Earnings call transcript: Richardson Electronics Q4 2025 sees EPS beat, stock climbs

Richardson Electronics Ltd (RELL) reported its Q4 FY2025 earnings with a notable earnings per share (EPS) beat. The company posted an EPS of $0.12, surpassing the forecasted $0.10, representing a 20% surprise. Revenue fell short of expectations, coming in at $51.9 million compared to the forecast of $55.07 million. Despite the revenue miss, Richardson’s stock surged by 7.21% in post-earnings trading, closing at $10.15. According to InvestingPro data, the company maintains strong financial health with a current ratio of 4.52, indicating robust liquidity. InvestingPro analysis shows 8 additional key insights about RELL’s financial position, available to subscribers.

Key Takeaways

• EPS exceeded forecasts by 20%, despite revenue falling short by 5.76%.
• Stock price increased by 7.21% following the earnings announcement.
• Green Energy Solutions and Power and Microwave Technologies showed significant growth.
• The company reported five consecutive quarters of positive operating cash flow.
• Focus remains on green energy and strategic acquisitions for future growth.

Company Performance

Richardson Electronics demonstrated robust performance in Q4 FY2025, with total sales increasing by 9.5% year-over-year to $51.9 million. The company’s full fiscal year sales reached $208.9 million, marking a 6.3% increase from the previous year. InvestingPro data reveals the company has maintained dividend payments for 38 consecutive years, showcasing long-term financial stability. The gross margin of 31.6% aligns with the company’s last twelve months’ margin of 31.02%, while operating income turned positive at $600,000, reversing an operating loss from the prior year. The company’s strong cash position, with more cash than debt on its balance sheet, provides additional financial flexibility.

Financial Highlights

• Revenue: $51.9 million, up 9.5% year-over-year.
• Earnings per share: $0.12, beating the forecast by 20%.
• Gross margin: 31.6%, an increase of 50 basis points.
• Operating income: $600,000, compared to a $100,000 loss last year.
• Cash and equivalents: $35.9 million.

Earnings vs. Forecast

Richardson Electronics reported an EPS of $0.12, exceeding the forecasted $0.10, resulting in a 20% surprise. However, revenue was below expectations at $51.9 million, a 5.76% miss from the projected $55.07 million. The EPS beat reflects the company’s effective cost management and operational efficiencies.

Market Reaction

Following the earnings announcement, Richardson Electronics’ stock price rose by 7.21%, closing at $10.15. This increase reflects investor optimism driven by the EPS surprise and the company’s strategic focus on growth areas like green energy. The stock remains volatile, with its current price still below the 52-week high of $15.51.

Outlook & Guidance

Looking ahead, Richardson Electronics anticipates double-digit growth in FY2026, focusing on expanding its presence in the green energy and power management markets. InvestingPro forecasts support this optimistic outlook, with analysts expecting the company to be profitable this year and revenue growth projected at 7% for FY2026. The company is exploring strategic acquisition opportunities to bolster its market position and product offerings. For detailed analysis and comprehensive insights into RELL’s growth potential, investors can access the full Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.

Executive Commentary

"We fully expect double-digit growth again next year," stated Greg Pelikwin, General Manager. Wendy Dedell, COO, emphasized, "We are pursuing new growth opportunities, managing costs, and allocating capital in areas that we believe produce the highest rates of growth and returns."

Risks and Challenges

• Supply chain optimization remains a priority amid global challenges.
• Tariff and regulatory issues could impact international operations.
• Market volatility in semiconductor and energy sectors may affect growth.
• Capital expenditure reductions could limit expansion capabilities.
• Competition in green energy markets continues to intensify.

Q&A

During the earnings call, analysts inquired about the expansion potential in the GE turbine market and the company’s strategies for navigating the semiconductor market recovery. Executives addressed stock buyback considerations and highlighted ongoing efforts to optimize global supply chains.

Full transcript - Richardson Electronics Ltd (RELL) Q4 2025:

Conference Operator: Good day, everyone. Thank you for standing by. Welcome to the Richardson Electronics Earnings Call for the Fourth Quarter of Fiscal Year twenty twenty five. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session.

Please note that today’s conference may be recorded. I will now hand the conference over to your speaker, Mr. Ed Richardson. Please go ahead, sir.

Ed Richardson, CEO, Richardson Electronics: Good morning, and thank you all for joining Richardson Electronics’ Conference call for the fourth quarter of fiscal year twenty twenty five. We appreciate your continued support and interest in Richardson Electronics. Joining me today are Bob Ben, Chief Financial Officer Wendy Dedell, Chief Operating Officer Greg Pelikwin, General Manager of our Power and Microwave Technologies Group, which includes Green Energy Solutions and Jens Ruppert, General Manager of Canvas. Today’s comments include GAAP and non GAAP financial results. A detailed reconciliation between GAAP and non GAAP results can be found in yesterday’s press release.

As a reminder, this call is being recorded and will be available for playback. I’d also like to remind you that we will be making forward looking statements. They’re based on current expectations and involve risks and uncertainties. Therefore, our actual results could be materially different. Please refer to our press release and SEC filings for an explanation of our risk factors.

