Q2 2021 Richardson Electronics Ltd Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Richardson Electronics earnings call for the second quarter of fiscal year 2021 at the.
Time, all participant lines are in a listen only mode. After the speakers presentation. There will be a question and answer session to ask the question. During the session you will need to press star one on your telephone. Please be advised of today's conference is being recorded if you're a party for their assistance. Please press star Zero I wouldn't Alexander the conference over to your speaker today.
The word Richardson CEO. Thank you. Please go ahead Sir.
Good morning, and welcome to Richardson Electronics Conference call for the second quarter fiscal year 2021, George.
Joining me today are Robert G.
Chief Financial Officer Wendy.
Wendy Diddell, Chief operating officer, and General manager for Richardson healthcare, Greg to work on.
General manager of our power and microwave technologies group.
And the EMS Rupert General manager of Candace.
We're all calling in from the remote locations as a reminder of this call is being recorded and will be available for audio playback.
I'd also like to remind you that we'll be making forward looking statements on there based on current expectations and involve risks and uncertainties the.
Therefore for actual results could be materially different.
Please refer to our press release and FCC filings for an explanation of our risk factors.
We're pleased with our results for the second quarter.
Fiscal year 2021.
Even though the <unk> continues to challenge our employees suppliers and customers throughout the world.
Every one of the pull together to deliver the best results possible.
Our sales on the second quarter were 7% above our second quarter last year prior to the pandemic.
In fact, the RF why 21 second quarter operating income of <unk>.
$852000 was our best operating quarter since the first quarter for 19.
The semiconductor wafer fabrication market continues to be strong.
We had good growth in the power and microwave group.
We're also seeing improvement in many of our IGI product lines, including several significant wins with new Oems with.
Within the healthcare segment, we sold more all for 750 tubes in any prior quarter.
We're very excited about this trend.
The Latin America system sales picking up healthcare revenue improved again over the most recent quarter.
The exceeded last years second quarter.
Canada sales well down to the prior year remain strong and our customer relationships are solid.
Well, you're kind of course is in the face of the pandemic and a rise in the number of covert cases.
The again say, thank you to the entire Richardson team for being mindful of our guidelines for staying healthy and keeping the business running without disruption. This.
The success would not be possible without everyone working together.
I'll now turn the call over the Bob Ben who will provide a detailed recap of our second quarter and year to date performance.
And Greg Wendy in yen sort of Skus, the individual business unit performance, our successes on our opportunities for the future growth.
Thank you Ed and good morning, I will review our financial results for our second quarter and first six months of fiscal year 2021, followed by a review of our cash position.
Net sales for the second quarter of fiscal 2021.
Increased to $42.4 million or 7%.
Pair of to net sales of 39.6 million in the prior year second quarter, primarily due to higher net sales for PMT and Richardson healthcare.
Partially offset by lower net sales for canvas.
PMT sales increased by 11.2 per cent from last year's second quarter as the result of higher sales of semiconductor wafer fab equipment specialty products.
Well as power conversion.
In RF and microwave components.
Power grid tube sales continued to be negatively impacted by the pandemic. However sales of certain product lines increased from the second quarter of fiscal 2020.
Richardson healthcare sales increased the zero point Sixmillion.
For 28.2%, primarily due to a significant increase in demand for the on the 750 tubes, which experienced a record sales quarter.
In addition equipment sales increased in Latin America.
Canvas net sales decreased by 1.2 million or 14.7 per cent due.
Due to the temporary decrease customer demand globally related to cope with 19.
Gross margin for the quarter was 33.8% of net sales compared to 32.0 per cent of net sales in the last years second quarter.
PMT margin increased to 34.2%.
From 31.6% due to a favorable product mix and improved manufacturing efficiencies.
Kansas margin as a percent of net sales also increased to 35.5 per cent.
From 32.9% as the result of its product mix.
Healthcare margin as a percent of net sales was 25.6% in.
For the second quarter fiscal 2021 compared to 34.3% in the prior year second quarter, primarily due to under absorbed manufacturing expenses related the tube development and manufacturing improvements.
Operating expenses were 13.5 million for the second quarter of fiscal 2021 compared to $13.2 million in the second quarter of fiscal 2020.
