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LAFOX, Ill. - Richardson Electronics, Ltd. (NASDAQ: RELL) has announced an increase in net sales of 2.2% year-over-year (YoY) for the first quarter of fiscal year 2025, marking the first quarterly increase since the third quarter of FY23. The company also noted positive operating cash flow for the second consecutive quarter and a strong balance sheet with $23.0 million in cash and cash equivalents and no debt.
The company's management expressed optimism for the fiscal year, expecting continued sales growth and improved profitability. In the first quarter, the growth was attributed to new program wins and rising demand for legacy programs, particularly in the GES segment, which saw an 84% increase in sales, driven by significant sales of electric locomotive and wind turbine battery modules. Richardson Healthcare also contributed with a 48.7% increase in sales due to higher demand for CT tubes, parts, and systems.
Despite these gains, the company faced a decrease in PMT sales by 4.3% and a decline in Canvys sales, reflecting challenging market conditions in North America and Europe. The backlog at the end of the first quarter stood at $137.4 million, a decrease from $147.8 million at the end of the previous quarter, mainly due to Canvys and GES.
Richardson Electronics reported a gross margin of 30.6% of net sales compared to 32.8% in the same quarter of the previous year. The decrease in gross margin was attributed to product mix changes. Operating expenses increased slightly to $16.1 million due to higher incentives tied to recent sales growth.
For the first quarter of fiscal 2025, the company posted a net income of $0.6 million, down from $1.2 million in the same quarter of the previous year. Earnings per share (diluted) were $0.04, compared to $0.09 in the prior year's first quarter.
The Board of Directors declared a $0.06 per share quarterly cash dividend, payable on November 27, 2024, to stockholders of record as of November 8, 2024.
The company also provided EBITDA, a non-GAAP financial measure, which was $1.7 million for the first quarter of fiscal 2025 versus $2.6 million in the prior year's first quarter. Management believes EBITDA is a useful measure for assessing financial performance, excluding items not considered indicative of ongoing results.
This financial update is based on a press release statement from Richardson Electronics. The company will host a conference call and Q&A session to discuss the first quarter fiscal-year 2025 results.
In other recent news, Richardson Electronics has reported a decrease in its Q4 fiscal 2024 net sales to $47.4 million, down from $58.8 million in the same period the previous year. The company attributed the decline to lower sales in the semiconductor wafer fab market and delays in the Green Energy Solutions sector. Despite this, Richardson Electronics ended the year with no debt and a strong cash position, even witnessing an increase in gross margins and a reduction in inventory levels.
Moreover, the company has entered into a global distribution agreement with Quantic MWD, aiming to expand the reach of Quantic's microwave and millimeter wave products. This partnership will integrate Quantic MWD's products into Richardson Electronics' power and microwave technology portfolio. Richardson Electronics will showcase its RF and Microwave product portfolio, including Quantic MWD's solutions, at the European Microwave Week in Paris, France.
In a separate development, Richardson Electronics plans to showcase its ultracapacitor energy modules and other products at the WindEnergy Hamburg event, introducing its ULTRAPEM™ and ULTRA3000® product lines to the European market. The company has also reported a 24.3% increase in sales in its Healthcare division, primarily from repaired Siemens Straton Z tubes, and a 16% growth in the GES business unit's backlog. These are among the recent developments for Richardson Electronics.
InvestingPro Insights
Richardson Electronics' recent financial performance, as highlighted in the article, aligns with several key insights from InvestingPro. The company's positive operating cash flow and strong balance sheet are reflected in the InvestingPro Tip that RELL "holds more cash than debt on its balance sheet." This financial stability is further underscored by the fact that RELL's "liquid assets exceed short term obligations."
The company's optimism for continued sales growth is supported by the InvestingPro Tip that "net income is expected to grow this year." Additionally, the fact that RELL has "maintained dividend payments for 37 consecutive years" speaks to its commitment to shareholder returns, as evidenced by the recently declared quarterly cash dividend mentioned in the article.
Despite the challenges faced in some segments, RELL's overall financial health appears robust. The company's market capitalization stands at $185.71 million, and it has been "profitable over the last twelve months" according to InvestingPro Data. The recent "large price uptick over the last six months" aligns with the company's positive outlook and improving sales performance.
It's worth noting that RELL is currently "trading at a high earnings multiple," which investors should consider in light of the company's growth prospects and dividend history. For those interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for Richardson Electronics, providing a deeper understanding of the company's financial position and market performance.
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