リチャードソン・エレクトロニクス（RELL）2027年度第1四半期決算説明会：売上高18.9％増

主要なポイント

• 2027年度第1四半期の売上高は前年同期比18.9%増の6,490万ドルとなり、リチャードソン・エレクトロニクスにとって9四半期連続での前年同期比増収を記録しました。
• 粗利益率は前年同期の31.0%から34.6%に拡大しました。IEEPA（国際緊急経済権限法）に基づく関税返還が当四半期の粗利益率を170ベースポイント押し上げました。
• 営業利益は400%以上増加して510万ドル（売上高比7.9%）となりました。希薄化後EPSは0.13ドルから0.27ドルに増加しました。
• 受注残高は1億8,440万ドルに達し、2026年度末から2,000万ドル増加しました。部門別の受注残高は、PMTが9,940万ドル、GESが4,320万ドル、Canvysが4,180万ドルとなりました。
• 営業活動によるキャッシュフローは前年同期の140万ドルから590万ドルに増加し、フリーキャッシュフローは420万ドルとなりました。当四半期末時点の現金および現金同等物は3,690万ドルで、リボ払い融資残高はゼロでした。
• 経営陣は、風力関連製品、蓄電池システム（BESS）、および拡大する案件パイプラインに支えられ、GES部門が2027年度に2桁の売上成長を達成すると見込んでいます。

主要財務実績

事業および業績の動向

パワー＆マイクロウェーブ・テクノロジーズ（PMT）

PMTの売上高は、半導体ウェーハ製造装置向けおよびRF・マイクロ波製品に牽引され、19.7%増加しました。従来のヘルスケア事業を除いたPMTの売上高は前年同期比23.1%増の4,660万ドルとなりました。

成長は半導体ウェーハ製造装置分野の顧客に加え、衛星通信（SATCOM）、レーダー、防衛通信などのRF・無線用途に集中しました。PMTの粗利益率は、製品ミックスと関税返還の影響を反映し、31.3%から35.4%に上昇しました。

経営陣によると、半導体関連の顧客は2027年度の残りの期間および2027年暦年にかけて需要に対して引き続き前向きな姿勢を示しています。リチャードソン・エレクトロニクスは、拡大する需要に対応するためにシフトを増設しています。

グリーン・エナジー・ソリューションズ（GES）

GESの売上高は、主に風力関連製品や蓄電池システム（BESS）などの新しい製品が牽引し、200万ドル（27.1%）増加しました。粗利益率は、製品ミックスの改善により29.6%から32.6%へ向上しました。

ピッチ・エナジー・モジュールの採用は複数の風力タービンプラットフォームに拡大しました。同社はブラジル、オーストラリア、フランス、イタリアから海外注文を受注しており、Suzlon、Senvion、Nordex、SSBなどのプラットフォーム向け製品を開発中です。

第1四半期のSuzlon関連の出荷額は約150万ドルでした。経営陣は、既存の保守・交換需要に加え、リチャードソン・エレクトロニクスの製品がSuzlonの新しいSX9タービンプラットフォームに標準装備される見込みであると説明しました。

当四半期中、同社は200万ドル規模の蓄電池プログラムを受注しました。蓄電池システムのパイプラインには50件近くの進行中案件が含まれています。また、リチャードソン・エレクトロニクスは、7つの僻地コミュニティ向けに18のカスタムシステムを提供する数百万ドル規模のアラスカプロジェクトの出荷を開始しました。

経営陣は、蓄電池戦略においてエンジニアリング技術を活かしたマイクログリッド用途への注力を強めていると述べました。質疑応答では、顧客の守秘義務により詳細は限られるものの、カリフォルニア州のエネルギー企業との間で2年間で10〜20件、推計約1,000万ドル規模の見込みプログラムについて議論したことを明らかにしました。

キャンビス（Canvys）

Canvysの売上高は前年同期の830万ドルから7.9%増の890万ドルとなりました。北米での成長が欧州での減収を相殺しました。

粗利益率は、製品ミックス、業務執行、関税返還に支えられ、30.9%から33.0%に上昇しました。四半期末の受注残高は4,180万ドルで、BBレシオは1.1でした。

顧客アクティビティは引き続き、ロボット支援手術、ナビゲーション、ヒューマン・マシン・インタフェース（HMI）向けの医療用ディスプレイや、乗客案内、印刷、自動販売機、フライス加工、梱包装置などの産業用途に注力しています。

業績見通し

経営陣は、拡大する受注残高、風力関連製品、蓄電池システムのパイプラインに支えられ、2027年度にGES部門が2桁の売上成長を達成すると予測しています。

PMTおよびGESについて、経営陣は現在の受注残高の約75%が2027年度中に出荷される予定であると試算しています。また、新製品、見積もり提出、新規顧客の獲得により、受注残高の継続的な成長を見込んでいます。

