Q3 2024 Richardson Electronics Ltd Earnings Call

Okay.

Unknown Executive: Good day, and thank you for standing by. Welcome to Richardson Electronics' earnings call for the third quarter of fiscal year 2024. At this time, all participants are in a listen-only mode.

Speaker Change: Good day and thank you for standing by welcome to Richardson Electronics earnings call for the third quarter of fiscal year 2024.

Speaker Change: At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please.

Unknown Executive: 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 that your hand is raised.

Unknown Executive: 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, Ed Richardson, Chief Executive Officer. Please go ahead.

Speaker Change: Star one one again.

Speaker Change: Be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your Speaker today, Ed Richardson Chief Executive Officer. Please go ahead.

Edward J. Richardson: Good morning, and welcome to Richardson Electronics' conference call for the third quarter of fiscal year 2024. Joining me today are Robert Ben, Chief Financial Officer; Wendy Diddell, Chief Operating Officer, and General Manager for Richardson Health Care. Greg Peloquin, General Manager of our Power and Microwave Technologies Group, which includes Green Energy Solutions, and Jens Ruppert, General Manager of Canvas. As a reminder, this call is being recorded and will be available for playback.

Edward J. Richardson: Good morning, and welcome to Richardson Electronics conference call for the third quarter of fiscal year 2024.

Edward J. Richardson: Joining me today are Robert Ben Chief Financial Officer, when do you Danielle Chief operating officer, and General manager for Richardson healthcare.

Edward J. Richardson: Pellegrin General manager of our power and microwave technologies group.

Edward J. Richardson: Which includes the Green energy solutions.

Edward J. Richardson: Rupert General manager of canvas.

Edward J. Richardson: Is it reminder, this call's being recorded and will be available for playback.

Edward J. Richardson: I would also like to remind you that we're making forward-looking statements. They are based on current expectations and involve risks and uncertainties. Therefore, our actual results could be materially different.

Edward J. Richardson: I would also like to remind you that we'll be making forward looking statements are based on current expectations.

Edward J. Richardson: Risks and uncertainties, therefore, our actual results could be materially different.

Edward J. Richardson: Please refer to our press release and SEC filings for an explanation of our risk factors. I'm pleased to report that we returned to profitability in the third quarter. Sales increased 18.7% sequentially, reflecting improving business conditions.

Edward J. Richardson: You should refer to our press release and SEC filings for an explanation of our risk factors.

Edward J. Richardson: I'm pleased to report that we returned to profitability in the third quarter.

Edward J. Richardson: Those increased 18, 7% sequentially, reflecting improving business conditions.

Edward J. Richardson: Stronger demand for Ultra 3000 from new and existing wind customers drove higher GES green energy solution sales. The financial increase in sales and profitability is encouraging. Reflecting the benefits of our diversification strategies as well as our team's focus on enhancing profitability and strengthening our balance sheet. However, our net sales continue to reflect the cyclical nature of the sales to semiconductor wafer fab customers, which declined $11.5 million in sales during the quarter. We believe Q3 will be our lowest semiconductor revenue quarter.

Edward J. Richardson: <unk> demand for ultra 3000 from new and existing wind customers drove higher Ges Green energy solutions sales.

If the gradual increase in sales and profitability is encouraging.

Edward J. Richardson: Reflecting the benefits of our diversification strategies as well as our teams focus on it.

Edward J. Richardson: <unk> profitability and strengthening our balance sheet.

Our net sales continued to reflect the cyclical nature of the sales to semiconductor wafer fab customers, which declined 11 and a half a million dollars in sales during the quarter.

Edward J. Richardson: We believe Q3 will be our lowest semiconductor revenue quarter, our customers continue to tell us they anticipate growth in the back half of calendar year 2024.

Edward J. Richardson: Our customers continue to tell us they anticipate growth in the back half of calendar year 2024, leading to record sales in calendar year 2025. Another highlight in the quarter was the $4 million sequential decrease in inventory, reflecting prudent strategies aimed at improving working capital levels. Throughout fiscal 2024, we focused on improving inventory levels to better align with expected demand across our market. Inventory grew primarily in response to supply chain constraints over the past several years. I'm pleased with the progress our global teams are making. This quarter marks the first time we've seen a decline in inventory in more than two years.

