Richardson Electronics(US:RELL)2022-07-21 19:30Financial Data and Key Metrics Changes - Fourth quarter sales reached $61.6 million, the highest quarterly sales since the sale of RFPD in 2011, representing a 22.1% increase compared to $50.5 million in the prior year's fourth quarter [4][13] - Total sales for FY 2022 were $224.6 million, a 26.9% increase from $176.9 million in FY 2021 [5][24] - Gross margin improved to 32.7% in Q4 FY 2022 from 31.8% in Q3 FY 2022, while the full-year gross margin decreased to 31.9% from 33.2% in FY 2021 [4][25] - Net income for Q4 FY 2022 was $8.3 million or 13.4% of net sales, compared to $1.9 million or 3.7% in Q4 FY 2021 [22][29] - Earnings per share on a diluted basis were $0.59 for Q4 FY 2022, up from $0.14 in the prior year [23][30] Business Line Data and Key Metrics Changes - Power & Microwave Technologies (PMT) sales increased by 26.8% to $49.3 million in Q4 FY 2022, contributing significantly to overall growth [37] - Canvys sales rose by 7.1% to $9.5 million in Q4 FY 2022, driven by strong customer demand in North America [15][63] - Richardson Healthcare sales increased by 4.1% to $2.9 million in Q4 FY 2022, although impacted by lower sales in China and Ukraine [56][58] Market Data and Key Metrics Changes - Total company backlog increased to $206.2 million in Q4 FY 2022, nearly doubling from $110.0 million at the end of Q4 FY 2021 [5][16] - Canvys backlog grew by 52.3% year-over-year, reflecting strong demand and customer relationships [66] Company Strategy and Development Direction - The company is focusing on power management solutions that support green energy initiatives, capitalizing on the growing demand for alternative energy [6][40] - A new Green Energy Solutions Group will be established to highlight revenue growth from new solutions and existing products [52][79] - The company is investing in engineering and manufacturing capabilities to support growth and backlog [11][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current demand for products, stating that they are not seeing the impact of recession on demand [78] - The company is closely monitoring global market activity and backlog growth, ready to react if necessary [78] - Management highlighted the importance of diversifying product offerings and maintaining strong relationships with key partners [48][49] Other Important Information - Operating expenses for Q4 FY 2022 were $15.2 million, an increase from $14.0 million in the prior year, primarily due to higher employee compensation expenses [19] - The company plans to increase capital expenditures to support manufacturing capabilities, estimating $3 million to $5 million over the next few years [102] Q&A Session Summary Question: What impacted the healthcare margins and future expectations? - Management indicated that supply issues led to lower margins, but they expect gross margins to return to mid to upper 20s in the upcoming quarters [81][83] Question: What is the status of sales in Ukraine and China? - Sales from Ukraine are expected to gradually recover, while sales in China are anticipated to rebound due to timing issues [84][85] Question: What is the outlook for the PMT business and follow-up orders? - Management expects a follow-up order from NextEra in Q2, with strong demand from multiple customers in the wind turbine sector [90] Question: What are the currency impacts on results? - Currency impacts were noted in Q4, with expectations for fluctuations in FY 2023, primarily related to the euro [100][101] Question: What factors will improve cash flow from operations? - Management highlighted the need for higher net income and better management of working capital to improve cash flow from operations [116][118]