Richardson Electronics(RELL) - 2026 Q1 - Quarterly Results

Executive Summary Richardson Electronics achieved its fifth consecutive quarter of YoY net sales growth, driven by semiconductor wafer fab sales, alongside positive operating income and cash flow, and declared a dividend Q1 FY26 Performance Highlights The company achieved its fifth consecutive quarter of YoY net sales growth, driven by semiconductor wafer fab sales, and maintained positive operating income and cash flow - Net sales increased YoY for the 5th consecutive quarter, led by a 52.2% YoY increase in semi-conductor wafer fab net sales[1] - Generated $1.0 million of operating income and ended Q1 FY26 with positive operating cash flow for the 6th consecutive quarter[1] - The Board of Directors declared a $0.06 per share quarterly cash dividend[1] CEO Commentary The CEO expressed satisfaction with Q1 FY26 results, highlighting significant operating income improvement from a profitable sales mix and cost control, and projected improved fiscal year performance - Excluding Healthcare (majority of assets sold in January 2025), net sales grew by 6.8% year-over-year[2] - Operating income more than tripled from the prior year's first quarter due to a more profitable sales mix and continued focus on controlling fixed costs[2] - Management is confident in the ability to deliver improved results for the year, supported by a solid balance sheet and a highly capable team[3] First Quarter Fiscal 2026 Financial Review This section provides a detailed financial review of Richardson Electronics' performance for the first quarter of fiscal year 2026 Net Sales Q1 FY26 net sales grew by 1.6% YoY to $54.6 million, or 6.8% excluding Healthcare, driven by PMT and Canvys, with a slight increase in backlog | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Net Sales | $54.6 | $53.7 | +1.6% | | Net Sales (Excl. Healthcare) | N/A | N/A | +6.8% | - PMT sales increased by $1.1 million (+2.8%), or +10.5% excluding Healthcare, driven by higher demand from semiconductor wafer fab customers and distributed electron tube products[5] - Canvys sales increased by $0.6 million (+8.3%) reflecting improved market conditions in Europe[5] - GES sales declined by $0.8 million, mainly due to the non-recurrence of a large EV Locomotive order[5] Net Sales by Strategic Business Unit (in thousands) | Segment | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | % Change | | :------ | :--------------------- | :--------------------- | :------- | | PMT | $39,069 | $38,001 | +2.8% | | GES | $7,263 | $8,086 | -10.2% | | Canvys | $8,275 | $7,638 | +8.3% | | Total | $54,607 | $53,725 | +1.6% | - Backlog totaled $134.7 million at the end of Q1 FY26, versus $134.2 million at the end of fiscal 2025, primarily driven by increases in PMT and Canvys[6] Gross Margin Overall gross margin improved to 31.0% in Q1 FY26, with PMT and GES margins increasing due to product mix, while Canvys' margin decreased | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------- | :------- | :----- | | Gross Margin | 31.0% | 30.6% | +0.4 pp | - PMT gross margin increased to 31.3% (from 30.1%) due to a favorable product mix and improved manufacturing absorption[7] - GES gross margin increased to 29.6% (from 29.4%) due to product mix[7] - Canvys gross margin decreased to 30.9% (from 34.3%) primarily due to product mix and higher freight costs[7] Gross Profit by Strategic Business Unit (in thousands) | Segment | Q1 FY26 Gross Profit (in thousands) | Q1 FY26 % of Net Sales | Q1 FY25 Gross Profit (in thousands) | Q1 FY25 % of Net Sales | | :------ | :------------------ | :-------------------- | :------------------ | :-------------------- | | PMT | $12,226 | 31.3% | $11,431 | 30.1% | | GES | $2,150 | 29.6% | $2,374 | 29.4% | | Canvys | $2,553 | 30.9% | $2,621 | 34.3% | | Total | $16,929 | 31.0% | $16,426 | 30.6% | Operating Expenses and Income Operating expenses slightly decreased in Q1 FY26, resulting in operating income more than tripling compared to the prior year | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Operating Expenses | $16.0 | $16.1 | -0.6% | | Operating Expenses (% of Net Sales) | 29.2% | 30.0% | -0.8 pp | | Operating Income | $1.0 | $0.3 | +233.3% | - The decrease in operating expenses resulted from lower travel expenses[8] Other Income, Taxes, and Net Income Other income significantly increased due to a non-recurring gain, driving substantial growth in income before taxes and net income, despite a higher effective tax rate | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Other Income | $1.4 | $0.3 | +366.7% | | Income Before Income Taxes | $2.3 | $0.6 | +283.3% | | Income Tax Provision | $0.4 | < $0.1 | Significant