I am pleased with our performance in fiscal twenty twenty five as our financial results improved throughout the year, excluding the loss on the sale of the health care assets. And we ended the fiscal year with four consecutive quarters of year over year sales growth and five consecutive quarters of positive operating cash flow. Our performance is especially noteworthy as we navigated a difficult global environment, which I believe reflects the hard work of our team and the value we provide our global customer base. Throughout the fiscal year, we faced elevated inflation in key markets, ongoing supply chain pressures and a growing global instability. Particularly in Europe and Asia, nonetheless, Richardson Electronics has remained focused, agile and committed to our long term vision.

Given our well established global infrastructure, we’re well positioned to minimize the impact of the ongoing tariff negotiations and other market constraints. In FY 2025, Q4 total sales were $51,900,000 up from $47,400,000 in Q4 of last year. While some headwinds impacted our ability to meet forecasted targets, we did see strong year over year growth in all three of our business units. PMT delivered notable sales growth year over year, driven by continued strength in our semiconductor and RF power segments. Green energy was up over the prior year due to increased demand for our wind turbine modules, and Canvas posted another solid quarter, exceeding both planned and prior year performance.

Importantly, FY twenty twenty five Q4 gross margin improved 50 basis points to 31.6%, reflecting disciplined pricing strategies and operational improvements, particularly in PMT, our semiconductor wafer fab business. We’re also pleased to report positive operating income for the fourth quarter compared to an operating loss in the same period last year. We continue to manage SG and A carefully while investing to attract and develop proven talent across our organization. In addition, we continue to pursue compelling growth opportunities supported by our strategic plan. Continue Our cash position remains strong at $35,900,000 providing us with flexibility to support both our ongoing operations and strategic growth opportunities.

Before we discuss business unit details, I’ll turn the call over to Bob Ben, our Chief Financial Officer, who will provide a detailed review of our fourth quarter and full financial results and capital positions. Following Bob’s remarks, Greg and Jens will provide updates on our business unit performance, and then Wendy will follow-up with comments on our future growth strategies.

Bob Ben, Chief Financial Officer, Richardson Electronics: Thank you, Ed, and good morning. I will review our financial results for our fourth quarter and fiscal year twenty twenty five, followed by a review of our cash position. In addition, please note that I will be discussing non GAAP financial measures. A reconciliation of non GAAP items to the comparable GAAP measures is available in our fourth quarter fiscal year twenty twenty five press release that was issued yesterday. Consolidated net sales for the 2025 increased 9.5% to $51,900,000 compared to net sales of $47,400,000 in the prior year’s fourth quarter.

This was our fourth consecutive quarterly year over year increase in sales. Fourth quarter net sales growth was led by a 17.8% increase in PMT sales, which was due to higher demand from the company’s semiconductor wafer fab customers and distributed products for RF and microwave applications. Also, we experienced a 14.1% increase in our GES business unit and a 9.1% increase in sales for canvas, which reflected improved market conditions in Europe. Sales growth for the 2025 was partially offset by a $2,400,000 decrease in healthcare sales that resulted from lower net sales after the sale of the majority of healthcare assets in January 2025. Consolidated gross margin for the fourth quarter was 31.6% of net sales compared to 31.1% during the fourth quarter of fiscal twenty twenty four.

The 50 basis point increase in consolidated gross margin was primarily due to margin expansion in both PMT and GES. PMT’s gross margin increased to 32.5% from 31.1% as a result of an improved product mix. GES gross margin increased to 31.6% from 25.5%, also due to product mix. Lower gross margin for both Canvas and Healthcare partially offset the improvement in consolidated gross margin. Operating expenses as a percentage of net sales improved to 30% for the fourth quarter fiscal twenty twenty five compared to 31.3% in the fourth quarter of fiscal twenty twenty four.

Loss on disposal of assets of $200,000 resulted from a closing adjustment to the sale of the majority of healthcare assets on 01/24/2025. In future periods, Healthcare’s financial results will no longer be a standalone segment and will be consolidated into the company’s PMT business unit. Operating income was $600,000 and non GAAP operating income was $800,000 for the 2025 compared to an operating loss of $100,000 in the prior year’s fourth quarter. Net income was 1,100,000 and non GAAP net income was $1,800,000 for the 2025 compared to a net loss of $100,000 and the non GAAP net income of $300,000 in the fourth quarter of fiscal twenty twenty four. Earnings per common share diluted were $08 and non GAAP earnings per common share diluted were $0.12 in the 2025 compared to loss per common share diluted of $01 and non GAAP earnings per common share diluted of $02 in the fourth quarter of fiscal twenty twenty four.

EBITDA for the 2025 was $2,900,000 EBITDA after excluding the additional loss on the sale of healthcare assets or adjusted EBITDA was $3,100,000 versus $1,000,000 in the prior year’s fourth quarter. Turning to a review of the results for fiscal year twenty twenty five. Net sales for fiscal year twenty twenty five were $208,900,000 an increase of 6.3% from $196,500,000 in fiscal year twenty twenty four, which primarily reflected higher sales in PMT and GES. Gross margin was 31% of net sales, which was 50 basis points higher than fiscal twenty twenty four, primarily due to product mix. As a percentage of net sales, operating expenses for the fiscal year were 29.8% compared to 30.3% for the prior fiscal year.

