Richardson Electronics, Ltd. Q1 FY2026 earnings call

• Total sales up 1.6% driven by PMT and Canvas; excluding Healthcare, sales up 6.8%. - Consolidated gross margin 31% vs 30.6% prior year, driven by PMT and GES margin improvements. - Operating income $1 million in 2026 vs $300,000 in prior year's first quarter. - Positive operating cash flow for six consecutive quarters, cash at $35.7 million; Board declared $0.06 per common share dividend. - PMT had strong sales growth, GES wind segment grew, Canvas saw improved market conditions in Europe. - Healthcare team making progress on AltiTubes and Siemens tube repairs. - Strategic initiatives include focus on engineered solutions, global footprint investment, ESS program, REV Illinois participation, and Made in America campaign.

Consolidated net sales for Q1 2026 increased 1.6% to $54.6 million compared to $53.7 million in the prior year's first quarter. Excluding Healthcare (sold in Jan 2025), net sales rose 6.8%. PMT (Power and Microwave Technologies Group) excluding Healthcare had sales of $37.8 million, a 10.5% year-over-year increase, with gross margin at 31.3% (up from 30.1%). Canvas sales were $8.3 million, a 8.3% increase, with a gross margin of 30.9%. GES (Green Energy Solutions) had sales of $7.3 million, down 10.2% year-over-year, but the wind segment grew 86.1% year-over-year, and gross margin was 29.6% (up from 29.4%).

• GES expected to grow double digits in FY 2026 due to wind repowering and government initiatives. - CapEx estimated in $4 to $5 million range, higher than prior year due to expansions in LaFox and Texas center. - Board declared $0.06 per common share dividend.

• Uncertainty associated with tariffs and market conditions could impact business. - Dependence on a key supplier exiting the tube business, leading to inventory buildup, though tubes are not obsolete.

Q: Good morning, guys. I wanted to ask you on where we are with the Ultra 3000s getting onto GE's approved aftermarket vendors list.

A: Yeah. Hi, Bobby. They update me every week. We actually talk to GE about other things, this included. So we're in communication with them. Their engineering team has signed off on it, and the last communication, which was last week, was that it's final signatures from legal. They're still waiting on it. And it was promised to us here in the next week or two. That's the status of it. Once we get that final signature from their legal team, we will send them a number of units. They'll test them, mainly for safety, not for function, but for safety because their installers will be working with it. And so, once that's done, they'll approve it, and then along with that, not only are we pushing, if you will, GE, but also two of our largest owner-operators are also pushing it. Because they have both TSAs and their own repair. So the short answer, which I just went long on, is we expect it to be signed in the next couple of weeks. They'll do the audit of it for quality, safety. And we fully expect sign-off here in Q2 at some point.

Q: The semi fab sales were up 52% year over year, which was great to see. But I just wanted to make sure I'm thinking about it right. Wasn't Q1 last year we were at, like, a trough level for those sales? And then the follow-up is, would you expect that year-over-year growth rate to continue through your fiscal 2026 or maybe at the minimum, the nominal level of semi wafer fab sales in Q1 stay consistent through fiscal 2026?

A: Yeah. You're correct, Bobby. Q1 of last year was the lowest quarter of the year for Lam. Although they recovered very well. And we don't get a lot of visibility from them. But the most recent information that they've put in the portal looks like these larger numbers they've been talking about now, which seems like a year or two, we should start seeing strong, strong growth in Q3 and Q4 of our fiscal year. But we'll kind of be at the same run rate here in Q1 and Q2. With large growth in Q3 and Q4 based on their forecast, which is a forecast.

Q: Hi. So just one quick question. The operating income, you know, it was mainly due to a nonrecurring gain of $900,000. Could you just fill in a bit more detail about what that was?

A: Hi, Brendan. This is Robert Ben. First of all, the operating income, as I stated in my remarks, was $1 million, and that did not include the nonrecurring gain, that's below in other income. Just to clarify. So operating income for the quarter more than tripled from last year's first quarter. But to specifically address your question on the $900,000 nonrecurring gain, you know, as I stated in my remarks, that's from a confidential contractual settlement. So, unfortunately, I'm not really allowed to say much about it other than that.