Richardson Electronics Q3 Earnings Call Highlights

09 Apr 2026, 16:04 by Danessa Lincoln · The Markets Daily

Richardson Electronics (NASDAQ:RELL) reported its seventh consecutive quarter of year-over-year sales growth in the third quarter of fiscal 2026, as strength in Power & Microwave Technologies (PMT) offset softer timing in other areas and the lingering impact of last year’s healthcare divestiture on comparisons.

Chairman and CEO Edward J. Richardson said the quarter was “led by strong momentum in PMT, particularly in EDG and the semi-fab equipment market,” while the company maintained “continued discipline around gross margin and operating expenses.” He added that the company is investing in technical expertise and operating performance “to build depth” and position the business for “sustainable long-term value creation.”

Quarterly results show higher sales, margin expansion, and return to operating profit

Total sales rose to $55.5 million from $53.8 million a year earlier. Richardson said operating income improved to $1.5 million versus an operating loss of $2.7 million in the prior-year quarter, while gross margin increased 90 basis points to 31.9%.

Chief Financial Officer Robert J. Ben said consolidated net sales increased 3.1% year over year, and that excluding healthcare—most of which was sold in January 2025—net sales increased 6.0%. He noted that healthcare results, including prior periods, are consolidated into the PMT segment beginning in fiscal 2026.

Ben attributed the quarter’s growth primarily to PMT, where sales increased 9.7% to $38.7 million, driven by “significant increases in semiconductor wafer fab and RF and microwave products.” Excluding healthcare, PMT net sales increased 14.5%.

Other segment performance reflected timing issues. Ben said Green Energy Solutions (GES) sales were $0.5 million below the prior-year quarter “due to project timing,” and Canvys sales decreased $1.2 million, “which primarily reflected project timing in North America.”

On profitability, Ben said the consolidated gross margin improvement was “due to higher margin in PMT, partially offset by lower margin in GES and Canvys.” Operating expenses increased to $16.2 million from $14.5 million, reflecting “higher salaries and incentives” for staffing additions and retention, as well as related benefits and travel. He also noted that the prior-year quarter’s operating expenses “were historically low.”

Net income was $0.9 million, or $0.07 per diluted share, compared with a net loss of $2.1 million, or $0.15 per diluted share, a year earlier. EBITDA was $2.2 million, compared with negative $2.1 million in the prior-year quarter.

Backlog rises to $151.2 million; management monitors tariffs and geopolitical risk

Richardson said order activity “remains solid,” and total backlog increased to $151.2 million at quarter end, which management cited as support heading into the fiscal fourth quarter.

During Q&A, executives provided additional detail on backlog by segment. Wendy Diddell, EVP and COO, said PMT backlog ended the quarter at $75.4 million. Diddell also confirmed total backlog at $151.2 million when asked by an investor.

Richardson said the company is “closely monitoring the developing situation in Iran, the related movement in energy markets, and the evolving tariff environment,” though he added these issues have not had a significant impact on the business “at this point.” He said the company has remained disciplined in “sourcing, inventory, pricing, and customer commitments” as trade conditions shift.

Segment updates: GES sees bookings strength; PMT benefits from semi-fab and RF demand

Greg Peloquin, EVP of PMT and GES, said both groups remain central to Richardson Electronics’ multi-year strategy, including building backlog, launching new products, expanding the customer base, and advancing development programs “from beta testing to pre-production.”

In GES, Peloquin said backlog for core Pitch Energy Module (PEM) products—including ULTRA3000 multi-brand offerings—grew 15% in the third quarter. He added that year-to-date bookings from key products “had a high double-digit growth rate versus the prior year,” which he said positions the business for a strong fourth quarter and “forecasted double-digit revenue growth” for fiscal 2026, with “continued momentum into FY 2027.”

GES sales were down 5.4% in the quarter after 39% growth in the previous quarter, which Peloquin attributed to shifting mix toward engineered solutions and softer components business results. He also said the company is “beginning to experience longer lead times for certain components due to precious metals supply constraints,” but emphasized these factors “in no way indicate the underlying strength of the business.”

