Richardson Electronics, Ltd.

Good day, and thank you for standing by, and welcome to the Richardson's Electronics Earnings Call for the second quarter of fiscal year 2024 conference call. At this time, our participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Edward Richardson, CEO.

Please go ahead.

Good morning and welcome to Richardson Electronics conference call for the second quarter of fiscal year 2024. Joining me today are Robert Benn, Chief Financial Officer, Wendy Dedell, Chief Operating Officer and General Manager for Richardson Healthcare, Greg Peliquin, General Manager of our Power and Microwave Technologies Group, which includes Green Energy Solutions, and Jens Rupert, General Manager of Canvas. As a reminder, this call is being recorded and will be available for playback. I would also like to remind you that we'll be making forward-looking statements They're based on current expectations and involve risks and uncertainties. Therefore, our actual results could be materially different. Please refer to our press release and SEC filings for an explanation of our risk factors. Financial results for the second quarter of the fiscal year 2024 fell short of our expectations. Economic conditions, rising interest rates, higher inventory levels, and a lagging economy in China negatively impacted customer demand for our products. As we operate over the near term with a more uncertain economic climate, we remain focused on pursuing our long-term growth strategies. These strategies position the business to take advantage of large, rapidly growing global opportunities. The expertise of our management team is a significant asset during this period. as we have successfully navigated difficult economic periods throughout our history. This is exactly why we maintain a strong balance sheet with access to additional sources of capital if necessary. We've also made the strategic decision to maintain stable levels of manufacturing employees and salespeople as many of the green energy solutions and semiconductor equipment customers expect demand to recover in calendar 2024. Therefore, maintaining continuity in our manufacturing team is important to ensure we can quickly adapt to increased orders and grow market share. Unfortunately, profitability was impacted in the second quarter as our gross margin reflects the underabsorption in our factory. Within our healthcare business, we made some changes to improve inventory and focus on strategic objectives, which Wendy will tell you about shortly. Overall, the team continues to do an excellent job managing expenses. We're focused on driving efficiencies. We simultaneously position the company for future growth. While we acknowledge revenues will be lower in FY24 than previously anticipated, we maintain our optimistic outlook and remain committed to our long-term strategy. We continue to expand our product roadmap for green energy solutions. We are adding new customers for wind, electric vehicles, and rail, and the applications that take advantage of energy transition initiatives underway across many geographies. While we're in the early innings of this transformation, we have quickly developed a compelling roadmap of products, technologies, and are establishing Richardson Electronics as a leading provider of innovative engineered solutions for global green energy markets. David Miller- Activity across our business remains extremely strong and specifically for the green energies business our pipeline of potential projects continues to increase. David Miller- In addition to public and private energy transition initiatives that are underway, we believe that the inflation reduction act of 2022 will create further opportunities for the company. One recent example is a new order from a U.S.-based technology company that's using 100-kilowatt generators to power a pilot reactor to make crystalline diamond materials for high-tech applications. Under the Inflation Reduction Act, this customer is applying for a grant to build a multi-reactor factory which will require a significant number of 100-kilowatt generators. We believe other wind and electric vehicle and rail customers will benefit from the Inflation Reduction Act, which we expect to support our higher sales forecast. As our GES business gets to scale in the coming quarters and years, much of our near-term new business is project-based and timing is not always easy to predict. I want to stress that we have not lost any opportunities and remain focused on capitalizing on market opportunities supported by the Inflation Reduction Act and other energy transition initiatives globally. We are also focused on adding suppliers that will fill our technology gaps. These relationships are critical to our business model as our partners often support new engineered solution opportunities for the company. that drive higher and more profitable sales. Our balance sheet remains strong with nearly $23 million in cash and no debt. Inventory increased in the quarter in line with purchases of TALIS products, which would support our Profitable 2 business, as well as long lead time capacitors that are required to support our green energy growth initiatives. The balance of our inventory remained flat. And the transit inventory was down, indicating we are reducing inventory purchases in line with sales. With this introduction, I'd like to turn the call over to Bob Benn, our Chief Financial Officer, to review our second quarter financial performance in detail. Then Greg, Wendy, and Jens will discuss our numerous opportunities within our business units, including the significant number of new products, programs, and customers that drive our optimism for future growth.