Canvysは受注残高の大部分が当年度中に出荷されると見込んでいますが、一部の基本合意契約（フレームワーク契約）は2〜3年に及びます。出荷時期は引き続き個々の顧客プログラムに依存します。

リチャードソン・エレクトロニクスは、オーガニック投資と収益性の高い成長に引き続き注力しています。取締役会は普通株式1株当たり0.06ドルの四半期現金配当を実施することを決定し、2027年度第2四半期に支払われる予定です。

リスクおよび注視事項

• 170ベースポイントの関税返還によるプラス効果は、第1四半期の粗利益率を大幅に押し上げました。経営陣は今後の返還の時期や規模について見通しを示すことができず、同様の利益が同水準で再現しない可能性があることを示唆しました。
• 貿易政策、関税、地政学的動向、物流、世界的な経済情勢は引き続き不確実性をもたらしています。
• CanvysおよびGESのいくつかのプログラムはプロジェクトベースであるため、売上高および出荷時期は四半期ごとに変動します。
• 金利上昇は借入に依存する資本集約的な顧客に影響を与える可能性がありますが、リチャードソン・エレクトロニクス自体は当四半期末時点でリボ払い融資残高がゼロでした。
• 同社は運転資本の規律と半導体、風力、その他の顧客需要とのバランスを取ったため、棚卸資産は約1億330万ドルと高水準で推移しました。

アナリスト質疑応答の要点

• 受注残高の消化：経営陣は、PMTおよびGESの受注残高の約75%が2027年度中に出荷されると推定しています。Canvysの受注残高の大部分も年度内に出荷される予定ですが、一部の契約は複数年に及びます。
• GESの売上構成：経営陣によると、同部門の成長の大部分は風力および関連製品によるものです。同社は風力タービンプラットフォーム向けに10以上の製品を提供しており、23社以上の顧客に対応しています。
• 風力市場の機会：リチャードソン・エレクトロニクスは、米国内のGE製風力タービンへの浸透率は依然として20%未満であり、さらなるシェア拡大の余地があるとしています。また、旧型タービンのリパワー（再設備化）もピッチ・エナジー・モジュールの需要を後押しする可能性があります。
• 蓄電池システム：経営陣は、アラスカでの導入、50件近くのパイプライン、カリフォルニア州での見込みプログラムを挙げ、カスタム仕様のマイクログリッドを中核的なニッチ分野として強調しました。
• 電気およびディーゼル機関車：同社はスターターモジュールおよびIGBTの開発において積極的な取り組みを維持しています。経営陣は、スターターモジュールの粗利益率は全社平均と同程度であると述べましたが、単価の開示は控えました。

決算説明会文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good day and thank you for standing by. Welcome to the Richardson Electronics earnings call for the first quarter of fiscal year 2027. 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 1-1 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, Chairman of the Board and CEO. Please go ahead.

Edward Richardson

Good morning and thank you for joining Richardson Electronics fiscal 2027 first quarter conference call. We appreciate your continued support and interest in our company. Joining me today are Robert Ben, Chief Financial Officer, Wendy Diddell, Chief Operating Officer, Gregory Peloquin, General Manager of our Power and Microwave Technologies and Green Energy Solutions Groups, and Jens Ruppert, General Manager of Canvys. As a reminder, this call is being recorded and will be available for playback. Before we begin, I would like to remind everyone that we will be making forward-looking statements. These statements are based on current expectations and involve risks and uncertainties. Actual results may differ materially from those discussed today. Please refer to our press release and SEC filings for discussion of risk factors.

I am pleased to report that we started fiscal 2027 with a strong first quarter. Higher than expected sales growth and expanded gross margin drove a 5x year-over-year improvement in operating income to $5.1 million, or 7.9% of sales. Improved profitability and proactive working capital management generated $5.9 million of cash operating activities compared with $1.4 million in the prior year first quarter. Backlog grew to $184.4 million, up $20 million from fiscal year 2026 year-end. While Robert will review the financial results in detail, the broader takeaways are strong execution across our global teams, growing adoption of key product lines, and positive momentum in our strategic growth priorities.

Our performance was led by continuous strength in our Power and Microwave Technologies, particularly in semiconductor wafer fabrication equipment, RF and microwave components, and engineered solutions. Demand remains healthy across key end markets, including semiconductor manufacturing, defense, communications infrastructure, and industrial applications. This growth reflects favorable market conditions and our multi-year efforts to broaden our customer base, expand technology partnerships, and strengthen our engineering capabilities. We also continue to make progress in Green Energy Solutions. Interest in power management, energy resiliency, and energy storage has strengthened as industrial, commercial, and infrastructure customers seek greater reliability, lower operating costs, and solutions for growing power requirements. We believe these long-term trends support our strategy and create attractive opportunities for Richardson Electronics.