Edward J. Richardson: Adding to record sales in calendar year 2025.

Edward J. Richardson: Another highlight in the quarter was $4 million sequential decrease in inventory, reflecting prudent strategies aimed at improving working capital levels.

Edward J. Richardson: Throughout fiscal 2024, we focused on improving inventory levels to better align with expected demand across our markets.

Edward J. Richardson: Inventory grew primarily in response to supply chain constraints over the past several years.

Edward J. Richardson: I am pleased with the progress of our global teams are making.

Edward J. Richardson: This quarter marks the first time, we've seen a decline in inventory and more than two years.

Robert J. Ben: I'll now turn the call over to Bob Ben, our Chief Financial Officer, to review our third quarter financial performance in detail. Then Greg, Wendy, and Jens will discuss our business unit performance, including an update on the new products, programs, and customers that continue to drive our optimism for the future. Thank you, Ed, and good morning.

Edward J. Richardson: I'll now turn the call over to Bob <unk>, Our Chief Financial Officer to review, our third quarter financial performance in detail.

Bob: Then, Greg Wendy and yen's or discuss our business unit performance, including an update on the new products programs and customers that continue to drive our optimism for the future.

Robert J. Ben: I will review our financial results for our third quarter of fiscal year 2024, followed by a review of our cash position. Net sales for the third quarter of fiscal 2024 were $52.4 million compared to net sales of $70.4 million in the prior year's third quarter. PMT sales decreased by $15.7 million from last year's third quarter, primarily driven by a decline in manufactured products for our semiconductor wafer fabrication equipment. However, sales for GES increased. 0.1 million from last year's third quarter, which included a large sale of EV locomotive battery modules that did not recur in fiscal 2024. Canvas sales decreased by $3.1 million, primarily due to short-term customer push-outs in North America.

Bob: Thank you Ann and good morning, I will review our financial results for our third quarter of fiscal year 2024, followed by a review of our cash position.

Speaker Change: Net sales for the third quarter of fiscal 2024 were 52.4 million compared to net sales of $70 4 million in the prior year's third quarter.

Speaker Change: PMT sales decreased by $15 7 million from last years third quarter, primarily driven by a decline in manufactured products for semiconductor wafer fabrication equipment customers.

Speaker Change: Sales for Ges increased.

Speaker Change: Zero point $1 million from last year's third quarter, which included a large sale of EDI locomotive battery modules that did not recur in fiscal 2024.

Speaker Change: Canvas sales decreased by $3 1 million, primarily due to short term customer push outs in North America.

Robert J. Ben: Richardson healthcare sales increased by 0.7 million compared to the third quarter of fiscal 2023. As higher CT tube and parts demand offset lower systems, backlog totaled $147.7 million at the end of the third quarter of fiscal 2024 versus $150.7 million at the end of the second quarter of fiscal 2024. The sequential decline was in PMT and CAN.

Speaker Change: Richardson healthcare sales increased by zero point $7 million compared to the third quarter of fiscal 2023 as higher C T tube and parts demand offset lower system sales.

Speaker Change: Backlog totaled $147 7 million at the end of the third quarter of fiscal 2024 versus $150 7 million at the end of the second quarter of fiscal 2024.

Speaker Change: The sequential decline was in PMT and canvas.

Robert J. Ben: GES backlog of $36.8 million increased from the second quarter of fiscal 2024 by $1.1 million. Consolidated gross margin for the third quarter was 29.5% of net sales compared to 31.8% in last year's third quarter, primarily due to product mix and underabsorption without underabsorption of the company's manufacturing facility. Management Estimates that the company's consolidated gross margin for the third quarter of fiscal 2024 would have been 31.0%. PMT's gross margin decreased to 28.3% from 32.9%, primarily due to product mix and $0.8 million of manufacturing under absorption.

Speaker Change: <unk> backlog of $36 8 million increased from the second quarter of fiscal 2024 by $1 1 million.

