Richardson Electronics(US:RELL)2024-04-11 17:53Financial Data and Key Metrics Changes - Net sales for Q3 FY 2024 were $52.4 million, down from $70.4 million in Q3 FY 2023, reflecting a decrease of $18 million year-over-year [4] - Gross margin decreased to 30.3% from 33.0% year-over-year, primarily due to product mix and manufacturing underabsorption [5] - Net income for Q3 FY 2024 was $0.8 million or $0.05 per diluted share, compared to $6.3 million or $0.44 per diluted share in Q3 FY 2023 [17] Business Line Data and Key Metrics Changes - PMT sales decreased by $15.7 million year-over-year, primarily due to a decline in semiconductor wafer fabrication equipment sales [4] - GES sales increased sequentially by 342% from $2.6 million to $11.5 million, driven by a larger customer base and new product revenue [20] - Healthcare division sales improved by 29.6% year-over-year to $3.1 million, with higher demand for CT tubes and parts [11] Market Data and Key Metrics Changes - The backlog totaled $147.7 million at the end of Q3 FY 2024, down from $150.7 million at the end of Q2 FY 2024, with GES backlog increasing by $1.1 million [40] - The company expects the semiconductor wafer fabrication equipment business to rebound in 2025, with predictions of record revenues [84] Company Strategy and Development Direction - The company is focused on expanding its market share and leveraging significant energy transformation projects globally [8] - The Engineered Solutions strategy includes partnerships with technology providers to fill gaps and support growth, enhancing product offerings [10] - The company aims to maintain a strong balance sheet while pursuing growth opportunities in green energy and power management sectors [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing customer feedback indicating a rebound in semiconductor demand in 2025 [84] - The company is committed to improving working capital and converting inventory to cash, with a focus on maintaining a healthy cash position [54] - Management acknowledged challenges from economic conditions but remains confident in the long-term growth strategies [29] Other Important Information - Cash and investments at the end of Q3 FY 2024 were $18.9 million, down from $22.8 million at the end of Q2 FY 2024 [6] - Operating expenses for the first nine months of FY 2024 were $44.7 million, an increase of $1.0 million from the previous year [41] Q&A Session Summary Question: What drove the sequential jump in GES business? - The increase was primarily due to a larger customer base and significant orders for the ULTRA3000 product, with over 12 new customers in the quarter [57] Question: What can be expected from Phase 2 of the ULTRA3000? - Phase 2 is expected to have similar or slightly higher magnitude based on customer forecasts [59] Question: What is the outlook for the semiconductor equipment business? - Management believes 2025 will see record revenues in the semiconductor wafer fabrication equipment sector, with expectations of over $40 million in sales [84] Question: Why is the company not aggressively buying back stock? - The company is focused on maintaining positive cash flow and reducing inventory before considering stock buybacks [72]