Richardson Electronics(RELL) - 2025 Q4 - Annual Results

Executive Summary & Company Overview Richardson Electronics closed FY25 with strong Q4 sales and positive operating cash flow, driven by Green Energy Solutions, focusing on engineered solutions Key Highlights Richardson Electronics achieved strong Q4 and FY25 sales growth, positive operating cash flow, and declared a dividend, driven by Green Energy Solutions - Q4 FY25 net sales increased 9.5% YoY, marking the 4th consecutive quarter of growth[1][3] - FY25 annual net sales grew 6.3% YoY, with Green Energy Solutions (GES) increasing by 23.6%[1][13] - Ended Q4 FY25 with positive operating cash flow for the 5th consecutive quarter[1][2] - Board of Directors declared a $0.06 per share quarterly cash dividend[1][19] - The company's strategic focus is on expanding value-added engineered solutions, scaling the GES business, and identifying opportunities for sales and profitability growth[2] About Richardson Electronics, Ltd. Richardson Electronics manufactures engineered solutions and green energy products, emphasizing in-house production and specialized technical expertise - Richardson Electronics is a global manufacturer of engineered solutions, green energy products, power grid and microwave tubes, power conversion, RF and microwave components, and customized display solutions[29] - Over 55% of products are manufactured in LaFox, IL, Marlborough, MA, Donaueschingen, Germany, or by global manufacturing partners adhering to strict specifications and a Supplier Code of Conduct[29] - The company serves markets such as alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor[29] - Strategy involves providing specialized technical expertise and 'engineered solutions' through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service[29] Fourth Quarter Fiscal Year 2025 Financial Performance Q4 FY25 saw a 9.5% net sales increase, improved gross margin, and positive operating income, driven by PMT and GES growth Net Sales by Segment Q4 FY25 net sales increased 9.5% to $51.9 million, driven by PMT, GES, and Canvys, despite Healthcare asset divestiture Q4 FY25 Net Sales by Strategic Business Unit (SBU) | SBU | May 31, 2025 (in thousands) | June 1, 2024 (in thousands) | % Change YoY | | :---- | :-------------------------- | :-------------------------- | :----------- | | PMT | $35,937 | $30,498 | 17.8% | | GES | $5,360 | $4,699 | 14.1% | | Canvys | $9,461 | $8,674 | 9.1% | | Healthcare | $1,131 | $3,503 | -67.7% | | Total | $51,889 | $47,374 | 9.5% | - PMT sales increased due to higher demand from semiconductor wafer fab customers and distributed products for RF and Microwave applications[4] - GES sales growth was driven by higher sales of wind turbine battery modules[4] - Canvys sales improved due to better market conditions in Europe[4] - The sale of most Healthcare assets in January 2025 reduced Q4 sales by $2.4 million compared to the prior year[4] - Backlog totaled $134.2 million at the end of Q4 FY25, stable compared to $134.1 million at the end of Q3 FY25, with GES backlog increasing[5] Gross Profit and Margin by Segment Q4 gross margin expanded to 31.6% due to favorable product mix in PMT and GES, despite declines in Canvys and Healthcare Q4 FY25 Gross Profit and Margin by Strategic Business Unit (SBU) | SBU | May 31, 2025 Gross Profit (in thousands) | May 31, 2025 % of Net Sales | June 1, 2024 Gross Profit (in thousands) | June 1, 2024 % of Net Sales | | :---- | :----------------------------------- | :------------------------- | :----------------------------------- | :------------------------- | | PMT | $11,680 | 32.5% | $9,486 | 31.1% | | GES | $1,693 | 31.6% | $1,196 | 25.5% | | Canvys | $3,041 | 32.1% | $2,903 | 33.5% | | Healthcare | ($39) | -3.4% | $1,139 | 32.5% | | Total | $16,375 | 31.6% | $14,724 | 31.1% | - PMT and GES gross margins increased due to a favorable product mix[6] - Canvys gross margin decreased primarily due to product mix and higher freight costs[6] Operating Expenses and Income Q4 FY25 operating expenses rose to $15.6 million, resulting in GAAP operating income of $0.6 million and non-GAAP of $0.8 million Q4 FY25 Operating Performance (in thousands) | Metric | May 31, 2025 | June 1, 2024 | | :-------------------------------- | :----------- | :----------- | | Operating Expenses | $15,600 | $14,800 | | Loss on disposal of assets | $20 | $0 | | GAAP Operating Income (Loss) | $631 | ($114) | | Non-GAAP Operating Income (Loss) | $789 | ($114) | - Increase in operating expenses resulted from higher employee compensation expenses, partially offset by lower R&D expenses[7] - Loss on disposal of assets of $0.2 million resulted from a closing adjustment from the sale of Healthcare assets[7] - Other income, including interest and foreign exchange, was $1.3 million, compared to other expense of less than $0.1 million in the prior year[8] Net Income and EPS Q4 FY25 GAAP net income reached $1.1 million (EPS $0.08), with non-GAAP net income at $1.8 million (EPS $0.12) Q4 FY25 Net Income and EPS (in thousands, except per share) | Metric | May 31, 2025 | June 1, 2024 | | :----------------------------------- | :----------- | :----------- | | GAAP Net Income (Loss) | $1,075 | ($119) | | Non-GAAP Net Income | $1,809 | $280 | | GAAP Diluted EPS | $0.08 | ($0.01) | | Non-GAAP Diluted EPS | $0.12 | $0.02 | Q4 FY25 Income Tax Provision (in thousands) | Metric | May 31, 2025 | June 1, 2024 | | :-------------------------------- | :----------- | :----------- | | GAAP Income Tax Provision (Benefit) | $889 | ($20) | | Non-GAAP Income Tax Provision (Benefit) | $313 | ($419) | EBITDA and Adjusted EBITDA Q4 FY25 EBITDA was $2.9 million, with Adjusted EBITDA reaching $3.1 million, significantly up from $1.0 million prior year Q4 FY25 EBITDA and Adjusted EBITDA (in thousands) | Metric | May 31, 2025 | June 1, 2024 | | :-------------- | :----------- | :----------- | | EBITDA | $2,929 | $950 | | Adjusted EBITDA | $3,087 | $950 | Financial Position Richardson Electronics ended Q4 FY25 with $35.9 million in cash, with $0.8 million in capital expenditures and dividend payments Q4 FY25 Cash and Capital Expenditures (in thousands) | Metric | May 31, 2025 | March 1, 2025 | June 1, 2024 | | :-------------------- | :----------- | :------------ | :----------- | | Cash and cash equivalents | $35,901 | $36,700 | $24,263 | | Capital expenditures | $800 | N/A | $1,000 | - Cash used during the fourth quarter primarily related to the payment of dividends[12] - Capital expenditures were mainly for manufacturing business, facilities improvements, and IT systems[12] Full Fiscal Year 2025 Financial Performance FY25 net sales grew 6.3%, led by GES, with improved gross profit and a non-GAAP operating income despite a GAAP loss Net Sales by Segment FY25 net sales grew 6.3% to $208.9 million, led by 23.6% GES growth, despite Healthcare asset divestiture FY25 Net Sales by Strategic Business Unit (SBU) | SBU | May 31, 2025 (in thousands) | June 1, 2024 (in thousands) | % Change YoY | | :---- | :-------------------------- | :-------------------------- | :----------- | | PMT | $137,752 | $128,697 | 7.0% | | GES | $28,719 | $23,233 | 23.6% | | Canvys | $33,145 | $32,444 | 2.2% | | Healthcare | $9,293 | $12,086 | -23.1% | | Total | $208,909 | $196,460 | 6.3% | Gross Profit and Operating Expenses FY25 gross profit rose to $64.8 million (margin 31.0%), while operating expenses increased to $62.2 million FY25 Gross Profit and Operating Expenses (in thousands) | Metric | May 31, 2025 | June 1, 2024 | | :-------------------------- | :----------- | :----------- | | Gross Profit | $64,800 | $59,966 | | Gross Margin (% of net sales) | 31.0% | 30.5% | | Operating Expenses | $62,173 | $59,548 | - Increase in operating expenses resulted from higher employee compensation expenses, partially offset by lower R&D expenses[14] Operating Income (Loss) FY25 GAAP operating loss was $2.5 million due to a $5.1 million asset disposal loss, but non-GAAP operating income was $2.6 million FY25 Operating Performance (in thousands) | Metric | May 31, 2025 | June 1, 2024 | | :-------------------------------- | :----------- | :----------- | | Loss on disposal of assets | $5,074 | $0 | | GAAP Operating Income (Loss) | ($2,463) | $348 | | Non-GAAP Operating Income (Loss) | $2,611 | $348 | - Other income for fiscal 2025, including interest income and foreign exchange, was $0.9 million, compared to other expense of $0.2 million in fiscal 2024[15] Net Income (Loss) and EPS FY25 GAAP net loss was $1.1 million (EPS $0.08), while non-GAAP net income reached $3.2 million (EPS $0.22) FY25 Net Income and EPS (in thousands, except per share) | Metric | May 31, 2025 | June 1, 2024 | | :----------------------------------- | :----------- | :----------- | | GAAP Net Income (Loss) | ($1,143) | $61 | | Non-GAAP Net Income | $3,229 | $460 | | GAAP Diluted EPS | ($0.08) | $0.00 | | Non-GAAP Diluted EPS | $0.22 | $0.03 | FY25 Income Tax Provision (Benefit) (in thousands) | Metric | May 31, 2025 | June 1, 2024 | | :-------------------------------- | :----------- | :----------- | | GAAP Income Tax Provision (Benefit) | ($388) | $96 | | Non-GAAP Income Tax Provision (Benefit) | $314 | ($303) | EBITDA and Adjusted EBITDA FY25 EBITDA was $2.5 million, with Adjusted EBITDA significantly increasing to $7.5 million from $4.5 million FY25 EBITDA and Adjusted EBITDA (in thousands) | Metric | May 31, 2025 | June 1, 2024 | | :-------------- | :----------- | :----------- | | EBITDA | $2,471 | $4,464 | | Adjusted EBITDA | $7,545 | $4,464 | Dividend Declaration The Board declared a quarterly cash dividend of $0.06 per common share and $0.054 per Class B share, payable August 27, 2025 Quarterly Cash Dividend The Board declared a quarterly cash dividend of $0.06 per common share and $0.054 per Class B share, payable August 27, 2025 - A $0.06 quarterly cash dividend per share was declared for common stock[19] - A $0.054 cash dividend per share was declared for Class B common stock[19] - The dividend is payable on August 27, 2025, to stockholders of record as of August 8, 2025[19] Non-GAAP Financial Measures Reconciliation This section reconciles GAAP to non-GAAP financial measures, excluding one-time charges for a clearer view of core performance Non-GAAP Operating Income Non-GAAP operating income adjusts GAAP by excluding a one-time loss on Healthcare asset sales for clearer operational view Non-GAAP Operating Income Reconciliation (in thousands) | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Twelve Months Ended May 31, 2025 | Twelve Months Ended June 1, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------- | :------------------------------- | | Income (loss) from operations | $631 | ($114) | ($2,463) | $348 | | Loss on disposal of healthcare assets and other charges | $158 | — | $5,074 | — | | Non-GAAP operating income (loss) | $789 | ($114) | $2,611 | $348 | Non-GAAP Income Before Taxes Non-GAAP income before taxes excludes the one-time loss on Healthcare asset sales, providing a normalized pre-tax view Non-GAAP Income Before Taxes Reconciliation (in thousands) | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Twelve Months Ended May 31, 2025 | Twelve Months Ended June 1, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------- | :------------------------------- | | Income (loss) before income taxes | $1,964 | ($139) | ($1,531) | $157 | | Loss on disposal of healthcare assets and