel Fuse 2013
Average 1.8x
Median 2.0x
Sales
Transaction
Value
Description of Target Company
Details not announced
TV/Sales
Year
Announced
Target/ Acquirer
Electronic products like cables/connectors
Interconnect products for healthcare
Connectors for broadband industry
Cables for military/aerospace
Interconnect products for military/aerospace
Connectors & cable assemblies
Interconnect products for military/aerospace
WACC 6.00%
NPV of FCF 2,704,952
Exit Multiple 2.0
Terminal Value 121,617,328
PV of TV 90,879,542
EV 93,584,494
Less: Net Debt (5,491,768)
Equity Value $99,076,262 25

Valuation: Exit Multiple
Market Multiple Analysis of Public Comparables
• Using the median EBITDA multiple of 12x , we get an equity value
=$83mn
• Using a value of equity/earnings multiple of 26.5x, we get an equity
value= $93mn
• Overall, value of company falls between $50-100mn
Company Market Cap Sales EBITDA Sales Net Income
Alliance Fiber Op. Prod. $275.0 $268.0 4.0x 17.5x 4.0x 16.0x
Amphenol Corp 12,000.0 13,300.0 3.0x 13.0x 3.0x 21.0x
Belden Inc 3,000.0 3,400.0 2.0x 13.5x 1.6x 26.0x
Bel Fuse 243.0 253.0 0.8x 11.0x 0.7x 33.0x
Molex Inc 7,000.0 6,500.0 2.0x 10.0x 2.0x 27.0x
Optical Cable Corp. 25.0 37.0 0.5x 11.0x 0.3x 56.0x
Average 2.0x 12.7x 1.9x 29.8x
Median 2.0x 12.0x 1.8x 26.5x
RF Industries 71.0 56.0 2.6x 2.3x 15.0x
Enterprise Value / Price /Enterprise
Value
26

27
Buyers List
RF INDUSTRIES

28
Molex Corp Amphenol Bel Fuse All. Fib Op.
Revenue $3.6bn $4.3bn $300mn $47mn
Mkt. Cap. $7bn $13bn $300mn $275mn
Description
One of world’s
largest
connector
companies
One of world’s
largest
connector
companies
Makes
connectors,
magnetic
products
Makes only
optic fiber
connectors,
cables
Synergies
Strong
geographic &
customer base
Strong
geographic &
customer base
Good
geographic &
customer base
Only Strong
geographic
Product Fit High High Low High
Fit Very Good Very Good Good Excellent
Strategic Buyers
• Strategic Buyers are firms who would benefit directly by acquiring RFIL
• Generally competitors who might want to augment existing operations
• Other strategic buyers include verticals like wireless carrier clients

In Focus: Alliance Fiber Optics
• Deals exclusively in fiber optic cables, connectors and other items
– Products are very complementary to RFIL’s coaxial products
– Also supplementary to new optic fiber division of RFIL
• AFOP only caters to the wireless carrier industry
– RFIL can deepen access to carriers
• Very strong geographical synergies
– 60% of AFOP’s revenues from outside North America
– Basically it’s a Chinese company based in California
• As can be seen from the table, both companies are very similar
• AFOP can be a strong contender as a potential acquirer 29
Revenue
Gross
Margin
EBIT
Margin
10Y
Growth
Debt PEG P/E P/B P/S
AFOP $47mn 35% 10% 13.5% 0 17.5 18.5 1.4 1.9
RFIL $30mn 50% 13% 13% 0 13.1 20 1.2 1.2
Key Metrics Comparison

30
Focus Investment Size Synergies Fit Location
Alta
Comm.
Media
Telecom
$10-30mn Strong Excellent MA
Thermo
Comp.
Telecom
Technology
$5-100mn Strong Excellent CO
Clarity
Partners
Media
Telecom
Not Mentioned Low Low CA
Spire
Capital
Biz Services
Telecom
$15-40mn Good Good NY
• These are private equity firms focused on telecommunications
• PE firms look for companies with low existing debt and stable EBITDA
• Synergies refer to synergies with other portfolio companies
• All provide management expertise to portfolio companies
Financial Sponsors

31
Final Thoughts
RF INDUSTRIES

Final Points
• Company is seeking a buyer for 100% of the equity
• Managers are willing to stay on in their current roles if favorable terms are
provided
• Strong fundamentals standalone and versus competitors makes for a strong
valuation
32
Created by:
abhishekgoel002@gmail.com