Peloquin highlighted three growth areas inside GES during the quarter:

Broader adoption of PEM modules across global wind turbine platforms and owner-operators
The company’s “first BESS program” booked in Q3, which he said began shipping in Q4
Strength in locomotive products, including starter modules and superstructures

On PMT, Peloquin said sales growth (excluding legacy healthcare) reflected “a slight slowdown in the electron device MRO business” that was more than offset by increased demand in RF and wireless components—“strong growth in SatCom, radar, and microwave communications”—and “strong growth in the semiconductor wafer fab market.” He said customer feedback from semiconductor equipment customers pointed to “ongoing optimism and continued growth going into our FY 2027.”

Canvys revenue declines year over year, but backlog supports Q4 outlook

Jens Ruppert, EVP and General Manager of Canvys, said the business generated $8.0 million in revenue, down from $9.2 million a year earlier, reflecting the project-driven nature of the segment and the timing of customer programs. On a year-to-date basis, Canvys revenue increased to $25.0 million from $23.7 million.

Canvys’ third-quarter gross margin was 32.2%, compared with 33.2% a year earlier. Ruppert said product mix and “freight, duty, and other supply chain related costs” affected the comparison, but margins “remained at a healthy level.”

Backlog increased slightly to $38.2 million from $38.0 million sequentially. Ruppert said the company remained focused on execution and flexibility amid “trade policy shifts, tariffs and logistics markets” that created “pockets of uncertainty.” He added that Canvys secured orders from both repeat and new medical OEM customers, with a focus on robotic-assisted surgery, navigation, endoscopy, and human-machine interface applications. Looking ahead, Ruppert said the fourth-quarter forecast “looks very promising” and the company expects “a strong finish to the fiscal year.”

Inventory, cash, and strategic initiatives: Thales inventory build complete; AI steering committee launched

Ben said cash and cash equivalents ended the quarter at $29.5 million, down from $33.1 million at the end of the second quarter. He attributed the cash use “primarily” to higher inventory tied to “final buys from a critical supplier.” Capital expenditures were $0.8 million, and the company paid $0.9 million in cash dividends during the quarter. The board declared a regular quarterly dividend of $0.06 per share to be paid in the fourth quarter. Richardson Electronics ended the quarter with no outstanding debt on its revolving credit line with PNC Bank.

In Q&A, Diddell said the company has “about $45 million in Thales inventory” and reiterated it expects the inventory to support the business “through 2030.” She said purchases are complete, and investors should begin to see inventory “burning down” going forward, while noting inventory levels with other suppliers are trending lower.

Diddell also outlined operational priorities of accelerating growth and improving efficiency. She cited strength in semiconductor wafer fab markets as “AI continues to lift equipment demand globally,” and pointed to new GES program launches, including the “long-awaited Suzlon India program.” She said the company has begun a “disciplined, cost-controlled” effort to evaluate AI opportunities, including forming an enterprise-wide AI steering committee intended to deliver early wins and a practical roadmap within 90 days.

Richardson, responding to a question about the company’s valuation relative to book value, said the board discusses share repurchases “every quarter,” but argued the “real answer” is to continue developing new programs and increase business and profit generation from those efforts.

About Richardson Electronics (NASDAQ:RELL)

Richardson Electronics, Ltd. (NASDAQ:RELL) is a global manufacturer, distributor and servicer of engineered components and subsystems for a diverse range of industrial, medical and scientific applications. The company specializes in vacuum electron devices, high-voltage power supplies and related electronic components, offering klystrons, traveling wave tubes, magnetrons, X-ray tubes, microwave amplifiers and power conversion products. Its solutions support customers in power grid management, semiconductor processing, medical imaging, scientific instrumentation and telecommunications.

In addition to its manufacturing capabilities, Richardson Electronics maintains a broad distribution network comprising thousands of standard and custom parts.