Loss on disposal of healthcare assets was $5,100,000 for fiscal 2025. Operating loss was $2,500,000 and non GAAP operating income was $2,600,000 during fiscal twenty twenty five compared to operating income of $300,000 during fiscal twenty twenty four. Net loss was $1,100,000 and non GAAP net income was 3,200,000.0 for fiscal twenty twenty five versus net income of $100,000 and non GAAP net income of $500,000 during fiscal twenty twenty four. Net loss per common share diluted was $0.8 and non GAAP earnings per common share diluted was $0.22 for fiscal twenty twenty five compared to $00 earnings per common share diluted and non GAAP earnings per common share diluted of $03 for fiscal twenty twenty four. EBITDA for fiscal twenty twenty five was $2,500,000 Adjusted EBITDA was $7,500,000 versus $4,500,000 in the prior year.

Moving to a review of our cash position. Cash and cash equivalents at the end of fiscal twenty twenty five were 35,900,000 compared to $36,700,000 at the end of the 2025 and $24,300,000 at the end of fiscal twenty twenty four. Cash flow provided from operations was $10,600,000 compared to cash flow provided from operations of $6,500,000 in the prior year. Capital expenditures of $800,000 in the fourth quarter fiscal twenty twenty five were primarily related to our manufacturing business, facility improvements and IT systems versus $1,000,000 in the fourth quarter fiscal year twenty twenty four. Total capital expenditures were $2,800,000 in fiscal twenty twenty five as compared to $4,000,000 in fiscal twenty twenty four.

As a result, we are pleased to report free cash flow was 7,700,000 in fiscal twenty twenty five. We paid $900,000 in the fourth quarter and $3,400,000 in fiscal year twenty twenty five for cash dividends. In addition, based on our current financial position, our Board of Directors declared a regular quarterly cash dividend of $06 per common share, which will be paid in the first quarter of fiscal year twenty twenty six. As of the end of fiscal twenty twenty five, the company had no outstanding debt on its $30,000,000 revolving line of credit with PNC Bank. Now, I will turn the call over to Greg, who will provide more details for our PMT and GES business groups.

Greg Pelikwin, General Manager, Power and Microwave Technologies Group, Richardson Electronics: Thank you, Bob, and good morning, everyone. PMT and GES are key components of our multi year growth plan. Coming out of FY ’twenty four, we had a strong backlog, launched several new products, expanded our customer base and advanced multiple development programs from beta testing to preproduction. Building on that positive momentum, we expected growth in FY 2025. Well, we are pleased to report that for fiscal year twenty twenty five, GES grew to 28,700,000 a 23.6% increase over fiscal year twenty twenty four, with a strong book to bill of 1.25.

PMT also grew to $137,800,000 up 7% year over year with a book to bill of 1.03. And turning to Q4, we saw double digit growth for both business units. PMT sales rose 17.8% with a book to bill of 1.03 and GES sales increased 14.1% with a book to bill of 1.1. Leading GES growth in Q4 was our pitch energy modules and related wind energy products. We continue to gain market share from new customers such as RWE and Xcel Energy and key owner operators who have recently completed beta testing, including TransAlta.

We also saw growth from our new multi brand PEM turbine platform. Today, we serve dozens of wind turbine owners and operators, including exclusive partnerships with the top four owner operators of GE wind turbines in North America, RWE, Invert Energy, Enel and NextEra. Additionally, we continue to grow this program internationally, expanding into Europe and Asia with new products and other turbine platforms such as Sujalon, Senvion, Nordex, and SSB. Our GES growth strategy centers on power management applications. We’ve rapidly designed multi products, secured patents, and built a strong global base of customers and partners.

Our success is evident in our growing pipeline as we capitalize on numerous growth opportunities to support new power management requirements, significant energy transformation, and wind turbine repowering projects. We’re entering FY twenty six with solid momentum. Key initiatives include faster design to production cycles and implementing a new design center in Sweetwater, Texas. Sweetwater has one of the largest concentration of wind turbine engineers in North America. Expanding our design team to accelerate and enhance design cycles prior to transitioning work to our world class manufacturing and testing group in LaFox, Illinois is one of the most critical strategic priorities we have.

Turning to Power and Microwave Technologies Group, or PMT, which includes the Electron Device Group, or EDG, our legacy tube and semiconductor wafer fab equipment business and our RF Power and Microwave Group, known as PMG. In the quarter, sales growth was led by double digit growth in our RF and Microwave Components business as we see growth in RF and wireless applications such as SATCOM and military applications including radar and drone technology. We also saw continued growth in our fourth straight quarter among our semi fab equipment manufacturing customers. GES backlog grew in the fourth quarter to 42,500,000 Our combined GES and PMT backlog ended the year strong at just over $99,000,000 The team has done a good job making sure we have the right products at the right time. We remain focused on managing all aspects of our business to maximize profits while meeting the needs of an expanding customer base.