Increase | | Effective Tax Rate | 18.1% | 9.0% | +9.1 pp | | Net Income | $1.9 | $0.6 | +216.7% | - The increase in other income was mainly due to a non-recurring gain of $0.9 million[9] Earnings Per Share (EPS) and EBITDA Diluted EPS more than tripled and EBITDA more than doubled in Q1 FY26, reflecting strong net income growth | Metric | Q1 FY26 | Q1 FY25 | YoY Change | | :----- | :------- | :------- | :--------- | | Diluted EPS | $0.13 | $0.04 | +225.0% | | EBITDA (Millions) | $3.3 | $1.7 | +94.1% | Financial Position and Capital Management This section reviews Richardson Electronics' financial position, cash management, debt, and capital allocation strategies for the quarter Cash and Capital Expenditures The company maintained $35.7 million in cash and cash equivalents, primarily using cash for dividends, while capital expenditures slightly increased YoY | Metric | August 30, 2025 (Millions) | May 31, 2025 (Millions) | QoQ Change | | :----- | :------------------------- | :---------------------- | :--------- | | Cash and Cash Equivalents | $35.7 | $35.9 | -0.6% | - Cash used during the first quarter of fiscal 2026 primarily related to the payment of dividends[12] - The Company invested $1.0 million in capital expenditures during the quarter, primarily for its manufacturing business, facilities improvements, and IT systems, versus $0.9 million in the prior year's first quarter[12] Debt and Credit Facilities Richardson Electronics has no outstanding debt on its revolving credit line and extended its $20 million Credit Agreement with PNC Bank through October 2028 - As of the end of Q1 FY26, the Company had no outstanding debt on its revolving line of credit with PNC Bank[13] - The Credit Agreement has been extended through October 6, 2028, with similar terms and a $20 million borrowing limit[13] Quarterly Cash Dividend The Board declared a quarterly cash dividend of $0.06 per common share and $0.054 per Class B common share, payable November 26, 2025 - A $0.06 quarterly cash dividend per share was declared for holders of common stock[14] - A $0.054 cash dividend per share was declared for holders of Class B common stock[14] - The dividend will be payable on November 26, 2025, to common stockholders of record as of November 7, 2025[14] Non-GAAP Financial Measures This section defines and explains the company's use of non-GAAP financial measures, specifically EBITDA, and its reconciliation Non-GAAP Measure Definition and Use The company defines EBITDA as a non-GAAP measure, used by management to assess ongoing financial performance by excluding non-core items for evaluation and planning - EBITDA is presented as a non-GAAP financial measure, reflecting earnings before interest, income tax, depreciation, and amortization expenses[15] - Management believes EBITDA provides useful information to investors by assessing financial performance excluding items not indicative of ongoing results, and uses it for evaluating performance, planning, forecasting, and analyzing future periods[16] - Non-GAAP financial measures are not intended as a substitute for GAAP measurements and may not be comparable to similarly titled measures reported by other companies[16] Corporate Information This section provides an overview of Richardson Electronics, its forward-looking statements, and details for its upcoming conference call About Richardson Electronics, Ltd. Richardson Electronics is a global manufacturer specializing in engineered solutions, green energy products, and various electronic components, providing technical expertise and value-added services - Richardson Electronics is a leading global manufacturer of engineered solutions, green energy products, power grid and microwave tubes, power conversion and RF and microwave components, tubes for diagnostic imaging equipment, and customized display solutions[20] - The company serves customers in alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets[21] - The Company's strategy is to provide specialized technical expertise and "engineered solutions" through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair[21] Forward-Looking Statements This release contains forward-looking statements subject to risks and uncertainties, with readers advised to consult SEC filings and the company disclaiming update responsibility - This release includes certain "forward-looking" statements as defined by the Securities and Exchange Commission, which involve risks and uncertainties[19] - For a discussion of such risks and uncertainties, readers should refer to Item 1A, "Risk Factors" in the Company's Annual Report on Form 10-K and other reports filed with the SEC[19] - The Company assumes no responsibility