other charges | $158 | — | $5,074 | — | | Non-GAAP income (loss) before taxes | $2,122 | ($139) | $3,543 | $157 | Non-GAAP Income Tax Provision (Benefit) Non-GAAP income tax adjusts GAAP by excluding asset sale loss, R&D credit, and valuation allowance for representative tax expense Non-GAAP Income Tax Provision (Benefit) Reconciliation (in thousands) | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Twelve Months Ended May 31, 2025 | Twelve Months Ended June 1, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------- | :------------------------------- | | Income tax provision (benefit) | $889 | ($20) | ($388) | $96 | | Loss on disposal of healthcare assets and other charges | $41 | — | $1,319 | — | | Prior years' research and development credit | — | $462 | — | $462 | | Valuation allowance adjustment | ($617) | ($861) | ($617) | ($861) | | Non-GAAP income tax provision (benefit) | $313 | ($419) | $314 | ($303) | Non-GAAP Net Income Non-GAAP net income clarifies core profitability by excluding asset sale loss, R&D credit, and state tax valuation adjustments Non-GAAP Net Income Reconciliation (in thousands) | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Twelve Months Ended May 31, 2025 | Twelve Months Ended June 1, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------- | :------------------------------- | | Net income (loss) | $1,075 | ($119) | ($1,143) | $61 | | Loss on disposal of healthcare assets and other charges | $117 | — | $3,755 | — | | Prior years' research and development credit | — | ($462) | — | ($462) | | Valuation allowance adjustment | $617 | $861 | $617 | $861 | | Non-GAAP net income | $1,809 | $280 | $3,229 | $460 | Non-GAAP Earnings Per Common Share (Diluted) Non-GAAP diluted EPS adjusts GAAP by excluding asset sale loss and valuation allowance for a normalized per-share metric Non-GAAP Earnings Per Common Share (Diluted) Reconciliation | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Twelve Months Ended May 31, 2025 | Twelve Months Ended June 1, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------- | :------------------------------- | | Net income (loss) per share (diluted) | $0.08 | ($0.01) | ($0.08) | $0.00 | | Loss on disposal of healthcare assets and other charges | — | — | $0.26 | — | | Valuation allowance adjustment and prior years research and development credit | $0.04 | $0.03 | $0.04 | $0.03 | | Non-GAAP net income per share (diluted) | $0.12 | $0.02 | $0.22 | $0.03 | EBITDA and Adjusted EBITDA EBITDA is net income (loss) plus tax, depreciation, and amortization; Adjusted EBITDA further excludes the Healthcare asset sale loss EBITDA and Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Twelve Months Ended May 31, 2025 | Twelve Months Ended June 1, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :------------------------------- | :------------------------------- | | Net income (loss) | $1,075 | ($119) | ($1,143) | $61 | | Income tax provision (benefit) | $889 | ($20) | ($388) | $96 | | Depreciation & amortization | $965 | $1,089 | $4,002 | $4,307 | | EBITDA | $2,929 | $950 | $2,471 | $4,464 | | Disposal of healthcare assets | $158 | — | $5,074 | — | | Adjusted EBITDA | $3,087 | $950 | $7,545 | $4,464 | - Management believes non-GAAP measures provide useful information by excluding items not indicative of ongoing results, such as the one-time loss on the sale of Healthcare assets[23][24] Consolidated Financial Statements Consolidated statements show FY25 asset growth, increased operating cash flow, and a shift to a GAAP net loss due to asset disposal Consolidated Balance Sheets Total assets reached $195.8 million as of May 31, 2025, with increased cash and accounts payable, and decreased inventories Consolidated Balance Sheets (in thousands) | Asset/Liability/Equity | May 31, 2025 | June 1, 2024 | | :------------------------------------ | :----------- | :----------- | | Assets: | | | | Cash and cash equivalents | $35,901 | $24,263 | | Accounts receivable, net | $24,117 | $24,845 | | Inventories, net | $102,799 | $110,149 | | Total current assets | $166,326 | $161,654 | | Property, plant and equipment, net | $17,916 | $20,681 | | Total non-current assets | $29,509 | $30,791 | | Total assets | $195,835 | $192,445 | | Liabilities: | | | | Accounts payable | $21,339 | $15,458 | | Accrued liabilities | $14,276 | $15,404 | | Total current liabilities | $36,786 | $32,031 | | Total non-current liabilities | $2,390 | $2,462 | | Total liabilities | $39,176 | $34,493 | | Stockholders' Equity: | | | | Total stockholders' equity | $156,659 | $157,952 | | Total liabilities and stockholders' equity | $195,835 | $192,445 | Consolidated Statements of Comprehensive Income (Loss) Consolidated statements show a shift from FY24 net income to a FY25 net loss of $1.1 million, influenced by asset disposal Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended May 31, 2025 | Three Months Ended June 1, 2024 | Twelve Months Ended May 31, 2025 | Twelve Months Ended June 1, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------- | :------------------------------- | | Net sales | $51,889 | $47,374 | $208,909 | $196,460 | | Gross profit | $16,375 | $14,724 | $64,800 | $59,966 | | Selling, general and administrative expenses | $15,566 | $14,838 | $62,173 | $59,548 | | Loss on disposal of healthcare assets and other charges | $158 | — | $5,074 | — | | Operating income (loss) | $631 | ($114) | ($2,463) | $348 | | Net income (loss) | $1,075 | ($119) | ($1,143) | $61 | | Comprehensive income (loss) | $4,279 | ($355) | $247 | $210 | | Net income (loss) per share (Diluted) | $0.08 | ($0.01) | ($0.08) | $0.00 | Consolidated Statements of Cash Flows FY25 operating cash flow increased to $10.6 million, investing activities generated $4.0 million, and financing used $3.2 million Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Fiscal Year Ended May 31, 2025 | Fiscal Year Ended June 1, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net (loss) income | ($1,143) | $61 | | Depreciation and amortization | $4,002 | $4,307 | | Loss on disposal of healthcare assets and other charges | $5,074 | — | | Net cash provided by operating activities | $10,552 | $6,524 | | Capital expenditures | ($2,811) | ($4,041) | | Proceeds from disposal of healthcare assets | $6,827 | — | | Net cash provided by (used in) investing activities | $4,023 | ($4,041) | | Cash dividends paid | ($3,407) | ($3,376) | | Net cash used in financing activities | ($3,246) | ($2,905) | | Increase (decrease) in cash and cash equivalents | $11,638 | ($718) | | Cash and cash equivalents at end of period | $35,901 | $24,263 | Additional Information This section provides conference call details and important disclaimers regarding forward-looking statements and associated risks Conference Call Information A conference call to discuss Q4 and FY25 results is scheduled for July 24, 2025, at 9:00 a.m. Central Time - Conference call to discuss Q4 and FY25 results scheduled for Thursday, July 24, 2025, at 9:00 a.m. Central Time[26] - A replay of the call will be available for seven days starting July 25, 2025, at 1:00 p.m. Central Time[27] Forward-Looking Statements This release contains forward-looking statements subject to SEC-defined risks, with no obligation to update, advising Form 10-K review - The release includes forward-looking statements as defined by the SEC, which involve risks and uncertainties[28] - Readers are advised to refer to Item 1A, 'Risk Factors' in the Company's Annual Report on Form 10-K for a discussion of such risks[28] - The Company assumes no responsibility to update forward-looking statements[28]