The increase in operating expenses resulted from a zero point Threemillion increase in legal expense.
And from our normal employee compensation expenses, including annual Merit increases.
These increases were partially offset by lower travel and consulting expenses.
Throughout the pandemic the company decided to support its employees through regular merit increases and incentive plans.
And by avoiding layoffs or furloughs.
As a result, the company reported an operating income of 0.9 million for the second quarter fiscal 2021.
As compared to an operating loss of 0.5 million in the second quarter last year.
Other expense for the second quarter fiscal 2021, including interest income and foreign exchange was 0.1 billion.
On the same as in the second quarter fiscal 2020.
The income tax provision of 0.1 million for the quarter reflected a provision for foreign income taxes.
Which was lower than the prior year second quarter.
Yeah, no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.
Although there was no tax benefit shown on our financial statements from U.S. net operating losses.
We can't use our net operating losses to offset any.
Any cash tax liability reported in our U.S. federal income tax return.
The amount of federal out of wells of 17.
6 million.
We had a net income of 0.7 million for.
For the second quarter fiscal 2021, as compared to a net losses, the real point Sixmillion.
And the second quarter of fiscal 2020.
Earnings per common share on a diluted basis in the second quarter fiscal 2021.
What's five cents.
Turning to a review of the results for.
For the first six months of fiscal year 2021.
Net sales for the for six months of fiscal year 2021 were 81.2 million in.
On an increase of 1.2%.
From the first six months of fiscal year 2020, net sales of 80.3 million.
Net sales increased.
By 3 million or five per cent for PMT, but.
But decreased by 1.7 million for 11.4 per cent for canvas and zero point $4 million or seven per cent for Richardson healthcare.
Gross margin increased to 32.9% from 31.9%, primarily reflecting favorable product mix in PMT and Candace.
And improved manufacturing performance for PMT.
Operating expenses were 26.5 million for.
For the first six months of the fiscal year, which represented an increase of 0.5 million from the first six months of the last fiscal year.
The increase was due to higher legal and employee compensation expenses.
Partially offset by lower travel and consulting expenses.
Operating income for the first six months of the fiscal year 2021.
Was 0.2 million as compared to an operating loss.
As the real point $4 million for the first six months of fiscal year or 2020.
Other expense.
For the first six months of fiscal 2021, including interest income and foreign exchange.
Was there a point fivemillion.
As compared to other income of the.
The real point 2 million for the first six months of fiscal 2020.
The income tax provision of 0.2 million.
Primarily reflected the provision for foreign income taxes.
Which was lower than the prior years for six months.
And no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.
We had a net losses zero point $5 million for the first six months of fiscal year 2021.
The same is on the first six months.
For fiscal year 2020.
We continue to closely manage our cash position.
Cash and investments at the end of the second quarter fiscal 2021.
Were 46.0 million compared to 42.5 million.
At the end of the first quarter of fiscal 2021.
And 46.1 million at the end of the second quarter fiscal 2020.
Capital expenditures.
For 0.6 million in the second quarter fiscal 2021, compared to 0.5 million in the second quarter fiscal year 2020.
Approximately zero point threemillion related to our healthcare business.
0.2 million was for I T system.
And 0.1 million was for our manufacturing business.
On the year to date basis cash.
Capital expenditures totaled 1.3 million.
As compared to 0.8 million in the first six months of fiscal 2020.
Free cash flow was 3.9 million for the second quarter of fiscal 2021 compare.
Compared to 0.1 million in the second quarter of fiscal of 2020.
We paid 0.8 million of dividends in the second quarter fiscal 2021.
In addition, based on our current financial position.
Our board of directors declared a quarterly dividend of six cents per common share.
Which will be paid in the third quarter fiscal 2021.
Now I will turn the call for the Greg who will discuss the results for our power and microwave technologies group.
Thank you Bob and good morning, everyone.
PMT sales in the second quarter of fiscal year, 2021 were 32.9 million versus 29.6 million.
In Q2 halfway 20.
Our gross margin increased in the quarter to 34.2%.
Versus 31.6% in the prior year.
Gross margin improved in both EG in PNG, the new designs in engineered solutions.