33
Appendix: Excel Models
RF INDUSTRIES

34
Income Statement for RFIl
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Sales 17,695,146 14,213,045 16,322,178 19,433,503 30,232,653 34,767,551 39,982,684 45,980,086 52,877,099 60,808,664
Cost of Sales (excl. D&A) 8,578,215 7,068,702 7,944,532 9,705,497 16,399,009 17,458,158 20,076,882 23,088,414 26,551,677 30,534,428
Gross profit 9,116,931 7,144,343 8,377,646 9,728,006 13,833,644 17,309,393 19,905,802 22,891,672 26,325,423 30,274,236
SG&A Expense 5,341,576 5,788,663 6,021,832 8,200,268 9,158,580 12,537,058 14,417,617 16,580,260 19,067,299 21,927,394
Other operating expenses 1,050,574 209,763 137,328 0 0
EBITDA 2,724,781 1,145,917 2,218,486 1,527,738 4,675,064 4,772,334 5,488,184 6,311,412 7,258,124 8,346,842
Depreciation & Amortization 211,389.0 239,777.0 214,266.0 391,633.0 599,824.0 839,697.9 932,652.6 1,039,550.5 1,162,483.1 1,303,855.6
EBIT 2,513,392 906,140 2,004,220 1,136,105 4,075,240 3,932,636 4,555,532 5,271,861 6,095,641 7,042,987
Interest Expense 0 0 0 28,804 0
Interest Income 0 0 0 0 0
Other Income/Expenses 258,381 193,429 86,614 44,542 37,669
Income before taxes 2,771,773 1,099,569 2,090,834 1,151,843 4,112,909 3,932,636 4,555,532 5,271,861 6,095,641 7,042,987
Provision for income taxes 1,212,540 443,602 870,587 378,832 1,500,487 1,376,423 1,594,436 1,845,152 2,133,474 2,465,045
Minnority Interest 0 0 0 2,727 -1,848
Net income 1,559,233 655,967 1,220,247 775,738 2,610,574 2,556,214 2,961,096 3,426,710 3,962,166 4,577,941
Diluted Weighted Shares Outstanding 7,424,919 6,497,808 6,485,610 7,291,848 7,680,743 7,680,743 7,680,743 7,680,743 7,680,743 7,680,743
EPS $0.21 $0.10 $0.19 $0.11 $0.34 $0.33 $0.39 $0.45 $0.52 $0.60
Ratios & Assumptions
Sales Growth Rate -20% 15% 19% 56% 15% 15% 15% 15% 15%
Gross Margin 52% 50% 51% 50% 46% 50% 50% 50% 50% 50%
SG&A expenses (as % of sales) 30% 41% 37% 42% 30% 36% 36% 36% 36% 36%
Other operating income (expense) 1,050,574 209,763 137,328 0 0 0 0 0 0 0
Effective tax rate 44% 40% 42% 33% 36% 35% 35% 35% 35% 35%
Historical Year Ending Sept 30th, Projected Year Ending Sept 30th,