to update the "forward-looking" statements in this release[19] Conference Call Details Richardson Electronics will host a conference call on October 9, 2025, at 9:00 a.m. Central Time to discuss Q1 FY26 results, with a replay available - The Company will host a conference call and question-and-answer session on Thursday, October 9, 2025, at 9:00 a.m. Central Time, to discuss its first quarter fiscal 2026 results[17] - Participants may register for the call, and a replay will be available beginning at 1:00 p.m. Central Time on October 10, 2025, for seven days[18] - A webcast link is also available[18] Consolidated Financial Statements This section presents the consolidated financial statements, including balance sheets, income statements, cash flows, and segment-level performance data Consolidated Balance Sheets The balance sheet shows slight increases in total assets and stockholders' equity, driven by accounts receivable and inventories, with a corresponding rise in current liabilities | Metric (in thousands) | August 30, 2025 (in thousands) | May 31, 2025 (in thousands) | Change | | :-------------------- | :-------------- | :----------- | :----- | | Total Assets | $200,067 | $195,835 | +$4,232 | | Total Liabilities | $40,699 | $39,176 | +$1,523 | | Total Stockholders' Equity | $159,368 | $156,659 | +$2,709 | | Cash and cash equivalents | $35,654 | $35,901 | -$247 | | Accounts receivable, net | $27,039 | $24,117 | +$2,922 | | Inventories, net | $104,635 | $102,799 | +$1,836 | | Total current assets | $170,276 | $165,887 | +$4,389 | | Total current liabilities | $38,699 | $36,786 | +$1,913 | Consolidated Statements of Comprehensive Income The statement highlights significant YoY growth in net sales, gross profit, operating income, and net income for Q1 FY26, with comprehensive income more than doubling | Metric (in thousands) | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | YoY Change | | :-------------------- | :--------------------- | :--------------------- | :--------- | | Net sales | $54,607 | $53,725 | +1.6% | | Gross profit | $16,929 | $16,426 | +3.1% | | Operating income | $968 | $316 | +206.3% | | Income before income taxes | $2,330 | $648 | +259.6% | | Net income | $1,909 | $590 | +223.6% | | Comprehensive income | $2,963 | $1,226 | +141.7% | | Diluted EPS (Common Stock) | $0.13 | $0.04 | +225.0% | Consolidated Statements of Cash Flows Net cash from operating activities significantly increased in Q1 FY26, with cash primarily used for investing and financing, leading to a slight quarterly decrease in cash equivalents | Metric (in thousands) | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | YoY Change | | :-------------------- | :--------------------- | :--------------------- | :--------- | | Net cash provided by operating activities | $1,367 | $412 | +231.8% | | Net cash used in investing activities | $(1,025) | $(919) | +11.5% | | Net cash used in financing activities | $(895) | $(868) | +3.1% | | Decrease in cash and cash equivalents | $(247) | $(1,228) | -79.9% | | Cash and cash equivalents at end of period | $35,654 | $23,035 | +54.8% | Net Sales and Gross Profit by Strategic Business Unit This section details net sales and gross profit by strategic business unit, showing sales growth in PMT and Canvys, a decline in GES, and varied gross margin performance Net Sales by Strategic Business Unit (in thousands) | Segment | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | % Change | | :------ | :--------------------- | :--------------------- | :------- | | PMT | $39,069 | $38,001 | +2.8% | | GES | $7,263 | $8,086 | -10.2% | | Canvys | $8,275 | $7,638 | +8.3% | | Total | $54,607 | $53,725 | +1.6% | Gross Profit by Strategic Business Unit (in thousands) | Segment | Q1 FY26 Gross Profit (in thousands) | Q1 FY26 % of Net Sales | Q1 FY25 Gross Profit (in thousands) | Q1 FY25 % of Net Sales | | :------ | :------------------ | :-------------------- | :------------------ | :-------------------- | | PMT | $12,226 | 31.3% | $11,431 | 30.1% | | GES | $2,150 | 29.6% | $2,374 | 29.4% | | Canvys | $2,553 | 30.9% | $2,621 | 34.3% | | Total | $16,929 | 31.0% | $16,426 | 30.6% | Reconciliation of Non-GAAP Financial Measures (EBITDA) This section reconciles net income to EBITDA, demonstrating a significant increase in Q1 FY26 EBITDA, reflecting improved operational profitability before non-cash and financing items EBITDA Reconciliation (in thousands) | Metric | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | | :----- | :--------------------- | :--------------------- | | Net income | $1,909 | $590 | | Income tax expense | $421 | $58 | | Depreciation & amortization | $971 | $1,044 | | EBITDA | $3,301 | $1,692 |