Looking ahead to FY twenty six, we are excited about the strategic initiatives across PMT and GES, including our development of an ESS program, global expansion of green energy products, and new technology partnerships. While we’re navigating a higher degree of uncertainty associated with the impact of new and reciprocal tariffs and market conditions, we are pursuing opportunities that may come from these disruptions. A key pillar of our growth strategy is expanding global technology partnerships that fill technology gaps, reduce tariff risks, and align with our strategic priorities. Through these partnerships, we often identify opportunities for new products that we design, manufacture, and test in house. This approach enhances the value we provide our customers and allows us to capture more revenue while expanding and diversifying our customer base.

These technology partnerships are key to our customer relationships with all products. We’re investing in infrastructure, expanding our design and field engineering teams, enhancing our in house design and manufacturing capabilities to support the growing demand and innovation. Our growing in house design and engineering and manufacturing teams are doing an excellent job supporting increased demand for current products and new product designs. Our field engineering team continues to identify new customers and opportunities. We need to invest in the team to keep identifying, developing, and introducing innovative products and technologies for green energy, power management, and RF and microwave applications.

Our global capabilities and global go to market strategy set us apart from our competition in the power management, RF and microwave, and green energy markets. We have developed a business model that combines legacy products with new technology partners and solutions, aligning with our growth strategy to deliver engineered solutions to a global customer base. This model differentiates us from our competition. Finally, we’re closely monitoring the impact of new tariffs and current administration’s new bill. As we’ve done successfully before, we’re adjusting our global supply chain, emphasizing non China sources.

We’ve already achieved this for most of our wind turbine products, which now include less than 5% Chinese components. Our GS products and technology partners support our product strategies as it appears federal subsidies will be harder to get under this administration. Looking at our ESS strategy, we are focused on sales in key states that will continue their very large subsidies such as Illinois, Massachusetts, and California. We are also expediting our efforts to expand market penetration of our green energy products globally into Europe and Asia, as currently about 70% of our GES sales are in North America. We are working on these initiatives alongside marketing our services to companies who need partners in The U.

S. To manufacture, test, and support products currently made in other countries throughout the world. We acknowledge that there are a lot of moving parts and unknowns, but we have successfully used our global resources and capabilities to mitigate the effects of the situation like this in the past. So in summary, we are entering FY twenty six with a strong book to bill and double digit growth in Q4 sales. We have new technology partners that fill technology gaps, and we’ve added new products in the power management area.

We have a proven strategy identifying opportunities in the multibillion dollar markets we serve. As a result, we feel FY twenty six will be another year of growth for both PMT and GES. And with that, I’ll turn it over to Jens to discuss Canvas.

Jens Ruppert, General Manager, Canvas, Richardson Electronics: Thanks, Greg, and good morning, everyone. Canvas engineers, manufacturers and sells custom displays to original equipment manufacturers across global industrial and medical markets. It is our mission to deliver high quality display solutions tailored to our customers’ needs. CANVAS reported revenue of $9,500,000 in the fourth quarter of fiscal year twenty twenty five, an increase from $8,700,000 in the same quarter of the previous year, and a 2.9% sequential improvement from the $9,200,000 in sales during the third quarter of fiscal year twenty twenty five. In fiscal year twenty twenty five, sales increased 2.2% to $33,100,000 from $32,400,000 during fiscal twenty twenty four, due to higher sales in the North American markets.

Our gross margin as a percentage of net sales decreased to 32.1% from 33.5% in the fourth quarter of fiscal year ’twenty four. Our fiscal year twenty twenty five gross margin as a percentage of sales decreased to 32.9% compared to 33.8% during fiscal year twenty twenty four due to product mix and higher freight costs. The backlog at the end of the fiscal year twenty twenty five remained strong at $33,900,000 providing a robust foundation for future business. During this most recent quarter, Canvas secured orders from both repeat and new medical OEM customers for a range of applications. Our primary focus remains on robotic assisted surgery, navigation, endoscopy, and human machine interface solutions for the control of medical devices.

Furthermore, our solutions are widely utilized in various commercial and industrial applications. For instance, our products enhance passenger information systems in trains and buses and improve HMI technologies used in printing, vending, milling and packaging equipment. Our strategic initiatives aim to boost CANVAS’s visibility and market leadership. We pursue new opportunities, connect with potential customers and engage with industry peers, and drive growth and innovation through collaboration. Looking ahead, we are cautiously optimistic about improving demand in our markets.

Positive indicators such as increasing requests for quotes and encouraging customer feedback suggest steady growth. Our dedicated sales teams continues to explore new opportunities, while I focus on implementing strategic plans to ensure sustainable growth and deliver long term value for our shareholders. I will now turn the call over to Wendy.

Wendy Dedell, Chief Operating Officer, Richardson Electronics: Thank you, Jens, and good morning, everyone. Fiscal twenty twenty five was a year of strategic transition and execution, highlighted by the decision in January 2025 to sell most of our healthcare assets to DirectMed. As a reminder, as part of the transaction, we entered into an exclusive ten year global agreement. Under this agreement, we supply DirectMed with repaired Siemens CT X-ray tubes and a limited supply of Alta tubes. During the fourth quarter, our team did an excellent job producing Alta tubes and heat exchangers.

