• Revenue: $49.5 million, a 12.1% increase from $44.1 million in the prior year second quarter.
• Green Energy Solutions Sales: Increased by 129% to $5.9 million.
• Power and Microwave Technologies Sales: Increased by 9.9% to $34.4 million.
• Canvys Sales: Decreased by 6.0% to $6.9 million.
• Healthcare Sales: Decreased by 22.8% to $2.3 million.
• Gross Margin: Improved to 31% from 28.4% in the prior year second quarter.
• Operating Expenses: Improved to 32.3% of net sales from 32.8% in the prior year second quarter.
• Operating Loss: $0.7 million, compared to $2.0 million in the prior year second quarter.
• Net Loss: $0.8 million or $0.05 per diluted share, compared to $1.8 million or $0.13 per diluted share in the prior year second quarter.
• EBITDA: Approximately breakeven, compared to negative $1.2 million in the prior year second quarter.
• Cash and Cash Equivalents: $26.6 million at the end of the second quarter.
• Operating Cash Flow: $5.5 million, compared to $0.8 million in the prior year second quarter.
• Free Cash Flow: $4.9 million for the second quarter.
• Dividends Paid: $0.9 million in cash dividends in the second quarter.
• Debt: No outstanding debt on the $30 million revolving line of credit.

• Warning! GuruFocus has detected 7 Warning Signs with RELL.

Release Date: January 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Richardson Electronics Ltd (NASDAQ:RELL) reported a 12% year-over-year increase in sales for the second quarter, reaching $49.5 million.
• The Green Energy Solutions (GES) business unit experienced a 129% increase in sales, demonstrating strong growth and market demand.
• The company achieved positive free cash flow of $4.9 million for the second quarter, marking the third consecutive quarter of positive operating cash flow.
• Gross margins improved across most business segments, with the healthcare division seeing a significant increase from 14.8% to 35.7%.
• Richardson Electronics Ltd (NASDAQ:RELL) maintained a strong cash position with $26.6 million in cash and cash equivalents and no outstanding debt on its $30 million revolving line of credit.

Negative Points

• The healthcare division experienced a 22.8% decline in sales, reflecting lower demand unrelated to specific customer or program loss.
• Canvys sales decreased by 6.0% due to challenges in the European markets, particularly in Germany.
• The company reported a net loss of $0.8 million for the second quarter, although this was an improvement from the previous year's loss.
• Operating expenses as a percentage of net sales were slightly high at 32.3%, although improved from the previous year.
• Visibility beyond the third quarter remains challenging, with customers keeping their plans close to the vest, impacting future projections.

Q & A Highlights

Q: With the recent multimillion-dollar orders, what time frame are you expecting those to ship within? A: We've already started shipping, and the balance will be shipped throughout calendar year 2025. These contracts began shipping at the beginning of December.

Q: Can you talk about other Green Energy Solutions (GES) opportunities that might come to fruition soon? A: We are working on several programs, including multi-brand introductions in Europe and Asia, and finalizing our Energy Storage System (ESS) strategy. These involve replacing lead-acid batteries with new products designed to integrate with customers' systems.

Q: Regarding SG&A expenses, will they continue to increase at a similar pace as sales grow? A: Most of the increase in SG&A was due to incentives tied to sales growth. We expect some increase in the next two quarters based on sales growth, but not at the same 10% level.

Q: Can you provide an update on the shipping timeline for the diesel locomotive family of products? A: We have a major program expected to ship over $1 million at the end of Q3. Starter modules for electric and diesel locomotives have started shipping, with forecasts for a thousand trains this calendar year.

Q: What is the outlook for the semiconductor equipment-related space, particularly in the second half of 2025? A: Visibility is more challenging, but we have good visibility for Q3, and numbers should increase. Customers have not indicated any drop-off, and we continue to see quarter-over-quarter increases in revenue and demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.