Speaker Change: Consolidated gross margin for the third quarter was 29, 5% of net sales compared to 31, 8% in last years third quarter, primarily due to product mix and under absorption.

Speaker Change: Without under absorption of the company's manufacturing facility management estimates that the company's consolidated gross margin for the third quarter of fiscal 2024 would've been 31%.

Speaker Change: Pmt's gross margin decreased to 28, 3% from 32, 9%.

Primarily due to product mix and zero point $8 million of manufacturing under absorption.

Robert J. Ben: GES gross margin increased in the third quarter of fiscal 2024 to 26.6% from 25.7% in the prior year's third quarter due to the product, Canvas gross margin increased and in the third quarter of fiscal 2024 to 34.4% from 32.0% in the prior year's third quarter because of the product. Healthcare's gross margin increased to 41.6% in the third quarter of fiscal 2024 compared to 39.8% in the prior year's third quarter The decrease in operating expenses resulted from lower incentive expenses partially offset by higher R&D expenses in support of the company's growth initiatives. The company reported an operating income of $1.0 million for the third quarter of fiscal 2024 versus operating income of $7.6 million in the third quarter of last year.

Speaker Change: <unk> gross margin increased in the third quarter of fiscal 2024 to 26, 6% from 25, 7% in the prior year's third quarter due to product mix.

Speaker Change: Canvas gross margin increased in the third quarter of fiscal 2024 to 34, 4% from 32.8% in the prior year's third quarter because of product mix health.

Speaker Change: Health Care's gross margin increased to 41, 6% in the third quarter of fiscal 2024 compared to 39, 8%.

Speaker Change: In the prior year's third quarter as a result of an improved product mix.

Speaker Change: Operating expenses were $14 4 million for the third quarter of fiscal 2024 <unk>.

Compared to $14 8 million in the third quarter of fiscal 2023.

Speaker Change: The decrease in operating expenses resulted from lower incentive expenses, partially offset by higher R&D expenses in support of the company's growth initiatives.

Speaker Change: The company reported an operating income of 1.1 million for the third quarter of fiscal 2024 versus operating income of $7 6 million in the third quarter of last year.

Robert J. Ben: Other expense for the third quarter of fiscal 2024, including interest income and foreign exchange, was less than $0.1 million, compared to other income of $0.4 million in the third quarter of fiscal 2023. Income tax provision was $0.2 million, or a 23.4% effective tax rate, versus an income tax provision of $1.7 million, or a 20.7% effective tax rate, for the third quarter of fiscal 2023.

Speaker Change: Other expense for the third quarter of fiscal 2024, including interest income and foreign exchange was less than zero point $1 million compared to other income of zero point $4 million in the third quarter of fiscal 2023.

Speaker Change: Income tax provision was 0.2 million or 23, 4% effective tax rate versus an income tax provision of $1 7 million or a 27% effective tax rate for the third quarter of fiscal 2023.

Robert J. Ben: Net income for the third quarter of fiscal 2024 was $0.8 million, or $0.05 per diluted common share, compared to net income of $6.3 million, or $0.44 per diluted common share, in the third quarter of fiscal 2023. Now, a review of the results for the first nine months of fiscal year 2024. Net sales for the first nine months of fiscal year 2024 were $149.1 million, a decrease from $203.8 million in the first nine months of fiscal year 2023, which reflected lower sales across our business sectors. Gross Margin decreased to 30.3% from 33.0%, primarily reflecting product mix and manufacturing under absorption in PMT.

Speaker Change: Net income for the third quarter of fiscal 2024 was zero point $8 million or <unk> <unk> per diluted common share compared to net income of $6 3 million or <unk> 44 per diluted common share in the third quarter of fiscal 2023.

Speaker Change: Turning to a review of the results for the first nine months of fiscal year 2024.

Speaker Change: Net sales for the first nine months of fiscal year 2024 were hired $49 1 million.

Speaker Change: A decrease from $203 8 million in the first nine months of fiscal year, 2023, which reflected lower sales across our business segments.

Gross margin decreased to 33% from 33.1%, primarily reflecting product mix and manufacturing under absorption in PMT.