In terms of revenue on.
Our engineered solutions products supporting the semiconductor wafer fab equipment market had an extremely strong quarter.
We also continued to see strong growth in our power and microwave <unk>.
This was led by a growing line of technology partners supporting Fiveg infrastructure as well as alternative energy power management applications.
Couple of 19 continue the hurt our Emerald business. However, we did see quarter over quarter growth in the legacy to business.
We saw an extremely positive booking trend in both EG or electron device group and PMT I power <unk> microwave <unk>.
Our book to Bill on the quarter was 1.2 for.
The increase in the <unk> was driven by the semiconductor wafer fab customers and the legacy to business coming back.
The increase in PMT bookings is the combination of our new technology partners products, our global demand creation model numerous design wins high growth markets in a very unique global business model.
Even with the strong quarterly results I believe COVID-19 did have the slowdown effect on our business.
Continue do we use the word of slow down a bit.
Because we have proven again in Q2 of the demand for our products and services did not go away with the pandemic. In fact, we're very excited about the booking trends again this quarter.
This growth in Q2 sales and bookings was amplified as we continue to look extensively and how to do things differently to achieve success now and in the future we.
We developed several unique strategies to support our global customers designs on projects, while working with the restrictions on travel and face to face meetings.
The strategies included adding technology partners, where we have technology gaps in the current key markets.
This continued in Q2 with the addition of quanta microwave and new products from the same key technology partners.
Which will be key to of customers working in Fiveg and microwave communication products.
We also increased communication the customer supplier focus webinars and major web upgrades.
Richardson Global go to market strategy has allowed us to grow multiple business opportunities during the pandemic do creative processes and communication procedures.
We are committed not only to bounce back, but the most forward coming out of this pandemic.
The Q2 results so excellent progress in the strategy.
This quarter, we continue to see support for my key technology partners, such as Corvo, Maycom and Nokia wave for United Sick Ellis M. try on and food you microwave.
Key to manufacturers in the industry such as C. P. I tell us NDRC and for tightness worked with us commenced customer requirements.
Our in House engineering, and manufacturing teams did a great job supporting increased demand from our global semiconductor wafer fab customers. In addition to designing and introducing new products.
For key growth markets.
With respect to Fiveg wireless sales revenues increased by double digits again in Q2.
As the need continues to grow for people to work from home the city of the country and the cars they must be able to send and receive large amounts of data from any of these locations quickly.
Especially during the coming out of this pandemic I cannot stress the enough the.
Value of originally Tronics model to our customers and suppliers.
Our unparalleled capability and global go to market strategy, our unique to the power and RF microwave industries we.
We developed a very strong business model of legacy products and new technology partners.
The go with our engineered solutions capabilities.
The rest steadfast in greater focus on customers. We survived this pandemic by taking advantage of opportunities when they arise.
The demand for our products has not gone away, our customers and technology partners need Richardson products and support more than ever.
With that I'll turn it over the Wendy's the Dell in Richardson healthcare.
Thanks, Greg and good morning, everyone second quarter was much stronger for the healthcare division over the from the hospitals begin to reopen for elective procedures and equipment maintenance. This trend continued throughout the fall we reported last quarter that we sold more alter some of them 50 day Ted than any prior quarter other than Q3 roughly 20.
We are pleased to announce the second quarter, we sold more to the for any prior quarter of.
The anticipated a higher percentage of our kids are still being sold in Europe.
He also had a good mix of sales throughout the U.S. and Latin America.
In the second quarter, we restarted to production, we are still experiencing some component delays and resource constrained due to kind of it. So production was not at full capacity.
We anticipate reaching I plan on production levels in the third quarter.
As a result healthcare revenue in Q2 exceeded Q1, and also surpassed second quarter last year sales.
Within the quarter for 2.8 million, an increase of 50.9% over the first quarter and 28.2 per cent better than sales in Q2 of last year.
Sales of parts of equipment into the all increased on for prior years second quarter.
Gross margin improved to 25.6% for 5.6% in Q1 margin.
The margin was down for instance, prior years second quarter of margin of 34.3%.
We're in a good stock position for 10 and parts, including the newer prime scanners.