35
Balance Sheet for RFIl
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Cash 7,924,549 7,702,908 9,306,454 1,760,816 5,491,768 2,361,868 2,066,508 1,923,306 1,955,087 2,188,098
Receivables 2,071,349 2,263,265 2,557,822 2,605,965 5,167,012 5,131,755 5,901,518 6,786,746 7,804,758 8,975,471
Inventories 5,949,708 4,984,921 4,607,843 6,189,601 6,984,546 10,623,115 12,216,582 14,049,069 16,156,430 18,579,894
Other current assets 759,543 818,562 1,061,287 5,856,824 1,400,920 1,738,378 1,999,134 2,299,004 2,643,855 3,040,433
Total current assets 16,705,149 15,769,656 17,533,406 16,413,206 19,044,246 19,855,115 22,183,742 25,058,126 28,560,129 32,783,896
PPE, net 565,860 565,804 530,327 2,442,738 1,204,298 1,204,298 1,204,298 1,204,298 1,204,298 1,204,298
Equity and other investments 0 0 946,491 0 0 0 0 0 0 0
Goodwill 347,091 137,328 0 3,076,023 3,076,023 3,076,023 3,076,023 3,076,023 3,076,023 3,076,023
Intangible assets 0 27,156 0 2,276,171 2,037,213 1,817,213 1,597,213 1,377,213 1,157,213 937,213
Other long-term assets 149,673 98,256 99,139 169,808 101,638 101,638 101,638 101,638 101,638 101,638
Total assets 17,767,773 16,598,200 19,109,363 24,377,946 25,463,418 26,054,287 28,162,914 30,817,298 34,099,301 38,103,068
Accounts payable 329,509 224,974 537,850 521,174 1,429,076 973,406 1,119,417 1,287,330 1,480,429 1,702,494
Accrued liabilities 760,762 673,080 1,217,454 1,489,076 2,101,691 2,160,395 2,484,454 2,857,122 3,285,691 3,778,544
Other current liabilities 232,927 75,134 123,909 1,484,599 609,709 428,081 492,293 566,138 651,058 748,717
Total current liabilities 1,323,198 973,188 1,879,213 3,494,849 4,140,476 3,561,882 4,096,165 4,710,589 5,417,178 6,229,755
Deferred taxes liabilities 105,700 50,500 18,800 1,072,202 1,077,157 1,077,157 1,077,157 1,077,157 1,077,157 1,077,157
Minority interest 0 0 0 213,617 0 0 0 0 0 0
Other long-term liabilities 217,185 321,030 297,390 132,867 15,480 15,480 15,480 15,480 15,480 15,480
Total liabilities 1,646,083 1,344,718 2,195,403 4,913,535 5,233,113 4,654,519 5,188,802 5,803,226 6,509,815 7,322,392
Common stock 32,263 28,483 29,309 71,105 69,783 69,783 69,783 69,783 69,783 69,783
Additional paid-in capital 6,411,810 6,502,447 7,025,965 11,382,605 12,007,523 12,007,523 12,007,523 12,007,523 12,007,523 12,007,523
Retained earnings 9,677,617 8,722,552 9,858,686 8,010,701 8,152,999 9,322,462 10,896,806 12,936,765 15,512,180 18,703,371
Total stockholders' equity 16,121,690 15,253,482 16,913,960 19,464,411 20,230,305 21,399,768 22,974,112 25,014,071 27,589,486 30,780,677
Total liabilities and stockholders' equity$17,767,773 $16,598,200 $19,109,363 $24,377,946 $25,463,418 $26,054,287 $28,162,914 $30,817,298 $34,099,301 $38,103,068
Check 0 0 0 0 0 0 0 0 0 0

36
Cash Flow Statement for RFIl
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Cash Flows From Operating Activities
Net income 1,559,233 655,967 1,220,247 775,738 2,610,574 2,556,214 2,961,096 3,426,710 3,962,166 4,577,941
Depreciation & amortization 211,389 239,777 214,266 391,633 599,824 839,698 932,653 1,039,551 1,162,483 1,303,856
Investment/asset impairment charges 0 209,763 137,328 0 0
Deferred income taxes -184,700 8,700 -166,600 16,940 -145,311
Stock based compensation 0 153,197 231,000 312,311 263,935
Accounts receivable 0 -200,026 -309,835 750,531 -2,584,752
Inventory -994,406 964,787 129,539 -1,228,728 -794,945
Accounts payable 0 -104,535 312,876 -302,843 907,902
Accrued liabilities 0 -57,682 554,590 210,645 536,265
Income taxes payable 0 -157,793 0 -384,226 1,269,439
Other working capital 92,374 -21,968 -5,338 -212,406 -266,453
Other non-cash items 460,304 12,936 184,583 -204,024 -63,383 -4,519,362.7 -2,089,704.7 -2,403,160.4 -2,763,634.5 -3,178,179.6
Net cash provided by operating activities1,144,194 1,703,123 2,502,656 125,571 2,333,095 -1,123,451 1,804,044 2,063,100 2,361,015 2,703,617
Cash Flows From Investing Activities
Investments in property, plant, and equipment-461,066 -217,392 -151,850 -368,205 -590,100 -619,698 -712,653 -819,551 -942,483 -1,083,856
Acquisitions, net 0 0 0 -2,800,000 0
Purchases of investments -11,779,828 -7,015,184 -5,014,406 -4,647,540 0
Sales/Maturities of investments 9,447,797 7,401,914 5,967,327 6,076,877 4,094,724
Other investing activities 0 0 0 0 0
Net cash used for investing activities-2,793,097 169,338 801,071 -1,738,868 3,504,624 -619,698 -712,653 -819,551 -942,483 -1,083,856
Cash Flows From Financing Activities
Common stock issued 190,246 0 0 0 0
Common stock repurchased -532,769 -1,612,592 0 -102,705 -1,143,243
Excess tax benefit from stock based compensation0 0 78,235 312,325 87,088
Dividend paid -394,343 -94,780 -84,113 -2,528,971 -1,386,751 -1,386,751 -1,386,751 -1,386,751 -1,386,751 -1,386,751
Proceeds Stock Options 46,041 0 205,108 981,753 353,791
Net cash provided by (used for) financing activities-690,825 -1,707,372 199,230 -1,337,598 -2,089,115 -1,386,751 -1,386,751 -1,386,751 -1,386,751 -1,386,751
Net change in cash -2,339,728 165,089 3,502,957 -2,968,068 3,730,952 -3,129,900 -295,360 -143,201 31,781 233,011
Cash at beginning of period 3,400,566 1,060,838 1,225,927 4,728,884 1,760,816 5,491,768 2,361,868 2,066,508 1,923,306 1,955,087
Cash at end of period 1,060,838 1,225,927 4,728,884 1,760,816 5,491,768 2,361,868 2,066,508 1,923,306 1,955,087 2,188,098

