RICHARDSON ELECTRONICS, LTD. Q1 FY2025 earnings call

• Net sales exceeded internal projections and prior year, with Q1 sales at $53.7 million vs $52.6 million prior year.
• Growth in green energy and healthcare businesses, with GES sales nearly doubling from prior year.
• Strong backlog in semiconductor fab equipment segment, up 16% from prior year.
• Anticipates growth and demand throughout 2024 and 2025, with new product launches expected in green energy business in first half of 2025.
• Focus on retaining production resources for semiconductor fab equipment market recovery.
• Strong balance sheet, customer base, and engineered solutions provide flexibility to navigate current environment.

Consolidated net sales for the first quarter of fiscal 2025 were $53.7 million. Segment performances:

• Green Energy Solutions (GES): Sales were $8.1 million, up 84% from the prior year, contributing approximately 15.1% to total net sales.
• Healthcare: Sales were $3.8 million, up 48.8% from the prior year, contributing approximately 7.1% to total net sales.
• Power and Microwave Technologies (PMT): Sales were $34.2 million, down 4.3% from the prior year, contributing approximately 63.7% to total net sales.
• Canvys: Sales were $7.6 million, down 22.8% from the prior year, contributing approximately 14.2% to total net sales. Gross margin was below prior year due to product mix and under-absorption in factory.

• Expect growth and demand throughout calendar year 2024 and into 2025.
• Anticipate launch of several new products in green energy business in first half of 2025.
• Semiconductor wafer fab equipment market expected to recover, with growth anticipated over next several years.

• Global economic uncertainty.
• Regulatory shifts and customer cautiousness in new product development and inventory management.
• Product mix and under-absorption in factory impacting gross margin.

Q: What were the new program wins and legacy program wins that drove GES sales growth?

A: Biggest new program is wind turbine repowering in North America and Europe, with large orders for ULTRA3000 used in repower program. Legacy programs include shipments of products to replace lead acid batteries in turbines, electric locomotive modules, and starter modules.

Q: How did the trade show in Europe for the ULTRA3000 family of solutions go?

A: The show confirmed opportunities, with Europe being a major market. Differences in dynamics include fewer GE turbines in Europe compared to Americas, but Suzlon, Senvion, Nordex, and SSB are being targeted.

Q: How is inventory expected to trend in coming quarters?

A: Inventory has a significant portion related to green energy and PMT. Wendy Diddell mentions inventory is state-of-the-art and no aging risk, with analysis done quarterly. Growth in inventory related to one vendor is expected to increase through end of 2025, then burned down.

Q: Thoughts on repurchasing stock?

A: Ed Richardson notes semiconductor wafer fab business growth will require substantial cash, and cash is needed to fund growth. Cash is managed carefully with foreign subsidiaries needing cash for operations.