Richardson Electronics (NasdaqGS:RELL) Q1 2026 Earnings Call October 09, 2025 10:00 AM ET Company ParticipantsGreg Peloquin - General Manager of Power and Microwave Technologies GroupBob Ben - CFOWendy Diddell - COOEd Richardson - CEOJens Ruppert - General Manager of CanvasConference Call ParticipantsAnja Soderstrom - AnalystRobert Brooks - AnalystChip Rui - AnalystBrendan Kenny - AnalystOperatorThank you for standing by. Welcome to the Richardson Electronics earnings call for the first quarter of fiscal ye ...

Richardson Electronics (NasdaqGS:RELL) Q1 2026 Earnings Call October 09, 2025 10:00 AM ET Company ParticipantsGreg Peloquin - General Manager of Power and Microwave Technologies GroupBob Ben - CFOWendy Diddell - COOEd Richardson - CEOJens Ruppert - General Manager of CanvasConference Call ParticipantsAnja Soderstrom - AnalystRobert Brooks - AnalystChip Rui - AnalystBrendan Kenny - AnalystOperatorThank you for standing by. Welcome to the Richardson Electronics earnings call for the first quarter of fiscal ye ...

Financial Data and Key Metrics Changes - Total sales for Q1 FY26 were $54.6 million, up 1.6% from $53.7 million in Q1 FY25. Excluding healthcare, net sales increased by 6.8% [2][6] - Consolidated gross margin improved to 31.0% from 30.6% year-over-year, primarily due to margin improvements in PMT and GES [8][9] - Operating income for Q1 FY26 was $1.0 million, compared to $0.3 million in the prior year, marking a significant increase [9] - Net income rose to $1.9 million in Q1 FY26 from $0.6 million in Q1 FY25, with diluted earnings per share increasing to $0.13 from $0.04 [9][10] - EBITDA for Q1 FY26 was $3.3 million, up from $1.7 million in the prior year [10] Business Line Data and Key Metrics Changes - PMT sales increased by 2.8% year-over-year, and by 10.5% when excluding healthcare, driven by demand from semiconductor wafer fab customers [6][12] - Canvas sales rose 8.3% due to improved market conditions in Europe [8] - GES sales decreased by 10.2% year-over-year, primarily due to the non-recurrence of a large EV locomotive order from the previous year, although the wind segment grew significantly [8][12] Market Data and Key Metrics Changes - The wind turbine business within GES grew by 86.1% year-over-year, supported by new customers and global expansion [12][13] - Approximately 70% of GES sales are currently in North America, indicating significant growth potential in international markets [17][37] Company Strategy and Development Direction - The company is focusing on engineered solutions and expanding its global footprint to manage tariff impacts and enhance manufacturing capabilities [4][16] - Strategic initiatives include the development of an Energy Storage System (ESS) program and partnerships to support growth in green energy applications [15][17] - The company is optimistic about growth in project-based business and is actively seeking new technology partners to fill gaps in its offerings [18][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing demand for alternative energy solutions and the potential benefits from recent legislative changes [4][24] - The company anticipates that the retained CT X-ray tube business will turn positive in Q4 FY26, following the sale of its healthcare business [22][23] - Management remains focused on efficiency and cash generation, with a commitment to driving growth both organically and through strategic acquisitions [25][26] Other Important Information - The company generated positive operating cash flow for six consecutive quarters, with a strong cash position of $35.7 million [5][10] - Capital expenditures for Q1 FY26 were $1.0 million, primarily related to manufacturing improvements [11] Q&A Session Summary Question: Status of Ultra 3000s on GE's approved vendor list - The engineering team has signed off, and final signatures from GE's legal team are expected soon, with testing to follow [30][32] Question: Semi-fab sales growth sustainability - Q1 of last year was a trough for semi-fab sales, and strong growth is expected in Q3 and Q4 FY26 based on forecasts [33] Question: Wind rotor sales opportunities outside the U.S. - The company is expanding its product offerings globally, with orders received from customers in Australia, India, France, and Italy [35][37] Question: CapEx expectations for the year - Estimated CapEx is in the $4 to $5 million range, slightly higher than last year [38][40] Question: Details on non-recurring gain affecting operating income - The $0.9 million non-recurring gain was from a confidential contractual settlement [46] Question: Insights on repower initiatives and operating leverage - The company expects to benefit from repowering initiatives and anticipates muted expense growth, contributing to operating leverage [49][56] Question: Outlook for the RF business - The RF tube business remains stable, with growth seen in the semi-fab equipment manufacturing sector and solid-state RF applications [57][59]