37
Working Capital Schedule for RFIL
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Sales 17,695,146 14,213,045 16,322,178 19,433,503 30,232,653 34,767,551 39,982,684 45,980,086 52,877,099 60,808,664
Cost of Sales 8,578,215 7,068,702 7,944,532 9,705,497 16,399,009 17,458,158 20,076,882 23,088,414 26,551,677 30,534,428
Working Capital Balances
Accounts Receivable 2,071,349 2,263,265 2,557,822 2,605,965 5,167,012 5,131,755 5,901,518 6,786,746 7,804,758 8,975,471
Inventory 5,949,708 4,984,921 4,607,843 6,189,601 6,984,546 10,623,115 12,216,582 14,049,069 16,156,430 18,579,894
Other current assets 759,543 818,562 1,061,287 5,856,824 1,400,920 1,738,378 1,999,134 2,299,004 2,643,855 3,040,433
Total non-cash current assets 8,780,600 8,066,748 8,226,952 14,652,390 13,552,478 17,493,247 20,117,234 23,134,819 26,605,042 30,595,799
Account payable 329,509 224,974 537,850 521,174 1,429,076 973,406 1,119,417 1,287,330 1,480,429 1,702,494
Accrued liabilities 760,762 673,080 1,217,454 1,489,076 2,101,691 2,160,395 2,484,454 2,857,122 3,285,691 3,778,544
Other current liabilities 232,927 75,134 123,909 1,484,599 609,709 428,081 492,293 566,138 651,058 748,717
Total non-debt current assets 1,323,198 973,188 1,879,213 3,494,849 4,140,476 3,561,882 4,096,165 4,710,589 5,417,178 6,229,755
NET WORKING CAPITAL (DEFICIT) 7,457,402 7,093,560 6,347,739 11,157,541 9,412,002 13,931,365 16,021,069 18,424,230 21,187,864 24,366,044
(Increase)/Decrease in Net Working Capital 363,842 745,821 -4,809,802 1,745,539 -4,519,363 -2,089,705 -2,403,160 -2,763,634 -3,178,180
Ratios & Assumptions
Number of days in year
Accounts Receivables, net (collection period, days) 43 58 57 49 62 54 54 54 54 54
Inventories (days outstanding) 253 257 212 233 155 222 222 222 222 222
Other current assets (as % of sales) 4.3% 5.8% 6.5% 30.1% 4.6% 5.0% 5.0% 5.0% 5.0% 5.0%
Accounts payable (days outstanding) 14 12 25 20 32 20 20 20 20 20
Accrued Liabilities (as % of cost of sales) 8.9% 9.5% 15.3% 15.3% 12.8% 0.1 0.1 0.1 0.1 0.1
Other current liabilities (as % of cost of sales) 1.3% 0.5% 0.8% 7.6% 2.0% 2.5% 2.5% 2.5% 2.5% 2.5%