We are still facing a lack of used the t. scanners, which will limit I system sales throughout the year.
Our system sales depend on hospitals changing out systems.
For for not happening is frequently during the pandemic.
Supply will continue to be constrained until the pandemic is under control and financial performance in the healthcare industry improves.
In the third quarter, we are launching a reloading program in China, which will drive incremental to the sales.
The two development is also going well, although we have some component delays due to kind of it.
Assuming there are no major setback, we are on track to launch the altice, having 50 G by the middle of calendar year 2021.
We're also making good progress on our next to the program.
There are three kids in the series.
They will be phased in is repair process of our validated.
We anticipate launching decent lesions. The later in calendar year, 2021, and extending into 2022.
We are finalizing schedules with the auditors to secure registrations fine you Ted we.
We are also working on the schedule for the MD SAP on it.
I will set the stage for Twod sales in Canada and several other countries.
We remain cautiously optimistic that performance will continue to improve.
Rising kind of it cases, and the vaccine just rolling out we know conditions can change overnight.
I will now turn the call over to Yens Rupert to discuss the result, the for Canada.
Thanks, Wendy and good morning, everyone.
Canvas, which includes the engineering manufacturing the sale of the cuts and discipline to each of the equipment manufacturers and then that's for the medical markets. The live at a good performance with sales of 6.7 million during the second quarter fiscal of 2021, a decrease of 14.7 per cent over the same period last year.
Customer the man decrease temporarily due to the growing of Iris and the recycling business impact on the Oems globally.
Gross margin as the percentage of sales was 35.5 per cent during the second quarter of fiscal Twentytwenty one.
The from 32.9 percentage during the second quarter fiscal 2020.
The increase because of margin was related to a favorable product mix and foreign currency effects.
Oh, the healthy backlog along with the number of projects that are currently on the engineering stage of position us for better for continued growth before considering any long term impact of COVID-19.
It is nearly impossible to predict the business would return to normal, but we are optimistic that all of business will improve in the second half of fiscal 2021.
Once the if it can headwind panel supply.
The robust demand for kind of additions in the U.S. and China combined with capacity reductions by the panel makers is leading for other deep panel price increases and longer lead times.
The shortages of some key components such as the integrated circuit parts could for other compounds the situation pushing panel prices even higher.
As for the panel supply with all the negatively impacted by a strong earthquake in north Eastern Taiwan.
And the power outage impacting the key class of Strat supplier in Japan the.
The loss of power damaged the feeders that move more of the class from the focus of the farming process. It.
It would take several months to repair the.
The Japanese suppliers importance of player to you on algae analog and the other well known Ltd. Many effect for us.
You have seen dramatic price increases on path of components, and k., but that's well, which brings us to the value at the canvas offers our customers.
Good for long term relationships with key suppliers and driven by of future commitments for.
Let the for the large and growing procurement numbers.
Well, we did the most of the product price increases.
Additionally, we avoid any supply chain disruption by carrying components and finished goods inventory.
We are compensating for a lack of face to face customer visits and trade shows joining the pen dynamic by focusing on the web marketing.
We successfully launched on you response of website in November.
The website with the new look and focus on that now also of course.
Vilification stories dotted to attract more visitors and potential clients.
We are confident that on that side of GE will result in new leads and business growth.
During the quarter, we received seven new orders from both existing on first time medical OEM customers. Some of these include.
On the other cross linking of minimally invasive procedure to its difficult to quantify that have been weakened by the cease all refractive surgery.
Radio frequency ablation, RFP used interrupting pain Cygnus veteran sales coming from irritated at the joins in the spine.
Refractive surgery laser system for therapeutic and reflect the GAAP applications of corneal surgery.
So do the navigation system for tracking the location of surgical instruments throughout the procedure.
Interest vascular imaging systems systems that allow physicians to acquire the images of disease the vessels from inside the lottery.
Patient monitoring.
And for a body consistent so to get veterans team from the precision and accuracy in spine surgery.
In the non medical space, we received the order for various display products applications include displays and on the ones money talks with the PC is integrated.
What products are used to control the product Penzance in retail stores and the control room for weighted way applications the oil.