Beginning in Q1 FY26, we will report the CT tube business under our PMT business unit. Until we finish the AltaTubes later in the fiscal year, this may have a slightly negative impact on PMT’s overall gross margin. Given the size of the tube business compared to PMT sales, this should not be material. With the strategic asset sale of Richardson Healthcare now behind us, more of our attention is focused on ways to accelerate growth and improve efficiency. We continue to work with management and the board on a series of strategic priorities that we believe will take our business to the next level.

We are pursuing new growth opportunities, managing costs, and allocating capital in areas that we believe produce the highest rates of growth and returns. During the fourth quarter, we were pleased to see the success of ongoing efforts to improve cash management and working capital efficiencies. This financial discipline gives us flexibility to invest in targeted growth priorities without compromising our financial stability. We remain highly intentional with how we deploy capital, balancing near term opportunity with long term value creation. As Greg mentioned, one of our primary near term investments is the expansion of our wind turbine program across Europe, The Middle East, and parts of Asia.

In FY25, sales to wind customers represented $10,700,000 in revenue. We believe we can increase sales in this market for many years to come because of the available market share, our expanded product range, and the value our products provide. Our wind customers consistently report improved turbine efficiency and extended lifespan when using our products. Downtime due to battery or grid failure is one of the main reasons for lost profits and revenue. This has become increasingly important as shifting political and regulatory dynamics may delay new wind farm construction, making the performance of existing infrastructure even more critical.

Our experience developing new power solutions for the wind market provides us with the confidence to leverage our know how in adjacent markets. As a result, we’re making progress developing a world class battery energy storage demonstration site at our LaFox facility. The demand for battery energy storage continues to accelerate, and our turnkey solution positions us to capitalize on that growth. At the same time, we’re working to increase The US made content of our solution by leveraging our internal engineering and manufacturing capabilities. This aligns with both customer demand and broader domestic manufacturing priorities.

Another strategic focus is expanding our US based manufacturing services. We are completing a marketing campaign launch and anticipate interest from companies looking to rapidly establish or shift production to The US. We are well positioned to support them. By leveraging our core engineering expertise and strategic technology partnerships, we’re able to deliver high value solutions in critical power management and energy applications. Longer term, we remain committed to pursuing a thoughtful acquisition strategy.

We’re looking for the right opportunities to utilize our capabilities and accelerate our growth while making full use of our global infrastructure. At the same time, we’re taking a hard look at our current organization structure, especially given today’s shifting economic policies with a focus on optimizing our operations for improved profits and resilience. As you can see, we have a growth focused strategic plan that leverages our financial strength, outstanding customer and technology partner relationships, and the efforts of our dedicated and committed team. We believe the organic opportunities we are pursuing will support meaningful growth over the next several years while we consider longer term opportunities that accelerate our growth through strategic acquisitions. We are excited by our potential, and I look forward to sharing the progress we are making on future calls.

I’ll now turn the call back to Ed.

Ed Richardson, CEO, Richardson Electronics: Thanks, Wendy. Looking forward, we remain committed to enhancing shareholder value. We’re focused on improving profitability, selectively investing in high growth areas. While the economic environment may remain volatile over the next term, we’re confident in our long term ability to adapt, execute and grow. Our team has navigated through uncertainty with resilience and determination, and I want to thank our employees around the world for their hard work and dedication.

Now we’ll open the call for questions.

Conference Operator: Thank you. Due to time constraints, we ask that you please limit yourself to one question and one follow-up. Again, we ask that you please limit yourself to one question and a follow-up until all have had a chance to ask a question, after which we will answer additional questions from you as time permits. Please stand by while we compile the Q and A roster. Our first question coming from the line of Bobby Brooks with Northland Capital Markets.

Your line is now open.

Bobby Brooks, Analyst, Northland Capital Markets: Hey, good morning team. Thank you for taking my question. When we had our fireside chat back in January, the dynamic of how you could not sell your ultracapacitor products to GE turbines under GE service contracts was discussed. I think, Greg, you mentioned how internal how an internal GE team was reviewing this matter at the time. I get that these things can take some time, but I wanted to check-in and see if there’s any update on you being able to sell into those customers because that’s obviously a substantial part of the market.

Greg Pelikwin, General Manager, Power and Microwave Technologies Group, Richardson Electronics: Hey, Bobby. Good morning. Yeah, fantastic. We met with them, we worked with products. And then when they want to do the one last final test we needed, this is about a month ago.

We needed an NDA and a test NDA for them to do that. The engineering team then sent that up to GE legal. And as we know, with companies that size, it’s been sitting there for for months or pushing to get that signed, so they can finish up the testing and all indications that final testing will then have them define that the service agreements will not be jeopardized if they put our products in for the current lead acid battery. So summary, moving forward, we’re talking directly to GE to the engineers, we got to who we needed to get to. Now it’s some paperwork issues, which we’re dealing with.

Bobby Brooks, Analyst, Northland Capital Markets: That’s really exciting. And I guess, could you just talk about what would then would you then be able would you have like a list to go after in terms of customers that were previously closed off? Or how would that kind of because it would definitely I I think it’s like 50% of turbines right are these GE service contracts. So I feel like it would open up a really big immediately open up a big door for you guys. Am I thinking about that right?

And just talk about how you would think about attacking that opportunity.