Robert J. Ben: Product Mixing GES, as well as increased scrap expense in manufacturing underabsorption and health, which was partially offset by a favorable product mix and lower freight costs for Canada. Operating expenses were $44.7 million for the first nine months of the fiscal year, which represented an increase of $1.0 million from the first nine months of the last fiscal year. The increase was due to higher salaries and R&D expenses, partially offset by lower incentives. Operating income for the first nine months of fiscal year 2024 was $0.5 million as compared to an operating income of $23.6 million for the first nine months of fiscal year 2023. Other expenses for the first nine months of fiscal 2024, including interest income and foreign exchange, were $0.2 million, as compared to other expenses of $0.1 million for the first nine months of fiscal 2020.

Speaker Change: Product mix in Ges.

Speaker Change: As well as increased scrap expense and manufacturing under absorption in health care.

Speaker Change: Which was partially offset by a favorable product mix and lower freight costs for canvas.

Speaker Change: Operating expenses were $44 7 million for the first nine months of the fiscal year, which represented an increase of 1.1 million from the first nine months of the last fiscal year the.

Speaker Change: The increase was due to higher salaries and R&D expenses, partially offset by lower incentive expenses.

Speaker Change: Operating income for the first nine months of fiscal year, 2024 was zero point $5 million as compared to an operating income of $23 6 million for the first nine months of fiscal year 2023.

Speaker Change: Other expense for the first nine months of fiscal 2024, including interest income and foreign exchange was <unk> 2 million as compared to other expense of 0.1 million for the first nine months of fiscal 2023.

Robert J. Ben: Income tax provision was $0.1 million, or an effective tax rate of 39.2%, during the first nine months of fiscal 2024 versus an income tax provision of $5.3 million, or an effective tax rate of 22.5%, in the prior year's first. The company reported net income of $0.2 million, or one cent per diluted common share for the first nine months of fiscal year 2024, versus net income of $18.2 million, or $1.27 Moving on, to a review of our cash position. Cash and Investments at the end of the third quarter of fiscal 2024 were $18.9 million, compared to $22.8 million at the end of the second quarter of fiscal 2020. The use of cash during the third quarter of fiscal 2024 primarily resulted from a $5.3 million increase in accounts receivable and a $4.1 million decrease in accounts payable, partially offset by a $4.0 million decrease in inventory. U.S. Cash and Invest 5.2 million at the end of the third quarter of fiscal 2024 versus 8.8 million at the end of the second quarter of fiscal. Capital expenditures were 0.4 million in the third quarter of fiscal 2024 and relate to investments in our, versus a total of $2.2 million in the third quarter of fiscal year 2023.

Speaker Change: Income.

Speaker Change: <unk> provision was <unk> 1 million or an effective tax rate of 39, 2%. During the first nine months of fiscal 2024 versus an income tax provision of $5 3 million or an effective tax rate of 22, 5% in the prior year's first nine months.

The company reported net income of <unk> 2 million or one cents per diluted common share for the first nine months of fiscal year 2024.

Speaker Change: <unk> net income of $18 2 million or $1 27.

Speaker Change: For diluted common share for the first nine months of fiscal year 2023.

Speaker Change: Moving to a review of our cash position cash.

Speaker Change: Cash and investments at the end of the third quarter fiscal 2024 were $18 9 million.

Speaker Change: Compared to $22 8 million at the end of the second quarter of fiscal 2024.

Speaker Change: The use of cash during the third quarter of fiscal 2024.

Speaker Change: Primarily resulted from a $5 3 million increase in accounts receivable and a $4 1 million decrease in accounts payable, partially offset by a 4.1 million decrease in inventory.

Speaker Change: U S cash and investments were $5 2 million at the end of the third quarter of fiscal 2024 versus $8 8 million at the end of the second quarter fiscal year 2024.

Speaker Change: Capital expenditures were zero point $4 million in the third quarter of fiscal 2024 and related to investments in our it system.

Speaker Change: Versus a total of <unk> 2 million in the third quarter of fiscal year 2023.

