Greetings and welcome to the RF Industries fiscal 2014 first quarter financial results conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded, I would now like to turn the conference over to your host, John Nesbett of IMS. Thank you sir, please go ahead.
Good morning and for the rest of you good afternoon and thank you for calling in. On the phone we have Howard Hill, Chief Executive Officer; and Mark Turfler, Chief Financial Officer of RF Industries. Howard will provide an overview of operations and Mark will review the financials, after which time we will open up the call up for questions.
Let me take a moment to read the Safe Harbor statement. Please note that except for historical statements, statements in this release may constitute forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. When used, the words anticipates, beliefs, expects, intends, future and other similar expressions, 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 and actual results may differ materially from the outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from actual results include delays in development, marketing or sales of new products and other risks and uncertainties discussed in the Company's periodic reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. RF Industries undertakes no obligation to update or revise any forward-looking statements.
Okay I will now turn the call over to Howard. Go ahead, Howard.
Well thank you, John. Welcome to our first quarter 2014 earnings conference call. I hope most of you had the chance to review the press release issued earlier this morning. During our first quarter as we anticipated and forecast in our previous earning calls, we saw a decrease in consolidated revenue. We remain profitable despite lower sales. Consolidated revenue of 5.9 million was well within the revenue projections for the first quarter and we are pleased to have achieved a moderate profitability of $0.03 per share, basic and diluted shares also as projected.
The decline in revenue in the quarter was largely significant to a decline in revenue at Cable Unlimited. The decreased revenue at Cable Unlimited during the quarter was related to a decrease in demand for the OptiFlex fiber optic cable users. We began to see a slowdown in the demand at OptiFlex in the fall of last year which continued to this year. OptiFlex was significantly developed for the wireless provider who were in the process of upgrading. We feel the major decline in revenue was related to the weather across the United States. The weather also reflected the core business in the connector and cable assembly.
However we are optimistic about the long-terms prospectives of our existing products and in the new products we are developing. We also are weathering the storm we have had in the past and we have had in the past. Our technology in the wireless space is constantly changing to address the growing continuous demand for the wireless products to meet consumers’ needs.
Our ability to provide cabling solution for cell towers has opened new opportunities of us as a provider of other interconnect products for the wireless systems and it has increased our recognition as our industry's provider.
We are pleased to achieving 9% increase in revenue for the quarter and our medical cabling segment, largely due to the increase of sales of existing customer. We also believe that a significant growth for the ability to provide interface solutions in the medical industry. The balance sheet remains strong, the cash and cash equivalents are 14 million, no long term debt and the current ratio of 12.4 to 1 which allows us to invest in our growth while also retain capital -- returning capital to our shareholders through dividends such as one we recently announced this Monday. Our balance sheet continues to provide a sound foundation for our growth.
I will now turn over the call to Mark to review details and discussions of the financial result of the current quarter. Mark.
Thank you, Howard. For the first quarter ended January 31, 2014 we reported consolidated net sales of 5.9 million, a decrease of 41% compared to the first quarter of fiscal 2013, primarily due to decreased sales of Cables Unlimited. Gross margin in the quarter declined to 44% compared to 46% in fiscal 2013 first quarter largely due the declining gross margins in the Cables Unlimited segment.
Operating expenses for the quarter decreased by 12% to 2.2 million compared to the first quarter of last year primarily because the fiscal 2013 quarter included lump sum bonus payments to senior management as well as increased legal and consulting fees in connection with the termination and replacement of an employee in the first quarter of 2013.
First quarter 2014 consolidated operating income was $339,000 with an operating margin of 5.8% compared to an operating income of 2 million and an operating margin of 20.4% in the same quarter last year. The decrease in operating income was largely due to the decrease in sales of Cables Unlimited. Our first quarter tax provision was $82,000 for an effective tax rate of 24%, compared to $564,000 for an effective tax rate of 28% for the same quarter last year. The decreased tax provision and effective tax rate was due to primarily to lower income during the quarter and the tax benefit derived from the exercise of incentive stock options by our employees.
Income from continuing operations was 264,000 or $0.03 per diluted share for the first quarter as compared to 1.5 million or $0.21 per diluted share in the first quarter of 2013. We discontinued and sold our radio mobile division during the fourth quarter of fiscal 2013 and as a result, income from discontinued operations net of tax for the first quarter of fiscal 2014 was $1,000 compared to income from discontinued operations net of tax of 25,000 for the prior year quarter.
Turning to details of our business segments for the first quarter, Q1 sales for Cables Unlimited were 2.1 million or a 61% decrease from 5.4 million in the first quarter of 2013. Q1 operating loss for CUI was a $169,000 compared to operating profit of 1.3 million in 2013. Q1 2014 sales for the RF Connector and Cables Assembly segment were $3 million, a 22% decrease from 3.8 million in 2013. Q1 2014 operating income decreased to 368,000 compared to 551,000 the same quarter last year. Q1 2014 sales in our Medical Cabling and Interconnect segment were $800,000 a 9% increase from 700,000 in 2013. Q1 2014 operating income of 140,000 decreased slightly from operating income of 157,000 in the same quarter last year.
Turning to the balance sheet, as of January 31, 2014 we had 12.8 million in cash and cash equivalents, an increase of almost $900,000 since yearend. In addition to the current ratio of 12 to 1, we have no debt. As a result our balance sheet remains extremely strong and allows us to return capital to our shareholders through dividends and/or stock repurchases, while also allowing us to consider strategic acquisition.
This concludes my discussion of financial results, Howard.
Thank you, Mark. Demand in wireless products is growing. Our goal is for the company to continue to develop state of the art customized product solutions so that our customers can remain competitive in the marketplace. We don’t like to see revenue fall, but we've been doing this a long time to recognize that particularly in a dynamic industries the sales may be sluggish and new product -- when new products are developed and introduced.
Profitability has always been the priority of one, we have been able to maintain through for 20 years. Our first quarter is a start of 21 years of making money. We have moved forward, we will focus on -- and we are focusing on using extensive capabilities to provide our innovative custom product solutions to our existing clients base while we’re developing a pipeline of new customers. I’d like to thank our employees and -- for their continued support of our shareholders.
I will it now turn over the floor to questions and answers. Operator, are you ready to take the first question?
(Operator Instructions) And our first question comes from the line of [Katie Price with Northwest Management] (ph). Please proceed with your question.
Hi, thanks for taking my question, would you mind providing some more color around the gross margin performance of the non-Cables Unlimited businesses?
Sure, despite the decline in sales in the first quarter of this year compared to first quarter of last year, aactually our gross margins increased at each of the other two divisions. In particular our gross margins at the Cables and Connectors division was 55.4%, which was an increase of almost 1% over the prior period. In addition, our Bioconnect segment also increased its gross margin percentage by almost 1.1%. So quite frankly, what we've found is despite the downturn in sales we're still managing our expenses and still maintaining our margins which we anticipate will continue. The gross margin at the OptiPlex division is a lot of different based on the type of product. And this is a very expensive product compared to our other products, so we have a good gross margin there but it's not as large as the other one.
Thank you. (Operator Instructions) I see we have no further questions at this time. I'd like to turn the floor back over to management.
I'd like to thank everybody for joining the conference call and we're looking forward to reporting an increase in sales hopefully by the next quarter. Thank you and have a great day.
Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
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