38
Depreciation & Amortization Schedule
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Sales 17,695,146 14,213,045 16,322,178 19,433,503 30,232,653 34,767,551 39,982,684 45,980,086 52,877,099 60,808,664
Capital expenditures -461,066 -217,392 -151,850 -368,205 -590,100 -619,698 -712,653 -819,551 -942,483 -1,083,856
Capital expenditures as % of sales -2.6% -1.5% -0.9% -1.9% -2.0% -1.8% -1.8% -1.8% -1.8% -1.8%
Depreciation expense 211,389 239,777 214,266 391,633 599,824 -619,698 -712,653 -819,551 -942,483 -1,083,856
Depreciation as % of CapEx -45.85% -110.30% -141.10% -106.36% -101.65% 100% 100% 100% 100% 100%
Depreciation as % of PP&E, net 37.4% 42.4% 40.4% 16.0% 49.8% -51.5% -59.2% -68.1% -78.3% -90.0%
Beginning Net PP&E 1,204,298 1,204,298 1,204,298 1,204,298 1,204,298
Capital expenditures 619,698 712,653 819,551 942,483 1,083,856
(Depreciation expense) -619,698 -712,653 -819,551 -942,483 -1,083,856
Ending Net PP&E 565,860 565,804 530,327 2,442,738 1,204,298 1,204,298 1,204,298 1,204,298 1,204,298 1,204,298
Beginning Net Amortizable Intangibles 2,037,213 1,817,213 1,597,213 1,377,213 1,157,213
Amortization 220,000 220,000 220,000 220,000 220,000
Ending Net Amortizable Intangibles 1,817,213 1,597,213 1,377,213 1,157,213 937,213

39
2010 2011 2012 2013 2014 2015 2016 2017
Sales $16,322,178 $19,433,503 $30,232,653 $34,767,551 $39,982,684 $45,980,086 $52,877,099 $60,808,664
EBITDA 2,218,486 1,527,738 4,675,064 4,772,334 5,488,184 6,311,412 7,258,124 8,346,842
Less: D & A -214,266 -391,633 -599,824 -839,698 -932,653 -1,039,551 -1,162,483 -1,303,856
EBIT 2,004,220 1,136,105 4,075,240 3,932,636 4,555,532 5,271,861 6,095,641 7,042,987
Less: Taxes 870,587 378,832 1,500,487 1,376,423 1,594,436 1,845,152 2,133,474 2,465,045
Post-Tax EBIT 1,133,633 757,273 2,574,753 2,556,214 2,961,096 3,426,710 3,962,166 4,577,941
Plus: D & A 214,266 391,633 599,824 839,698 932,653 1,039,551 1,162,483 1,303,856
Less: Capex -151,850 -368,205 -590,100 -619,698 -712,653 -819,551 -942,483 -1,083,856
Change in Working Cap 745,821 -4,809,802 1,745,539 -4,519,363 -2,089,705 -2,403,160 -2,763,634 -3,178,180
Unlevered FCF 1,941,870 -4,029,101 4,330,016 -1,743,149 1,091,391 1,243,550 1,418,532 1,619,762
WACC Calculation
Risk-Free 0.0% Cost of Debt 0.0%
Risk Premium 6.0% Tax Rate 34.0%
Beta 1.00 % Debt in Capital 0.0%
Cost of Equity 6.00% WACC 6.00%
Historical Projected
Discounted Cash Flow Analysis for RFIL

40
WACC 6.00% WACC 6.00%
NPV of FCF 2,704,952 NPV of FCF 2,704,952
Terminal Growth Rate 3.00% Exit Multiple 26.5
Terminal Value 55,611,820 Terminal Value 121,315,447
PV of TV 41,556,387 PV of TV 90,653,959
EV 44,261,339 EV 93,358,911
Less: Net Debt (5,491,768) Less: Net Debt (5,491,768)
Equity Value $49,753,107 Equity Value $98,850,679
49,753,107 2.50% 3.00% 3.50% 98,850,679 25.5 26.5 27.5
5.00% 60,366,084 60,366,084 73,691,904 5.00% 99,663,610 99,663,610 103,250,547
5.50% 75,015,825 75,015,825 97,653,651 5.50% 97,516,596 97,516,596 101,019,336
6.00% 75,015,825 75,015,825 97,653,651 6.00% 95,429,775 95,429,775 98,850,679
6.50% 60,366,084 60,366,084 73,691,904 6.50% 93,401,188 93,401,188 96,742,540
7.00% 43,643,569 43,643,569 49,753,107 7.00% 91,428,948 91,428,948 94,692,957
WACC WACC
Perpetuity Growth Sales Multiple
Discounted Cash Flow Analysis for RFIL
Perpetuity Growth Model Exit Multiple
Sensitivity Analysis
Perpetuity Growth Model Exit Multiple Approach

41
Created by:
abhishekgoel002@gmail.com

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