At Canvys, customer engagement remains active across medical and industrial markets. Although project timing can create quarterly variability, customer activity, requests for quote volume, and opportunities for new design wins remain encouraging. Continue to support customers with highly engineered display solutions differentiated by customization quality and long-term support. Strategically, we are seeing increased customer interest in our U.S.-based engineering and manufacturing capabilities. Our Made in America initiative, engineering expertise, global infrastructure, manufacturing footprint, and strong balance sheet are creating opportunities in aerospace, defense, power management, and industrial applications. We expect this trend to remain favorable as customers evaluate supply chain continuity, localization, and tariff exposure in sourcing decisions.

The macro environment remains uncertain with trade policies, tariffs, geopolitical developments, energy markets, and global economic conditions creating challenges across industries. However, the underlying demand drivers supporting our business remain strong, and we continue to focus on what we can control. Expansion of AI-related infrastructure, semiconductor investment, power systems modernization, defense spending, and demand for energy support markets where Richardson Electronics has recognized capability and customer relationships. We remain disciplined in managing inventory, pricing, operating expenses, and capital allocation. A strong balance sheet and debt-free position provide flexibility to invest in strategic growth while maintaining the financial discipline that has been a hallmark of the company for 80 years. Overall, we believe the company is well positioned as we move through fiscal 2027. We remain focused on growing higher value engineered solutions, improving profitability, supporting customers, and creating long-term shareholder value. Thank you. With that, I will turn the call over to Robert Ben for a detailed review of the quarter's financial results.

Robert Ben

Thank you, Edward, and good morning. I will review our financial results for our first quarter of fiscal 2027, followed by a review of our cash position. Consolidated net sales increased 18.9% to $64.9 million compared to net sales of $54.6 million in the prior year's first quarter. This was our ninth consecutive quarterly year-over-year increase in sales. The first quarter was led by a 19.7% increase in PMT sales, driven by strong growth in semiconductor wafer fab and RF and microwave products. GES sales increased $2.0 million, or 27.1%, as a result of higher sales of wind products and new products, including battery energy storage systems. Canvys sales increased 7.9%, reflecting higher sales in North America.

Consolidated gross margin for the quarter was 34.6% of net sales compared to 31.0% during the first quarter of fiscal 2026. In the first quarter of fiscal 2027, gross margin benefited by 170 basis points due to an IEEPA tariff refund. PMT gross margin increased to 35.4% compared to 31.3% as a result of product mix and the IEEPA tariff refund. GES gross margin increased to 32.6% from 29.6% due to product mix that included new products. Canvys gross margin increased to 33.0% from 30.9%, primarily due to the IEEPA tariff refund. Operating expenses were $17.4 million compared to $16.0 million in the first quarter of fiscal 2026. The increase in operating expenses resulted primarily from higher employee compensation expenses, including incentives driven by the strong sales growth, and higher travel expenses.

As a percentage of net sales, operating expenses improved to 26.8% in the first quarter of fiscal 2027 versus 29.2% in the prior year's first quarter. Operating income increased over 400% to $5.1 million compared to an operating income of $1.0 million in the prior year's first quarter. Net income was $4.1 million for the first quarter of fiscal 2027 compared to net income of $1.9 million for the first quarter of fiscal 2026. Earnings per common share diluted were $0.27 in the first quarter of fiscal 2027 compared to earnings per common share diluted of $0.13 in the first quarter of fiscal 2026. EBITDA was $6.0 million for the first quarter of fiscal 2027 versus $3.3 million in the first quarter of fiscal 2026. 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 first quarter fiscal 2027 press release that was issued yesterday after the market closed.

Turning to a review of our cash position. Cash and cash equivalents at the end of the first quarter of fiscal 2027 were $36.9 million compared to $31.8 million at the end of fiscal 2026. The increase in cash and cash equivalents related to net income adjusted for non-cash items and higher accounts payable, partially offset by higher accounts receivable. Capital expenditures of $1.7 million in the first quarter of fiscal 2027 were primarily related to facilities improvements in IT systems versus $1.0 million in the first quarter of fiscal 2026. Free cash flow was $4.2 million for the first quarter of fiscal 2027. We paid $0.9 million during the quarter for cash dividends. In addition, based on our current financial position, our Board of Directors declared a quarterly cash dividend of $0.06 per common share, which will be paid in the second quarter of fiscal 2027. As of the end of the first quarter of fiscal 2027, the company had no outstanding debt on its revolving line of credit with PNC Bank. Now I will turn the call over to Gregory, who will provide more details for our PMT and GES business groups.