Greg Pelikwin, General Manager, Power and Microwave Technologies Group, Richardson Electronics: Yeah. It almost doubles our SAM. I don’t like to use TAM, so our service available market where we have a product that can go in immediately. We thought it was 50%, but, since we’ve been dealing directly with, GE, I asked the question and they said it’s about 35% of their owner operators have service agreements with them. So it would increase our SAM 35% as soon as these customers who are some of the same customers who are selling today, but other products, not the pitch energy module can move forward and start putting these in.

Yeah, it would be a nice, definitely nice uptick, and definitely a nice increase in SAM.

Bobby Brooks, Analyst, Northland Capital Markets: Got it. Then just one last one, if I could squeeze it in here. As your fiscal ’twenty five has come to a close, could you just discuss some product wins you enjoyed during the year for green energy solutions? We’ve gotten a pretty consistent drip of exciting pilot projects or potential verticals to attack. But I’m more so focused on does your ’25 gs results have a benefit of any new, let’s say, commercial opportunities where I’m comparing it to the ’24 results that didn’t benefit from that?

Greg Pelikwin, General Manager, Power and Microwave Technologies Group, Richardson Electronics: Yeah, probably the biggest benefit has been market share gains. I think we did a couple of press releases. So market share gains, we got the RWE agreement and they’re larger than NextEra, you know, and Embraer Energy, the largest of our of the top four owner operators, GE wind turbines, the TransAlta agreement, which is exciting. That’s for a new multi brand that’s on the books. And then I believe we announced it in December, the Excel Energy agreement, and we’re shipping to that.

That’s why you saw double digit growth in the fourth quarter. And we got engineering sign off on the web tech starter module for the locomotives, and that product will start shipping in September. So those are probably the four major bookings that we did in the past twelve months that will help us, launch f y twenty six. And, you know, when the dust settled, Bobby, it was 26% growth, a 1.25 book to bill, increase in gross margin from 25.5 to 31.6%. So all parts of the business grew.

The only thing that went down was inventory, which is a positive. So we’re we’re excited with, what we’re able to accomplish. You know, it’s spread out. You know, we grew 84% in q one and a 129% in q two, and then 14% in q four. So we’re trying to increase our our backlog and our products.

And then a number of new products we introduced, we did a couple press releases that are coming out that are getting good signs of from alpha to beta testing, and we’ll see incremental revenue from those also. And then finally, the expansion into Europe and the BES program, you know, we’ll start seeing fruition that q three q four, which will help our f y twenty six, but definitely launch us again like we are right now into f y twenty seven. So all arrows are up just how much is somewhat in our control and somewhat not.

Bobby Brooks, Analyst, Northland Capital Markets: Fair enough. Appreciate the color. Thank you.

Greg Pelikwin, General Manager, Power and Microwave Technologies Group, Richardson Electronics: You bet, Bobby.

Conference Operator: Thank you. Our next question coming from the line of Anja Sodasum with Sidoti. Your line is now open.

Anja Sodasum, Analyst, Sidoti: Thank you for taking my questions. So, you mentioned when you talked about the PMT that you have a lot of competitive advantages. Can you just talk a little bit about the main competitors within this segment and how you compare to those?

Greg Pelikwin, General Manager, Power and Microwave Technologies Group, Richardson Electronics: I’m sorry, for PMT? Yeah, on the tube side, I’ll let Ed answer that question. But on the component side, your competitors are your standard industrial distributors, and then a handful of local distributorsrep companies throughout the world. So it’s your AVNET, your ARROWs, your TTI has an RF group, and of course, our biggest competitor is our former RPD organization. They’re still the largest, but they’re a division of arrow.

So what we’re seeing is their competitors, consider a competitor, anyone who can sell the same products I do, but their model is different. They’re more contract manufacturing, and we’re more in demand creation and design. And if you look at our line card, I don’t think there’s a lot of competition because of the smaller niche disruptive technology suppliers that we have. And then, of course, our model is different, because we can also design in the components like our competitors can, but they don’t have a world class engineering and manufacturing group that you can also use a components to design modules, etcetera. They don’t have anywhere near the global infrastructure.

We do just support those customers worldwide. So, but their competitors there, but a different aspects of our model.

Ed Richardson, CEO, Richardson Electronics: Good morning.

Anja Sodasum, Analyst, Sidoti: Thank you. And you also mentioned, think good morning.

Ed Richardson, CEO, Richardson Electronics: Was going to

Anja Sodasum, Analyst, Sidoti: On the good performance here. I’m sorry.

Ed Richardson, CEO, Richardson Electronics: As far as the two businesses are concerned, we probably own 80% of the market, so there’s very little competition. And in the semiconductor wafer fab industry, there are a lot of competitors, but a lot of the products that we make were sole source on, and we’re really counting on that business in the future to be a very high margin growth area for the company.

Anja Sodasum, Analyst, Sidoti: Okay, thank you. And I just have one question about the strategic opportunities. So are you looking at anything actively right now? What kind of opportunities are you looking at?