The include Touchscreens designed to assist harsh environment the conditions for ticketing machines and the public transportation market.
From the Verity of cost in the Sun applications as well as the value of for us from existing and new customers. It is clear we all of our customers outstanding products and service.
While our sales organizations the focus on new opportunities I will continue to review and adjusted business strategy to improve the operating performance of the division.
Customizing cash flow is an ongoing priority we will continue to work with our partners to help reduce inventory of being able to meet the demands of our customers.
Thank you Larry joined the pandemic.
I would now kind of the call back over to Ed.
Thanks yen canvas, that's true for him well in recent years and we're confident growth will continue in the Pandemics under control.
The significant percentage or your business is in the medical OEM market as we know from our healthcare segment. The medical industry has been severely impacted by the Corona virus.
It will be sometime before hospitals are spending on new equipment.
In spite of the potential long term impacts of coated and knowing we're not out of the woods, yet we're optimistic about the future.
We're seeing growth initiatives to improve revenue profitability and cash flow.
This is clearly reflect the didnt healthcare in PMT performance on.
Challenge now is to determine what changes we've made during the pandemic that should remain as part of our ongoing strategy for growth and improved profitability.
The continued are carefully manage expenses and maximize cash flow, we want to make sure. We have funds available to support our growth initiatives and improve our financial returns at the.
That's the point, we'll be happy to answer a few questions.
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Our first question comes on the line of Dean shots here I private Investor. Your line is now for him.
Hey, guys. Thanks for taking my question I'm learning. The it was just wondering if the morning I was just wondering if you could provide a little bit of color on.
On the inventory levels.
Oh, yes, the you know with multiple.
The business units the changes from one to another.
Certainly, it's requiring more inventory for PMT for the semiconductor portion of the business.
As the business grows.
And also in the two business we saw the actual decline for a period of time, which now seems to be coming back.
And the net case, we buy inventory, sometimes there are scheduled for the year in advance of the inventories were up there.
But.
But you know for the most part I take it to the overall blended is pretty much the normal even canvas for example.
Has had some additional inventory that they're carrying because customers of pushed out the orders.
On the other hand, right now if we had more C.T. tubes, we could sell more in the healthcare space. So the inventory levels there are down there so.
So it's a sort of the mix between the S for use.
Okay is it is it fair to say that as the the cloud of cold It sort of goes the way that you shouldn't see a meaningful rise in inventory going forward is that a fair of an outside of standpoint is that fair to say.
Well certainly in the E. G are the two portion of the business the inventory levels will be reduced debt the business picks up but on the other hand, when you look at the.
The power of and microwave group in the semiconductor space.
That business is growing 20, 30% of year and it takes additional inventory of services and also you have the.
More payables or receivables.
So it's a mix a there will be an increase in inventory so far we're a pretty well pleased with our cash flow.
Okay. That's great and then just kind of a broader capital allocation question on.
As the business.
It's recovering are continuing to recover from some of the.
The lockdowns.
Whereas.
What is the priority for my capital allocation standpoint for <unk>.
Right.
No for the board and the executive team.
Well certainly we want to fund the healthcare business, we've spent about $25 million on equipment or we think we have the most modern C. T manufacturing operation in the World right now.
But the majority of the capital has been spent in the as you saw the the capital expenditures for healthcare was.
No really moderate in both the quarter and the six months.
So you know what we're hopeful is once we can get healthcare to turn profitable debt.
We go cash flow positive, but that's probably still are to two or three years out something like that.
But the capital expenditures that you're seeing now are pretty much the normal.
Okay.
So I I.
Harry Phrasing net it's fair to say that there shouldn't be are there from for the healthcare business. The written a need for a significant amount of additional capital. Its notable right now.
Right, we're always the adding new equipment, but there isn't anything substantial coming.
Okay. That's.
That's it for me thanks, so much.
Thanks day.
As a reminder, ladies and gentlemen, if you have a question. Please press Star then the number one key on your Touchtone telephone.
Our next question comes on the line of Eric.
Eric Landry from BMS capital. Your line is now open.
Good morning.
Turning Eric.
So is it correct in assuming that were basically in a quarter number two for.
Richardson of the.
Wayfair cycle right now.