Gregory Peloquin

Thank you, Robert, and good morning, everyone. We are excited by the continued progress we are making in both bookings and billings as a result of our multi-year growth strategies underway for GES and PMT. Into FY '27 key strategic imperatives include developing a stronger backlog, launching new products, expanding our customer base, and advancing multiple development programs from beta testing to pre-production. I am pleased to report that we are making excellent progress towards our goals in Q1 FY '27. Starting with GES, our year-over-year sales growth and bookings trends are encouraging as we continue to grow the pipeline of opportunities through both current and new technology partners, as well as engineered solutions developed by our field engineers and design team. GES sales in the quarter grew 27.1% year over year, as more customers adopted our key products across a broader set of applications.

Within GES, we saw continued progress across key growth opportunities. First, we experienced growth adoption of our Pitch Energy Modules across multiple wind turbine platforms. We served dozens of wind turbine owners and operators, including exclusive partnerships with the top four owner-operators of GE wind turbines, as RWE, Inber Energy, Enel, and Nextera. We also saw growth from our multi-brand PEM Turbine Platforms. We continue to grow this program internationally, expanding into Europe, Asia, with new products for other turbine platforms including Suzlon, Senvion, Nordex, and SSB. We have now received orders outside of North America from customers in Brazil, Australia, France, and Italy, adding to our strong rollout in North America. Second, we booked a $2 million BEST program in Q1. This milestone highlights the accelerating momentum of our BEST strategy, supported by a growing pipeline of nearly 50 active opportunities as of today. We expect new partnerships under development will expand our depth of product offering and customer reach in the future.

We believe our competitive advantage in BEST is rooted in our ability to deliver highly engineered custom solutions for unique applications. That capability is supported by years of engineering and manufacturing expertise in niche power management products and markets, differentiating ourselves and technology partners, a U.S.-based footprint and a nearly 80-year corporate history and a strong balance sheet. Together, these strengths allow us to work closely with customers to design battery energy storage systems tailored to their specific performance, operating, and application requirements. We believe our approach and platform differentiate us from emerging and more standardized off-the-shelf solutions. Today, our pipeline includes niche commercial and industrial applications throughout North America, and we believe there are many opportunities to increase our pipeline throughout FY '27 and beyond. We are also focused on converting this growing pipeline into sales, with multiple opportunities expected to close in FY '27. Our overall GES growth strategy remains centered on power management.

We have rapidly designed multiple products, secured patents, and built a strong global customer base and technology partners. Our success is evident in our growing sales pipeline as we capitalize on numerous growth opportunities tied to an evolving power management requirements and significant energy transformation initiatives. With these programs, testing and deployment continue to progress well with our key customers. We expect continued sales growth coupled with our growing backlog to produce double-digit growth for GES in FY '27. Turning to the PMT, excluding the legacy healthcare business, sales were $46.6 million in the quarter, a 23.1% increase over the prior year's first quarter. This reflects strong growth for both our semiconductor wafer fab customers as well as our RF and wireless component product line, specifically in SATCOM, radar, and defense communication markets. This continued growth trend in Q1 allowed us to expand sales at a double-digit rate with strong growth and backlog.

We are excited about the positive feedback from our Semi-Fab customers who are expressing ongoing optimism and continued growth well into calendar year 2027. We continue to invest in our infrastructure, including our LaFox-based BEST demo center, while also expanding our design and field engineering teams and enhancing our manufacturing capabilities to support growing demand and innovation. Our field engineering team continues to identify new customers and opportunities across our global end markets. We continue to gain market share by developing new products and solutions that are accepted by our customers. In summary, we are encouraged by the success so far of our strategic initiatives underway across PMT and GES, including our new BEST program, global expansion of our key engineered solutions products, and new technology partnerships. Our global capabilities and global go-to-market strategy continue to separate us from our competition in power management, RF and microwave, and green energy markets. By combining legacy products and new technology partners and engineered solutions, we believe we are well positioned to deliver continued sales growth. We believe positive momentum has continued as we enter Q2 in the second half of FY '27. With the expanding backlog, compelling new products, growing market share, and strong cross-controls, we believe FY '27 will be another strong year for growth in sales and profits for both GES and PMT. And with that, I will turn it over to Jens to discuss Canvys.

Gregory Peloquin

to see the future in our fiscal year 2027. Jens, do you want to take Canvys?