Wendy, Chief Operating Officer, Richardson Electronics: Hi Anya. No, our first priority is related to the expansion of green energy, the products and programs that Greg already mentioned

Bobby Brooks, Analyst, Northland Capital Markets: that

Wendy, Chief Operating Officer, Richardson Electronics: are just getting well positioned in the market. Near term, there is plenty of opportunity to gain market share, to gain additional revenue from the new products and the new programs. So we’ve really looked at our plans for FY twenty six and our resource allocation towards what that team needs in order to take advantage of the development that we’ve already done. So, on the acquisition side, that will be, as we pointed out, more of a longer term and more of an opportunistic approach. So, we’re not out there actively today trying to find the right companies, but we remain open to the ideas of technology companies that would tuck in nicely with our green energy business unit, for which maybe it’s a company that has products that we can manufacture in the box, which would help our overall gross margin, and also which would take advantage of the global infrastructure.

Anja Sodasum, Analyst, Sidoti: Okay, thank you. Thank you, Wendy. That’s all for me.

Wendy, Chief Operating Officer, Richardson Electronics: Thanks, Thank

Conference Operator: you. Our next question coming from the line of Mark Mendel with Charles Lane Capital. Your line is now open.

Mark Mendel, Analyst, Charles Lane Capital: Good morning, Ed. Good morning, Wendy. It’s been a while. Congratulations on all all your hard work.

Wendy Dedell, Chief Operating Officer, Richardson Electronics: Thank you.

Mark Mendel, Analyst, Charles Lane Capital: I think you know where I’m gonna go. The business now has a rock solid balance sheet. As you said, we’re up to $35,900,000 in cash. You’ve got now consistent positive operating cash flow. You worked on hard and we appreciate it.

The Board is better aligned through their stock ownership, though I think we still need to see more courageousness, at the board level. They shouldn’t be just getting to the minimum. They should be, you know, they should be courageous and, striving to do better. We would now like to see the board reward long term shareholders. And there really is no reason to be not repurchasing shares below book value with your balance sheet.

So I just want to reiterate, you’ve done a great job cleaning things up, you and Wendy and the team. Other companies do it. We’d like to see you guys be courageous and reward long term shareholders when the value of your business is not reflected in the long term value of the organization. Any comments would be appreciated.

Ed Richardson, CEO, Richardson Electronics: Well, we talk about stock repurchase in every board meeting and have a fair amount of experience with that. When we sold the semiconductor business to Arrow years ago, we bought back $45,000,000 worth of stock. And every time we would buy the stock, the price of our stock would go down. So people were valuing the company on the amount of cash we had and didn’t really give us credit for the stock buyback. So I would say we’re very cautious in buying additional stock back.

Mark Mendel, Analyst, Charles Lane Capital: Well, Ed, that’s not really fair because on the past several years, your stock went up to 20. So your repurchases were value added. It just takes time. I mean, the price you pay, which was a good price, was rewarded to long term shareholders. And your business today is not just a one trick pony anymore.

You’ve got multiple legs to the stool. And if you guys see the future, way we hear on the conference call of these multiple business lines, then there’s tremendous opportunity and you have to be courageous when the market is not seeing the value.

Ed Richardson, CEO, Richardson Electronics: Well, we certainly look at it every quarter. The one thing we’re probably more interested in is using our cash to expand the business into other markets for higher growth. And we keep looking at that into that area on a perpetual basis.

Mark Mendel, Analyst, Charles Lane Capital: All right, well, all we ask is that you entertain at the board level. And I think it would be a strong sense of confidence to all shareholders and constituents.

Ed Richardson, CEO, Richardson Electronics: Well, we appreciate your recommendation and we look at it every quarter and we’ll let you know how we proceed in the future.

Mark Mendel, Analyst, Charles Lane Capital: Thank you very much.

Wendy, Chief Operating Officer, Richardson Electronics: Thanks, Mark.

Mark Mendel, Analyst, Charles Lane Capital: Thank you, Wendy.

Conference Operator: Thank you. Our next question coming from the line of Chip Roy with Roy Asset Management. Your line is now open.

Ed Richardson, CEO, Richardson Electronics0: Good morning, Hi, Ed. Hi, Wendy. Hi. Good year, kind of transition stabilizing year, so it was nice to see it. And your business does have kind of a multi legged stool, but what I see are two main businesses, kind of like a double barrel shotgun that’ll drive performance for the company and for the stock when they hit stride.

And I guess I want to ask a question on both of those and I’ll ask them at the same time and you can divvy up the answer. But first on GES, I still think it’s neglected and not really well known what the long term positive could be there, especially for the WinPitch modules. It’s white space growth for the company, but what’s exciting is it’s into an existing aftermarket. The assets are there in the field and they’re working and your product improve those and longer as a service cycle. So the question there is, and what we haven’t seen is kind of consistent growth.

And when are we going to see higher quarter over quarter sequential growth? I mean, there’s so much opportunity here and the sales levels are emerging. Are we there yet? How does the TransAlta agreement help that? Maybe some of the other ones you mentioned.

And when can we be at a point investors can kind of embrace this as a growth business and not have bumps in the road as a start up business would? And the second question is different on the semiconductor CapEx side, you know, in the Lam and the players there, that’s kind of a core business. It’s in a protracted down cycle, and it’s been a protracted down cycle. So, you know, somebody who grew up in capital intensive industries, the longer you’re in a down cycle, but the long term industry is positive, the more potential there is. And so when are we going to see inflection off the bottom there to get back to even moderate to potentially strong levels?

