Richardson Electronics, Ltd.

Good day and thank you for standing by. Welcome to Richardson Electronics' earnings call for the second quarter of fiscal year 2025 conference call. 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 the session, you will need to press star 1-1 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, Ed Richardson, CEO of Richardson Electronics. Please go ahead.

Good morning, and thank you all for joining Richardson Electronics conference call for the second quarter of fiscal year 2025. Joining me today are Rob Ben, 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 share an encouraging update on our second quarter performance as we're making significant progress with multi-year growth strategy. During the second quarter, we experienced sequential improvements in sales and delivering positive operating income in October and November. In addition to this operational momentum, we generated positive free cash flow during the quarter. We achieved outstanding growth in our green energy solutions business during the second quarter, with sales more than doubling compared to the prior year. Furthermore, we experienced a significant improvement in revenues from our semiconductor wafer fab business, underscoring the strength of our diversified business segments. Overall, second quarter sales reached $49.5 million, exceeding $44.1 million, which we recorded in our Q2 last year, a solid 12% year-over-year increase. With this overview, I'll now hand the call over to Bob Benn, our Chief Financial Officer, who will provide a detailed review of our second quarter financial results and capital position. Following Bob's remarks, Greg, Wendy, and Jens will offer in-depth updates on our business and unit performance, including progress on our growth strategies, new product developments, key program wins, and the expansion of our customer relations. Thank you, and now over to Bob. Thank you, Ed, and good morning.

I will review our financial results for our second quarter of fiscal year 2025, followed by a review of our cash position. Consolidated net sales for the second quarter of fiscal 2025 increased 12.1% to 49.5 million, compared to net sales of 44.1 million in the prior year's second quarter. This was our second consecutive quarterly year-over-year increase in sales. Second quarter net sales growth was led by 129% increase in sales for our green energy solutions business unit and a 9.9% increase in PMT sales, which is due primarily to higher sales to semiconductor wafer fab customers. Sales growth for the second quarter fiscal 2025 was partially offset by a 6.0% decrease in Canvas sales and a 22.8% decline in healthcare sales, reflecting lower demand in the quarter unrelated to any specific customer or program loss. Consolidated gross margin for the second quarter was 31% of net sales compared to 28.4% during the second quarter of fiscal 2024. The largest component of the 260 basis point increase in consolidated gross margin was due to margin expansion across most parts of our business. PMT's gross margin increased to 30.3% from 28.5% as a result of an improved product mix. GES gross margin increased to 32.0% from 29.2%, also due to product mix. Healthcare margin increased to 35.7% from 14.8% because of an improved product mix and manufacturing efficiencies. Partially offsetting these improvements in gross margin was lower gross margin for Canvas compared to the prior year's second quarter. Operating expenses as a percentage of net sales improved to 32.3% for the second quarter of fiscal 2025 compared to 32.8% in the second quarter of fiscal 2024. Operating loss was $0.7 million for the second quarter of fiscal 2025 versus an operating loss of $2.0 million in the second quarter of last year. Income tax benefit was $0.3 million or an effective tax rate of 28.8 percent versus an income tax benefit of $0.5 million or an effective tax rate of 21.6 percent in the prior year's second quarter. Net loss for the second quarter of fiscal 2025 was $0.8 million or five cents per diluted share compared to net loss of 1.8 million or 13 cents per diluted share in the second quarter of fiscal 2024. EBITDA for the second quarter of fiscal 2025 improved and was approximately breakeven versus negative 1.2 million in the prior year second quarter. Please note that EBITDA is a non-GAAP financial measure and a reconciliation of the non-GAAP item to the comparable GAAP measure is available in our second quarter fiscal year 2025 press release that was issued yesterday. Turning to a review of the results for the first six months of fiscal year 2025. Net sales for the first six months of fiscal year 2025 were 103.2 million, an increase of 6.7% from 96.7 million in the first six months of fiscal year 2024, which reflected higher sales across our business segments except for Canvas. Gross margin was 30.8% of net sales, which was unchanged from the first six months of fiscal 2024. As a percentage of net sales, operating expenses for the first six months of the fiscal year were 31.1%, compared to 31.3% for the first six months of the prior fiscal year. Operating loss for the first six months of fiscal year 2025 was $0.4 million, as compared to an operating loss of 0.5 million for the first six months of fiscal year 2024. Income tax benefit was 0.2 million during the first six months of fiscal 2025 versus an income tax benefit of 0.1 million in the prior year's first six months. The company reported a net loss of 0.2 million or one cent per diluted common share for the first six months of fiscal year 2025 versus net loss of 0.6 million or 4 cents per diluted common share for the first six months of fiscal year 2024. EBITDA for the first six months of fiscal 2025 was 1.7 million versus 1.4 million in the prior year's first six months. Moving to a review of our cash position. Cash and cash equivalents at the end of the second quarter of fiscal 2025 were 26.6 million compared to 23.0 million at the end of the first quarter of fiscal 2025. Operating cash flow was 5.5 million compared to 0.8 million in the prior year's second quarter. This was the third consecutive quarter of positive operating cash flow. Capital expenditures of 0.5 million in the second quarter of fiscal 2025 were primarily related to our facilities and IT systems, versus $1.5 million in the second quarter of fiscal year 2024. As a result, free cash flow was $4.9 million for the second quarter of fiscal 2025. We paid $0.9 million in cash dividends in the second 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 third quarter of fiscal 2025. As of the end of the second 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 provide more details for our PMT and GES business groups.