Jens Ruppert

Thanks, Gregory, and good morning, everyone. Canvys designs, engineers, manufacturers, and sells custom display solutions to Original Equipment Manufacturers across global medical and industrial markets. Our mission is to deliver high-quality application-specific display solutions that meet demanding customer requirements and support long product life cycles. Canvys reported first quarter fiscal 2027 revenue of $8.9 million, an increase of 7.9% compared with $8.3 million in the first quarter of fiscal 2026. Our business remains project-based and can vary from quarter to quarter based on timing of customer programs and shipments. Gross margin was 33.0% of net sales in the first quarter, compared with 30.9% in the same quarter last year. The year-over-year improvement reflected a more favorable overall product mix and disciplined execution, despite continued variability in freight, duties, tariffs, and other supply chain costs.

Regional performance was mixed with lower year-over-year revenue in Europe, offset by growth in North America. This highlights the value of our diversified customer base while reflecting regional differences in customer demand and program timing. The quarter unfolded in a resilient but uneven global economy. Tariffs, trade policy changes, logistics conditions, and customer scheduling continue to create uncertainty. We remain focused on disciplined execution, customer collaboration, and supply chain flexibility to support customers' requirements and protect program continuity. During the quarter, Canvys continued to pursue opportunities with both repeat and new medical OEM customers across robotic-assisted surgery, navigation, and human-machine interface applications for medical devices. Our solutions also continue to support commercial and industrial applications, including passenger information systems for trains and buses, and HMI technologies used in printing, vending, milling, and packaging equipment.

Our commercial initiatives remain centered on increasing Canvys' visibility and market leadership, developing new opportunities, deepening strategic customer relationships, and converting our pipeline into additional design wins and production programs. We are also continuing to strengthen supply chain flexibility and operational execution, so that we can respond effectively as customers demand patterns and trade conditions evolve. At the end of the first quarter, backlog was $41.8 million, with a book-to-bill ratio of 1.1. These measures provide important visibility into future demand, although the timing of individual programs can cause quarterly fluctuations. Looking ahead, we expect customer investment decisions and production schedules to continue varying by market and program. We remain encouraged by customer engagement, request for quote activity, and our opportunity pipeline. With our improved first quarter profitability, disciplined execution, and continued focus on design wins, we believe Canvys is well positioned to support sustainable growth and create long-term shareholder value. I will now turn the call over to Wendy.

Wendy Diddell

Thanks, Jens, and good morning, everyone. As we have discussed previously, our corporate strategy remains centered on two key priorities: accelerating profitable growth, and improving efficiency. The first quarter's results show strong progress on both fronts. Customer activity and backlog continue to support our growth priorities. At the end of the quarter, PMT and GES backlog increased meaningfully from fiscal year-end, reflecting continued demand across semiconductor, power management, wind, and other engineered solution markets. We continue to view backlog as an indicator of demand and future visibility, while recognizing that shipment timing depends on product mix, customer schedules, supply, and program milestones. We also continue to focus on efficiency and cash generation. Inventory was approximately $103.3 million, essentially flat to FY '26 year-end, as we balanced inventory discipline with the need to support semiconductor, wind, and other customer programs.

Our focus remains on converting inventory and backlog into revenue and cash, improving manufacturing absorption, and directing resources toward the programs that best position us for growth and improved profitability. We also continue to manage sourcing, pricing, operating expenses, and capital commitments carefully. During the fourth quarter, we completed our initial AI readiness and opportunity assessment. In the first quarter, our emphasis shifted from identifying areas to implementing practical use cases and establishing a process for measuring results. We are focused on business outcomes, including reduced manual work, shorter cycle times, better consistency, and improved visibility in business processes. Our use sales, supply chain, manufacturing and engineering, finance, and administrative workflows, with governance and security controls built into the process. We also continue to advance our Made in America strategy, where our U.S.-based engineering, manufacturing, testing, and quality capabilities can help customers address localization, tariffs, supply chain continuity, and speed to market. During the quarter, sales activity continued across aerospace, defense, industrial, semiconductor, and power management applications. Our LaFox operation continues to provide us with the ability to support customers from design and sample builds through production and tests.

We are seeing increased interest in programs that require the combination of technical support and domestic manufacturing capabilities. Our solid relationships with rail and wind customers are a strong testament to our Made in America strategy, as is our growing relationships with companies like C-Motive, Kiva, and Goshen. We are also working on a new program involving ultracapacitor racks. Our ultracapacitor-based energy storage platform delivers a fully integrated solution designed specifically for the demanding requirements of data centers. By combining power conversion and energy storage into a single cohesive system, we eliminate the complexity of multi-vendor architectures and deliver a streamlined high-performance backup solution. We started with contract manufacturing quotes and then continued conversations with our own products. Our previous engineering work on other programs offered a fundamental building block.