Oh, the semiconductor wafer fab business is that what you're making reference to yeah. We are we in basically the second quarter of an upturn here.
Oh, Yes, and you know our major customers there are predicting that in the the calendar year. This calendar year that will continue to increase.
And it certainly increased for us as you can see so its a.
It's good news the where the.
The good news is part of that is the last thing this occurred.
The business is sort of like a roller coaster, we were working seven days a week the try to accommodate the customer's requirements and this time, we were well ahead of that and we are in certain instances working six days a week, but not seven and we become the new manufacturing managers since the.
Last uptick and he's.
Really efficient and as cross trained a lot of people on the assembly area.
So we're well ahead of the curve and we can handle the uptick or.
Without.
Jeopardizing delivery.
Okay.
So I know these things tend to end abruptly but by all accounts. What your customers are telling you is that there's likely three to four quarters. After this.
Of strong growth in what is one of your most profitable the profitable businesses is that the <unk> an accurate assessment.
Yes, yeah, its very accurate and you know the roll out of five g., what that means that big companies like Samsung and Intel and others are adding capacity and building new wafer fabs and the that's where the tools and equipment go from our major customers.
So it's all good news in there also the tooling older equipment.
Which is good for us as well.
Okay great.
Well it did I did I did I hear correctly that you said two sales have been a little bit restricted by the inventory constraints of the is that right.
Yes, we haven't been able to build siti tubes, as fast as the customers of required them.
First of all we did as we had mentioned in the past, we shut down manufacturing of C.T. tubes for a quarter or so as we were.
We're trying to improve quality and we had a good inventory at that time.
And we started got caught a little bit in between the.
By the time, we got back into production the.
On the requirements it picked up and we're.
We're pretty much working hand to mouth right now.
So.
That to me sounds like a big change.
From what you were saying as recently as the quarter or two ago.
When you were having trouble even people taking calls to buy these things so what has changed here.
Well, we've the we're doing really well in Europe, and some of the Amir <unk> countries.
And so that that's picked up a lot and it's also a picked up in the United States.
It's.
When we talk about large quantities you know how extensive the tubes are so it's not a matter of hundreds its a matter of tens.
But at the same type of it's a it's excellent business.
Okay.
So the okay. So [laughter].
So a matter of tens is going to take a long long time.
I just feel that the factory of years. Your your brand new fresh factory that has the capacity of the thousand units with three shifts. So we're still a long way away from the has there been any fresh thinking.
On how to get that factory up and running with the decent amount of too so that we can.
Somehow make some money in healthcare here sooner than later.
Well, we're you know we're adding people were adding engineers were.
Ah working when do you might want to address this but were working a partial second shift.
What are some of the plans when the year on top of that on a day to day basis well.
With the on the.
The programs that we discussed.
In the call itself. So we've got the China Reloading program coming on line and that got good volume potential area.
I'd also point out that.
That was the one area, where I feel like we miss the opportunity to ship some too in the second quarter was into the getting that China be loading program going sooner.
And.
Then as we pointed out Weve got the Gi coming on line and that will be mid mid this year mid mid 2021, the calendar year and then we have the new to the program.
Which will come on line throughout the year as as we validate these processes.
So those you know those three programs alone are going to fully cover us in the first and possibly going in is that already said into the second shift on I think what you're looking for is have we made any progress on an OEM program, what we would really all to the tool.
And you know at this point there is some irons in the fire, but there's nothing imminent.
And our our top priority right now are the two programs I just mentioned the d., the Gi and the need of repair president and all of the modeling that we're doing by the way is based on you know those theories of Twod.
And we will keep our eyes and ears open obviously, we got to be able to travel in order to really effectively look at any other Oems they have to be able to come here, we have to be able to go there.
So I think that's still a ways out before we're going to see any true or meaningful effort on the OEM side.
The new two program is that the different manufacturers and Ken is that when you're talking about or something different than the it is it is the different manufacturing for the different different line.
Okay and the <unk>. So that is the only thing on the design.
Yeah, the replacement volume for that particular manufacturer is much larger than Canada.
But then the we mentioned the three to the than that series, Eric So little bit on the would be bunched independently.
