Richardson Electronics, Ltd.

Good day, and thank you for standing by. Welcome to the Richardson's Electronics Earnings Conference Call for the first quarter of fiscal year 2025. At this time, all 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 this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you 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, Ed Richardson, CEO. Please go ahead.

Good morning and thank you all for joining Richardson Electronics Conference Call for the first quarter of fiscal 2025. Joining me today are Bob 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. I'm pleased to report that we had a solid start to the fiscal year with net sales exceeding both our internal projections and exceeding our performance from the prior year. Q1 sales were 53.7 million, slightly ahead of the 52.6 million we achieved in Q1 last year. As a note, Q1 last year benefited from an extra week of sales, making the year-over-year growth rate even more encouraging. Sales expanded in our green energy and health care businesses, reflecting continued success of our long-term growth strategies. We were particularly pleased to see revenue growth in green energy with sales nearly double what they were in Q1 last year. Our gross margin was below the prior year, mainly resulting from the product mix and underabsorption in our factory. We remain committed to retaining our production resources in anticipation of ongoing recovery in the semiconductor fab equipment market. While our Q1 sales in this segment remained low, we were up 16 percent compared with the first quarter last year, and backlog is increasing. We expect growth in demand throughout the balance of the calendar year 2024 and into calendar year 2025. We also anticipate the launch of several new products in our green energy business and in the first half of the calendar year 2025. These activities are expected to drive higher manufacturing demand and improve gross margin. As you can see, we expect demand in key parts of our business to improve over the coming quarters despite global economic uncertainty. This is a direct result of the value we provide our global customers as well as the multi-year growth strategies we're pursuing to diversify our business. In addition, we believe our strong balance sheet, customer base, and growing engineered solutions will provide the company with flexibility to navigate the current environment and invest in our long-term growth objectives. So with this introduction, I'll now turn the call over to Bob Benn, our Chief Financial Officer, to discuss our first quarter financial results and capital position. Then Greg, Wendy, and Jens will provide more detail on our business unit performance. including an update on our growth strategies, new product development, program wins, and expanding customer relationships.

Thank you, Ed, and good morning. I will review our financial results for our first quarter of fiscal year 2025, followed by a review of our cash position. In addition, please note that I will be discussing EBITDA, a non-GAAP financial measure, a reconciliation of the non-GAAP item to the comparable GAAP measure is available in our first quarter fiscal year 2025 press release that was issued yesterday. Consolidated net sales for the first quarter of fiscal 2025 were $53.7 million compared to net sales of $52.6 million in the prior year's first quarter, which was a 2.2% increase. It is also important to note that the first quarter of fiscal 2025 comprised 13 weeks compared to 14 weeks for the first quarter of fiscal 2024. This was our first quarterly year-over-year increase in sales since the third quarter of fiscal 2023. This growth in net sales for the first quarter of fiscal 2025 was due to an 84% increase in sales for GES and a 48.7% increase for healthcare. Sales growth for the first quarter fiscal 2025 was partially offset by a 4.3% decrease in PMT sales and a 22.8% decline in Canvas sales. Consolidated gross margin for the first quarter was 30.6% in sales compared to 32.8% during the first quarter of fiscal 2024. The largest component of the 220 basis point decline in consolidated gross margin was due to our PMT business. PMT's gross margin declined to 29.8 percent from 32.2 percent as a result of product mix and higher manufacturing underabsorption as the company maintains much of its workforce in anticipation of increasing demand for its manufacturing resources. Partially offsetting this decline was higher gross margin at Richardson Healthcare and Canvas compared to the prior year's first quarter. Operating expenses as a percentage in net sales were 30% for the first quarter of fiscal 2025 and remain unchanged compared to the first quarter of fiscal 2024. Operating income was $0.3 million for the first quarter of fiscal 2025 versus operating income of $1.5 million in the first quarter of last year. Income tax provision was $0.1 million, or an effective tax rate of approximately 9%, versus an income tax provision of $0.4 million, or an effective tax rate of 23.7% in the prior year's first quarter. Net income for the first quarter of fiscal 2025 was $0.6 million, or $0.04 per diluted share, compared to net income of $1.2 million, or $0.09 per diluted share, in the first quarter of fiscal 2024. EBITDA for the first quarter of fiscal 2025 was $1.7 million, or 3.1% of net sales. versus $2.6 million or 5.0% of net sales in the prior year's first quarter. Moving to a review of our cash position, cash and cash equivalents at the end of the first quarter of fiscal 2025 were $23.0 million compared to $24.3 million at the end of the fourth quarter of fiscal 2024. Operating cash flow. was $0.4 million compared to $1.0 million in the prior year's first quarter. This was the second consecutive quarter of positive operating cash flow. Capital expenditures of $0.9 million in the first quarter of fiscal 2025 were primarily related to our facilities and IT systems versus $1.1 million in the first quarter of fiscal year 2024. We paid $0.9 million in cash dividends in the first quarter of fiscal year 2025. In addition, based on our current financial position, our board of directors declared a regular quarterly cash dividend of $0.06 per common share, which will be paid in the second quarter of fiscal 2025. As of the end of the first quarter of fiscal 2025, the company had no outstanding debt on its $30 million revolving line of credit with PNC Bank. Now I will turn the call over to Greg, who will discuss the results for our PMT and GES business groups.