We are now looking to make these racks a standard offering to support smaller battery energy storage installs. Our capital allocation priorities remain focused on organic growth. Battery energy storage is becoming an increasingly important part of our growth strategy. During the quarter, our pipeline continued to grow across commercial, industrial, utility, and data center applications where customers need resiliency, energy management flexibility, and engineered solutions. We began shipments for our first Alaska order, a multi-million dollar project that includes 18 customized battery energy storage systems serving seven remote communities. This project is an important early reference point as we continue to pursue additional opportunities where reliability, customization, and technical expertise are critical. We have also started the build-out of our energy storage demonstration center at our LaFox headquarters.

In addition, we continue to advance our partnership with Goshen, a leading manufacturer of lithium-ion batteries and battery energy storage systems. We have expanded our REST product family during the quarter with the introduction of the REST 211 and REST 422 systems. Together with the REST 760 and the REST 1505 platforms, these additions broaden our ability to serve a wider range of commercial and industrial energy storage applications. Taken together, these activities demonstrate the progress we are making as our emerging battery energy storage strategy moves from development into commercial adoption and scale. In wind and power management, demand remains supported by the global install base of wind turbines, the need for reliability and life extension solutions, and our expanding portfolio of related products. We have shipped more than 90,000 units since we launched the first product. As Gregory mentioned, we also continue to make progress with geographic expansion, including the ongoing Suzlon rollout and continuing new customer testing in Europe. Margins on these products is accretive to the company's overall margin, further supporting our profitable growth strategies. Semiconductor demand also remained an important growth driver during the quarter. Key customers have indicated continuing activity into calendar 2027. We are expanding capacity via additional shifts to support higher levels of demand. Overall, the first quarter represented a strong start to our fiscal 2027. We delivered strong sales growth, improved operating performance, increased cash, and continued to advance the strategic initiatives that support our long-term plan. With that, I will turn it back to Edward.

Edward Richardson

Thanks, Wendy. In closing, our first quarter performance reinforces our progress against multi-year strategy. The comments from Robert, Gregory, Jens, and Wendy reflect solid execution across the organization and continued momentum in our chosen markets and programs. I am very proud of the Richardson team. Our priorities remain clear: execute for customers, improve profitability, manage capital with discipline, and convert our strategic initiatives into sustainable growth and long-term value for shareholders, customers, and employees. We will now open the call for questions.

Operator

As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to one question and one follow-up. Again, we ask that you please limit yourself to one question and a follow-up until all have had a chance to ask a question. After which, we will answer additional questions from you as time permits. Please stand by while we compile the Q&A roster. Our first question comes from Keaton Shoki with Northland Capital Markets. Your line is open.

Unknown Speaker

Hi, this is Keaton Shoki on for Bobby. Congrats on the quarter. My first question is on backlog. We saw it grow another 12% sequentially. And I was curious if we could get a sense of visibility for backlog converting to revenues over the next 12 months. And then as you look at your pipeline for new orders, what are your expectations for backlog growth through year-end?

Gregory Peloquin

I will speak to PMT and GES. Our current backlog, I would estimate that, analyst, probably about 75% of the backlog is scheduled to ship in the quarter, I am sorry, the fiscal year. That is continued backlog growth in Q2. And based on the number of new products, number of quotes, number of new customers, we feel that we are going to have strong top-line growth and continued growth in backlog.

Jens Ruppert

Sure. Sure. I am happy to address Canvys. Yeah. So our backlog, you know, we have a lot of orders. They go out like 2 years, 3 years, but we are expecting orders coming in like every quarter. So it is really hard to say. The majority of the backlog will ship also within the fiscal year. But again, you know, some of the orders we have like frame contracts, they carry out for 2 years or even longer.

Unknown Speaker

Okay, thank you for the color on that. And then on the IEEPA tariff refunds, what are your expectations for refunds going forward? Have those most of them worked through? Should we expect the benefit to continue in the next quarter?

Robert Ben

Hi, this is Robert Ben. Unfortunately, it is really hard to answer that question. You know, we are getting these refunds sporadically and they do not even really tell us what exactly, you know, time periods they relate to. So I wish I could give you more specific information, but unfortunately, I do not have that to give.

Unknown Speaker

I do not think we expect to receive that much.

Unknown Speaker

Okay, okay, that is helpful. And then can you help me understand the revenue mix within GES? How much of that growth was specifically from the wind ultracapacitors versus the BEST and other new products?