And that's the fiscal year 2022 at the earliest type of event.
Yeah, I would say meaningful results. We you know we will likely start shipping at least one of the three earlier than that.
But again, we want to make sure that the product that were putting out there works that it meets the warranty requirements and the satisfied the customers so to be conservative I would say of why 22.
Okay last last question for you you made mention of a first shift.
Almost fully absorb the <unk> does the correct did I hear the correctly.
With it with the full production, which we will be back and now we're actually back in full production now we will be fully absorbed and in the third quarter, we should be fully absorbed in the third quarter with one shift.
Going to a second shipped in the third shutout leverage some of those costs.
All right, maybe I'm not interpreted this correctly, but that that does not mean 300 302 annual pace correct.
No the probably not I would have to go in and count the production with all the the three two series and sometimes we're running second shift because of the equipment. You know we need to run scanners. For example, when we are testing the GE and we're putting that through its paces. It's very helpful to have on those scanners running 24 seven.
So we'll have people in here at night and on the weekend running scanners and tracking to the status. We may use of ends on second shift for a bake out in some of the the the processes that require a longer period of time.
Mm.
Alright, well. Thank you very much I appreciate you taking all the questions.
Thanks for that.
Thank you for our next question comes on the line of William Wilson, an individual Investor. Your line is now open.
Good morning.
Good morning, or good afternoon, and thank you for taking the call.
Just ecstatic about your results there, but at the same time I'm, a little bit under invested and I'm just wondering how that would.
Extrapolate to other investors that might be listening on potential investors.
Which brings to mind the question of whether.
You've been able to the outreach to the investment community.
For whether that is something that.
Because of the travel with the coal the you're still able to the do I would think that that would.
Present as great.
Forward looking opportunity you on that.
The next loosen you can.
Get out the story about the company.
But well that's do you know in the past the we've done a lot of the conferences financial conferences and presentations and things of that nature and of course with the the cobot issue that's all stopped.
But certainly as the business continues to pick up and be profitable and as soon as the for the impact of the Corona virus is under control and the there are financial conferences. The again, we will be participating.
Okay, Great and then I look at the look.
Look at the chart when.
You know going back five years, or so when I started investing or more than that actually and I see that.
You know were about.
50 per cent at a minimum of what it was and yet.
If I see.
The the company correctly, the your at least twice as good as far as size potential markets for.
Products are in the.
Manufacturing space et cetera et cetera. So my question is if my perception lay on the air or are you twice as good as you used to be five or 10 years ago [laughter] [laughter] well, we certainly agree with you you know, we think that particularly addressing some of the.
The the markets that are growing rapidly like the of healthcare space and also a on the power and microwave group for Fiveg. The in the semiconductor wafer fab business also canvas as a a big market.
You know.
We're really.
A very optimistic about the future of the company and and we feel like you that the company is certainly undervalued as far as the the market value on the street for sure.
Okay and I'll, let kids on the one quick last one of the this is kind of stretching into but.
South the of the border it would seem that you could only for the to grow old by the placement of the idea of a life Oh, OEM would probably not come into play there.
But at the same time, if you look at.
Of note, the giant companies, Siemens or whatever who could potentially.
Jump into the market and the undercut your price is <unk> do you see other.
For sales to South America, Latin America of being a long term potential.
Oh on stabilizing factor there.
Yes, we we sell the Latin America currently so a fair amount of equipment and also replacement tubes, and then we install our new tubes in a used equipment. When the equipment is sold and in Latin America. The problem. We have there as the economies of the various countries in south and the Latin America.
Haven't been that good, but it's certainly a excellent market and you're correct the.
Probably the especially to day, 95% of the tubes, we sell are for replacement of existing equipment.
Yeah.
Okay, well. Thank you very much in the Ghana, we're ecstatic got the sense.
Great well, thank you very much for the investment.
Okay.
At this time I'm showing no further questions I would like to turn the call back over the Ed for closing remarks.
Okay, well. Thank you for joining of century ongoing interest in Richardson electronics, we look forward to discussing our third quarter with you in April and.
And we hope by then we'll be thinking about seeing people face to face the again and in the interim we wish you continued good health and success.
Feel free to call us at any time.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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