Richardson Electronics Q1 Earnings Call Highlights

Richardson Electronics NASDAQ: RELL reported higher sales, expanded margins and a more than fivefold increase in operating income for the first quarter of fiscal 2027, citing strength in semiconductor wafer fabrication equipment, RF and microwave products, wind-related offerings and emerging battery energy storage programs.

Chairman and CEO Ed Richardson said the company began the fiscal year with “a strong first quarter,” supported by sales growth and gross-margin expansion. Operating income rose to $5.1 million, or 7.9% of sales, from $1.0 million a year earlier. The company also generated $5.9 million in operating cash flow, compared with $1.4 million in the prior-year quarter, while consolidated backlog increased by $20 million from fiscal year-end to $184.4 million.

Sales and Profitability Increase

Chief Financial Officer Bob Ben said consolidated net sales increased 18.9% to $64.9 million from $54.6 million in the first quarter of fiscal 2026. The result marked Richardson’s ninth consecutive quarter of year-over-year sales growth.

• Power & Microwave Technologies, or PMT, sales rose 19.7%, led by semiconductor wafer-fab equipment and RF and microwave products.
• Green Energy Solutions, or GES, sales increased $2.0 million, or 27.1%, driven by wind products and newer offerings including battery energy storage systems.
• Canvys sales increased 7.9%, reflecting higher revenue in North America.

Consolidated gross margin was 34.6%, up from 31.0% a year earlier. Ben said the quarter’s gross margin benefited by 170 basis points from an IEEPA tariff refund. PMT gross margin increased to 35.4% from 31.3%, while GES margin rose to 32.6% from 29.6%, aided by product mix. Canvys gross margin increased to 33.0% from 30.9%, primarily due to the tariff refund, according to the company.

Operating expenses increased to $17.4 million from $16.0 million, principally due to employee compensation, incentives tied to sales growth and higher travel expenses. However, operating expenses declined as a share of sales, falling to 26.8% from 29.2%.

Net income reached $4.1 million, or $0.27 per diluted share, compared with $1.9 million, or $0.13 per diluted share, in the year-earlier period. EBITDA, a non-GAAP measure, was $6.0 million, compared with $3.3 million a year ago.

Cash Position and Backlog

Cash and cash equivalents totaled $36.9 million at the end of the first quarter, compared with $31.8 million at the end of fiscal 2026. The company reported free cash flow of $4.2 million after $1.7 million in capital expenditures, largely related to facility improvements and information technology systems.

Richardson paid $0.9 million in cash dividends during the quarter. Its board declared a quarterly cash dividend of $0.06 per common share, to be paid during the second quarter of fiscal 2027. The company had no outstanding borrowings on its revolving credit line with PNC Bank at quarter-end.

During the question-and-answer session, PMT and GES General Manager Greg Peloquin said approximately 75% of PMT and GES backlog was scheduled to ship during fiscal 2027. He said GES backlog totaled $43.2 million and PMT backlog was $99.4 million. Canvys General Manager Jens Ruppert said its backlog was $41.8 million, with a book-to-bill ratio of 1.1, though some frame-contract orders extend two years or longer.

Energy Storage and Wind Programs Advance

Peloquin said GES growth was principally driven by wind and related products. Richardson serves dozens of wind-turbine owners and operators and has expanded its pitch energy module program internationally, receiving orders from customers in Brazil, Australia, India, France and Italy.

The company also booked a $2 million battery energy storage system, or BESS, program during the quarter. Peloquin said Richardson’s BESS pipeline included nearly 50 active opportunities and that the company expected multiple opportunities to close during fiscal 2027.

Chief Operating Officer Wendy Diddell said Richardson began shipments on its first Alaska order, a multimillion-dollar project involving 18 customized battery energy storage systems serving seven remote communities. The company also began building an energy-storage demonstration center at its LaFox, Illinois, headquarters.

Diddell said Richardson expanded its RESS energy-storage product family with the introduction of the RESS211 and RESS422 systems, joining the RESS760 and REST1505 platforms. The company is also advancing its partnership with lithium-ion battery and energy-storage manufacturer Gotion.

In wind power, Diddell said Richardson has shipped more than 90,000 units since launching its first product. During the call, Peloquin said the company recorded approximately $1.5 million of Suzlon-related shipments in the quarter for replacement lead-acid batteries. He added that Richardson’s product has been confirmed for installation as original equipment on Suzlon’s new SX-9 turbine platform, while the company pursues maintenance, repair and overhaul business on existing Suzlon turbines worldwide.

Semiconductor, Canvys and Manufacturing Strategy

Excluding legacy healthcare operations, PMT sales were $46.6 million, up 23.1% from the prior-year first quarter. Peloquin said semiconductor wafer-fab customers have provided positive feedback and indicated continued activity through calendar 2027. Richardson is adding shifts to support higher semiconductor demand, Diddell said.

Canvys reported first-quarter revenue of $8.9 million, up from $8.3 million a year earlier. Ruppert said lower European revenue was offset by North American growth. The display-solutions business continues to pursue medical-device applications including robotic-assisted surgery, navigation, endoscopy and human-machine interfaces, as well as industrial uses such as passenger information systems and equipment controls.

Management also highlighted interest in its U.S.-based engineering, manufacturing, testing and quality capabilities under its “Made in America” strategy. Diddell said the company is seeing activity across aerospace, defense, industrial, semiconductor and power-management applications as customers consider localization, supply-chain continuity, tariffs and speed to market.

Looking ahead, Richardson said it remains focused on growing higher-value engineered solutions, improving profitability and converting backlog and strategic programs into revenue and cash. Management said it expects GES to deliver double-digit growth in fiscal 2027 and believes PMT and GES are positioned for continued sales and profit growth.

About Richardson Electronics (NASDAQ:RELL)

Richardson Electronics, Ltd. NASDAQ: RELL is a global provider of engineered solutions, replacement parts and specialized components for industrial, healthcare and energy markets. Founded in 1947 and headquartered in LaFox, Illinois, the company serves original equipment manufacturers, distributors and end users through a network that spans North America, Europe and Asia.

The company operates through three primary business areas. Its Power and Microwave Technologies segment supplies power semiconductors, electronic components, vacuum tubes, radio-frequency and microwave products, and related engineering services for applications including telecommunications, industrial equipment, broadcasting and defense.

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