Gregory Peloquin

Yes, the majority of it was in the wind and associated products. As you have seen over the last four calls, we currently have seen or continue to have over 23 customers that are using our product, and we have over 10 different products that we are selling into the wind turbine platforms today that, uh, you know, where they are obviously, we started the group, so that is the majority of it on the wind side.

Unknown Speaker

And then, okay, thank you. I will return to the queue.

Operator

Thank you. As a reminder, please press star 1-1 to ask a question. Our next question comes from Anja Marie Soderstrom with Sidoti. Your line is open.

質疑応答

Anja Soderstrom

Hi, thank you for taking my questions. Congratulations on the great quarter. Hi, Wendy and everyone. Just curious, with a backlog, how much of that is FS 40 40 43?

Gregory Peloquin

$43.2 million for GES, $99.4 million for PMT.

Anja Soderstrom

Okay, and then within PMT, how much of that revenue is from the semiconductor wafer fab, and what do you see in terms of revenue? Is that growing sequentially? What is your visibility for the second quarter there?

Gregory Peloquin

I do not know if we could say what that is for backlog, but the forecast, the input from the customer base. We have numerous customers in the Semi-Fab Space. They look at this type of growth that we are seeing in Q1 to continue well into definitely the rest of our fiscal year 2027, but even into farther for calendar year 2027. Very positive feedback from the customers.

Anja Soderstrom

Okay, thank you. And then within the Suzlon opportunity, that is really in its early innings, what kind of opportunities do you see there? How big can that be? Yes, I thought she said Suzlon. Suzlon. S-U-Z-L-O-N. Suzlon, yes. Yes.

Gregory Peloquin

The Suzlon platform, is that what you said? Yes. Suzlon, you said. Yes. So we had a very strong shipments in Q1 for Suzlon, for the, you know, replacement business of their lead acid batteries. It was, I think, about $1.5 million. But the good news there is we are working on their new platform for their new turbines called the SX9, and we have been confirmed our product will be installed on an OEM point of view versus the MRO. So we will have both the MRO business worldwide on all Suzlon turbines, but then we will also be standard equipment, if you will, on their new platforms as they introduce new turbines. So it has been a very good relationship. It has been a long one, a lot of work, but like Richardson's DNA, we have done every sort of unique need that they had for that product to work in their turbine over what is going on in about 2 years. So a very good example of Richardson's capabilities there, for sure.

Anja Soderstrom

Okay, thank you. And just one last one for me. How do you anticipate the high interest rates to affect?

Robert Ben

Well, first of all, we do not have any debt, as you know. You know, there really is not any impact there. Were you thinking something more specific?

Anja Soderstrom

Yes, I know. I do not expect it to affect you directly, but it might affect your customers' demand, I would assume, given they are so capital-intense.

Gregory Peloquin

Yeah, I, you know, maybe Gregory can speak to the wind customers. Yeah, the interest rates obviously will affect anyone borrowing money. But what we have seen is in a positive and negative, in that this administration has greatly reduced the subsidies and grants that they get for putting in new wind turbines or even new solar, which falls well for us because what people are doing, and we did see a huge increase with one of our largest, I call them the four sisters, and we mentioned them in our presentation notes, they repower. So they take apart the turbine and just rebuild it with all new products to make it last for another 10 to 15 years. And our ultracapacitor or Pitch Energy Modules work perfect for that. Because once they do the repower, that would be the last time they have to put a battery in the turbine. So in a way, the best way to do that to us is the reduction in grants and subsidies in terms of interest rates and, you know, people borrowing money. I do not know if it has a direct effect on our business, but anyone that has to borrow money to do that, it would.

Anja Soderstrom

Okay, thank you. That was all for me.

Operator

Thanks, Anja. Our next question comes from Ross Taylor with ARS Investment Partners. Your line is open.

Unknown Speaker

Thank you and congratulations. How are you doing? Good. Good quarter. I wanted to ask you guys more of a philosophical question. We have often, Wendy, had discussions about, you know, the desire to build kind of repeat business and, you know, a lot of what Richardson is expert at is things that are limited runs, smaller runs. Are you guys making or do you see progress and opportunity to have business that really becomes more repeat so we can basically, you know, effectively build a core business that covers the operating costs and makes a reasonable return, you know, over the next few years?

Wendy Diddell

Certainly that is true. I will jump in first and other people can add to it. Certainly that is true of our tube business. The tube business is, you know, EDG is MRO and that is very much repeat business, long-term repeat business, very steady business.

