- 6-Quarter Growth Streak: Q2 FY'26 sales reached $52.3M, up 5.7% YoY, driven by Green Energy (39% to $8.3M) and Canvys (28.1% to $8.8M).
- Operating Profit Recovery: Operating income turned positive at $132K, reversing a $667K loss in Q2 FY'25.
- Strong Cash Position: $33.1M in cash, with 70% held outside the U.S., supporting growth initiatives and dividend of $0.06/share.
- GES Momentum: Green Energy's book-to-bill ratio hit 1.10 in core business (95% of GES), aided by new customers and European/Asian expansion.
- Inventory & AI Strategic Shift: Near completion of EUR 1.5M inventory receipts from a critical supplier and launched an AI steering committee for efficiency gains.
Segment Performance
The Green Energy and Power Management segment (GES) reported sales of $8.3 million, a 39% increase over the prior year. The Power & Microwave Technologies Group (PMT) reported sales of $35.2 million, a 4% decrease over the prior year. Canvys reported revenues of $8.8 million, up 28.1% from the same quarter last year. The GES segment saw a book-to-bill ratio of 1.10 in its core business, driven by new customers and expansion into Europe and Asia.
Growth Initiatives and Outlook
The company is investing in infrastructure, expanding design and field engineering teams, and enhancing in-house design and manufacturing capabilities. It expects FY '26 to be another growth year for both PMT and GES. Richardson Electronics is optimistic about its growing project-based business and is well-positioned to benefit from growth in memory-related applications and the semi fab equipment market through 2026. Analysts estimate next year's revenue growth at 14.3%.
Valuation and Financial Metrics
With a P/S Ratio of 0.7 and an EV/EBITDA of 24.07, the company's valuation appears reasonable considering its growth prospects. The Dividend Yield is 2.33%, providing a relatively stable return for investors. The company's ROIC is 2.01%, and ROE is 0.51%, indicating room for improvement in capital efficiency. The Net Debt / EBITDA ratio is -6.46, reflecting the company's strong cash position.
Operational Highlights
The company is shifting towards more run-rate businesses, such as EDG and green energy, which will provide a steady annual flow through in top and bottom line. It has shipped batteries for electric trains and is now shipping starter modules on a regular run-rate basis. The electric locomotive product line is seeing a hybrid approach, and the company's starter modules are used in any train, whether it's diesel, electric or hybrid.