And if those two pieces, wind pitch and semi CapEx work, You know, it’s just great. And then everything else can kick in down the road. So maybe address those two points for me, please.

Greg Pelikwin, General Manager, Power and Microwave Technologies Group, Richardson Electronics: Okay, I’ll touch on the GES program and the growth. It’s it’s still gonna be project based business for a while. And, like I mentioned, in f y twenty five, we had quarters where we’re sequentially up, double digit, year over year growth of double digit growth throughout the four quarters. That’s probably gonna continue, because of the size of these projects and the size of the group. Until we’re multi billion dollars like the customers we’re selling to, you’re gonna see that for a while, but it’s gonna be a positive because when you have these large major orders and large major shipments, these customers did not forecast well at all.

So you’re gonna see times when a product was supposed to ship in q1, but it shipped in q2, and when a product was supposed to ship in q4 and ships in q3. So you can get the highs and lows of that. But the end result is we put together an annual plan. And that annual plan produced growth in all aspects of the business. And we fully expect that going forward.

And as we implement the three main strategic initiatives, we might see some definitely see growth, but we might see some flattening out, you know, quarter over quarter and year over year. And with the global expansion, I mean, percent of our GS business North America, The European market is as large, if not larger than the North American market. That expansion will will happen. Getting products to market faster will help, you know, again, manage the quarter over quarter growth and sequential and year over year. Putting together a design center where we can find the resources to get products designed faster, and then get them to our the Fox manufacturing team.

And then continue with, and this will be very up and down quarter over quarter is our engineered solutions, energy storage systems and containers. And that program’s funded. It’s up and running. We’re getting the demo site, together. So I I just think that the the group, and I think they’ve done a great job of it so far, needs to implement the strategy and we just manage the exceptions which happen, whether it be tariffs and other things that happen with customer design cycles.

And you mentioned TransAlta, I think we may have or you may have seen the press release on that and that’s a customer we were dealing with for two years, just service the hell out of them. And in the end, they finally got the budget approved, they got the capital request approved, and they bought the product and we’ll be shipping that in 2025 calendar year. So that the model is very strong, and you continue to see the technology partners we’re adding. So the funnel is being filled, we have an increase in demand, increase in customers, increase in new products. And it’s just, you know, how fast can we get there?

And we’ve done this before, you know, I’ve done it for forty years, the new product introduction process. And we’re doing what changes we need to make to expedite the growth. But you know, the growth is there, the products are there, the customer relationships are there. And that takes so much time. I mean, I know people and friends in the industry that have been trying to get into, Nextera for five years, They don’t know who to talk to, and we’re their major supplier, within a few short months at that time.

So that’s kinda what we see going forward. We fully expect double digit growth again next year. But if a handful of these programs we have going on and these quotes and projects, you know, could be high double digit.

Ed Richardson, CEO, Richardson Electronics: I can talk about it if you want. In the peak years, the semiconductor wafer fab business was over $40,000,000 And this year, Wendy, where are we? Somewhere around 20?

Conference Operator: Little more

Ed Richardson, CEO, Richardson Electronics: than 20,000,000. And part of that, Lam was really a great customer at the end of the peak the last time around, we had a lot of inventory on hand, which they bought and paid for. And we had, as we were shipping orders since then, they absorbed that inventory, but we weren’t able to show it as sales. And at the end of the fourth quarter, we’ve absorbed all of that inventory. So the sales that we have now will be 100%.

And we’re seeing it improve every quarter. And if we could see that business again to go from 20,000,000 plus up to 40,000,000, it’s one of the highest margin businesses we have. So it would have a major impact. And we’re sole source in the majority of those products there. Things like RF matches that sell for $30,000 plus and we probably sell them a 100 different components.

And they have monthly calls with all of their vendors and they’re very optimistic about the future of the business. We think our business will grow as they grow.

Ed Richardson, CEO, Richardson Electronics0: That’s positive. So you said Lam is sold through all of your inventory basically and then now kind of back to take and pay?

Ed Richardson, CEO, Richardson Electronics: That’s correct, yes.

Ed Richardson, CEO, Richardson Electronics0: That’s great.

Ed Richardson, CEO, Richardson Electronics: All right, guys, thank you.

Greg Pelikwin, General Manager, Power and Microwave Technologies Group, Richardson Electronics: Thank you. Thank you.

Conference Operator: You. And I’m showing no further questions. I will now turn the call back over to Mr. Ed Richardson for any closing remarks.

Ed Richardson, CEO, Richardson Electronics: Thanks, Olivia. Well, thanks again for joining us today and for your questions during the Q and A. As we wrap up the year, I want to thank all of you for your ongoing support and interest in Richardson Electronics. We know this quarter came with its share of challenges, but we’ve made real progress and we’re staying focused on what matters most, running a strong business, supporting our customers and building for the future. We look forward to talking to you again in October and until then, we’re available anytime.

Be free to call us and we’ll answer more questions for you. Thanks very much.

Conference Operator: Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and you may now disconnect.

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