Gregory Peloquin

Yes, and so you have that base business that is very consistent, very measurable. And then, you know, we have to pick opportunities that we can win at. And we have found so far that these opportunities are very niche, very unique. And so they are not really what I will call consumer goods at all. And there is so much project-based. So, you know, we have seen over time that the Pitch Energy Module business somewhat getting more and more consistent each quarter. We will get a large order, you know, every so the quarter that is starting to get consistent, but it is project-based. Most of these other programs that we are working on. And so we are going to see, you know, large bookings and then booking slowed down a little bit as we build and ship the product to these one-year contracts for backlog. So, you know, really, we do not look for, we look at opportunities where we can win at. And over time, for a good example, the Pitch Energy Modules were project-based, but we have now added, you know, almost a dozen new products in that so we can kind of get a more steady stream of revenue, with the customers we have today as opposed to just the repower, which, you know, the three-month program.

Wendy Diddell

Or a six-month program. Plus, in those markets that we serve that Gregory just mentioned, our market share is still fairly low. We have a lot of runway left to, you know, expand our penetration when you look at, for example, the GE wind turbines in the United States, you know, we are not even at that 20% level. So we have a long way to go, Ross.

Unknown Speaker

Continue to sell these units. Okay, so basically with that what I am hearing you say is on those areas you can, you will basically be able to get both market share growth and then over time, you will that will basically become a recycling business where perhaps every 10 years or so customers might need to replace the module and you will be able to pick up that as a cash flow business. Yes. Yeah. Can you answer, I am going to slide two questions into one, which is talk about the opportunities in both battery storage and also we saw, um, you know, a competitive or competitor in the electric locomotive space makes them deliver some engines, I think, down into L.A. or further, I think, the Union Pacific Yard. Can you talk about where you guys stand, how you see the electric opportunity but like locomotive opportunity? Yes, so right now we are still very.

Gregory Peloquin

We are very active in electric locomotives and diesel locomotives. As you know, we have large programs for starter modules, working on an IGBT module for locomotive management. So, we are still hearing from our customers, and we have finished the large order for Burlington Northern Santa Fe that they expect that they will be building and getting more contracts for electric locomotives. So we are just waiting on them. We do not have a lot of input on that for the electric locomotives part. What was the other question? The other part was the, and we are happy to have you on the electric motor, the.

Unknown Speaker

Electric locomotives. Can you talk about the economics in the starter modules as well and compare those to the electric locomotives themselves? What do we look at on a unit basis? Oh, I mean, in terms of cost and resale? Yes, what you sell it for and does it carry kind of corporate average margins, better or worse?

Gregory Peloquin

Yeah, I mean, we make strong margins, corporate average margins on the starter modules. It is obviously a much smaller number within the diesel locomotive itself, but it is good margin, we have a niche, and we can expand that technology and other products that we are working on. But, you know, it does not offset the, you know, electric locomotive modules that we make and have installed today.

Unknown Speaker

What is the cost of a starter module for a diesel? Yes, I am not going to share that. I have got too many customers and competitors looking.

Gregory Peloquin

And competitors listening.

Unknown Speaker

Give them the family discount. They know that. All right. Okay, and then the battery storage space.

Gregory Peloquin

Yes, we really, and it has been confirmed by customers, by integrators, by industry people, this microgrid system, growth. That is what the current order is with BOX in Alaska. There are small microgrids in seven different towns on a federal property. The next one that we will be coming up with is for a large energy company in California, due to NDAs, I cannot give you the name, but I am sure you can figure it out, Ross. And we will be receiving an order to support them with the battery, hence the container. Somebody else will be putting in the whole infrastructure and the build-out of these microgrids. About 10 to 20 different projects that we will be supporting this company on over the next 2 years. It will be about $10 million. The products we work on, because there are too many people involved and companies involved and margins lower on these huge data centers. These microgrids really fit a niche that we are doing. Our product seems to fit that. Our engineering and value-added capabilities allow us to take a product and design it to that really specific site of anything between 200 kilohertz and 5 megawatts. And we are just seeing so many opportunities for that. And with our relationship with our technology partners, our own internal engineering capabilities, to be honest with you, we are winning more than I thought. It has really defined our strategy. We thought it would work and so far it has. Obviously, you can see with the bookings and shipments in a very short amount of time, and the funnel continues to grow.

Unknown Speaker

Yes, it is a real exciting opportunity for you guys. Okay, thank you very much. I will jump back.

Gregory Peloquin

Thank you. Thanks, Ross.

Operator

As a reminder, please press star 1-1 to ask a question. I am showing no further questions at this time.

Edward Richardson

I would like to turn it back to Edward Richardson for closing remarks. Thanks again for joining us today and for your questions during the Q&A portion of the call. We appreciate your continued interest in Richardson Electronics and we look forward to speaking with you again in the next quarter. Until then, please feel free to call us at any time. We are happy to answer your questions.

Operator

This concludes today's conference. Thank you for participating. You may now disconnect.

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