Gregory J. Peloquin: We paid $0.8 million in cash dividends in the third quarter of fiscal year 2020. In addition, our Board of Directors declared a regular quarterly cash dividend of $0.06 per common share, which will be paid in the fourth quarter of fiscal 2024. As of the end of the third quarter of fiscal 2024, the company had no outstanding debt on its $30 million revolving line of credit with PNC. Now, I will turn the call over to Greg, who will discuss the results for our PMT and GES business. Thank you, Bob, and good morning, everyone.

Speaker Change: We paid zero point $8 million in cash dividends in the third quarter of fiscal year 2024. In addition, our board of directors declared a regular quarterly cash dividend of <unk> <unk> per common share, which will be paid in the fourth quarter of fiscal 2024.

Speaker Change: As of the end of the third quarter of fiscal 2024, the company had no outstanding debt and.

Speaker Change: It's $30 million revolving line of credit with PNC Bank.

Speaker Change: Now I will turn the call over to Greg who will discuss the results for our PMT and Ges business groups.

Greg: Thank you Bob and good morning, everyone.

Gregory J. Peloquin: We are pleased to share that in fiscal 2024, the third quarter, we experienced strong quarter over quarter sequential growth and slight year over year growth for our Green Energy Solutions Group, or GES. GSLs were up 342% sequentially from 2.6 million to 11.5 million. In addition, our GES book-to-bill is $1.07 for the third quarter, with the addition of new customers, new products, and new technology partners. As we implement our GS growth strategy, and until our new products are mature, we are seeing fluctuations from quarter to quarter in terms of sales. The team continues to do a great job identifying customer requirements, establishing design and manufacturing capabilities, and launching beta site tests. In a short amount of time, we have designed numerous products, received several patents, and developed a growing list of key customers. All this will help develop a more predictable quarterly revenue stream. As a reminder, GE benefited from several large projects last fiscal year, including electric locomotive development and the large-scale rollout of pitch energy modules to the replacement of lead-acid batteries with our major owner-operators of GE wind turbines such as Nextera, Enel, and Ember Energy.

We are pleased to share that in fiscal 2020 for third quarter, we experienced strong quarter over quarter sequential growth and slight year over year growth for our Green energy solutions group for Ges.

Greg: Gsl's were up 342% sequentially from $2 6 million to $11 5 million.

Greg: In addition, our GBS book to Bill was one <unk> for the third quarter with the addition of new customers new products and new technology partners.

Greg: Okay.

Greg: As we implement our GFS growth strategy and until our new products mature, we are seeing fluctuations from quarter to quarter in terms of sales.

The team continues to do a great job of identifying customer requirements, establishing design and manufacturing capabilities and launching beta site testing.

Greg: In a short amount of time, we have designed numerous products received several patents until the growing list of key customers.

Greg: All of this will help develop a more predictable quarterly revenue stream.

Greg: As a reminder, ges benefited from several large projects last fiscal year, including electric locomotive development and large scale rollout of pitch energy modules to the replacement of lead acid batteries with our major owner operators that GE wind turbines such as Nextera.

Greg: <unk> and <unk> energy.

Gregory J. Peloquin: We remain confident that our market share continues to expand. Our customers repeatedly tell us we have maintained our market share for our core GES applications, identified new opportunities, and the slowdown in revenue in Q1 and Q2 was purely a timing issue. In fact, our customer pipeline and number of opportunities continue to increase, as we take advantage of significant energy transformation projects globally. Our combined GES and PMT backlog remains strong at over 98 million.

Greg: We remain confident that our market share continues to expand.

Greg: Customers repeatedly tell us we have maintained our market share for our core ges applications identifying new opportunities and the slowdown in revenue in Q1, and Q2 was purely a timing issue.

Greg: In fact, our customer pipeline a number of opportunities continue to increase as we take advantage of significant energy transformation projects globally.

Greg: Our combined Ges in PMT backlog remained strong at over $98 million.

Gregory J. Peloquin: Given our inventory position, we believe we will continue to ship many incoming orders from stock, as we were able to do in Q3. This resulted in a significant inventory reduction, which we expect will convert into cash in the coming quarters as receivables are collected. We remain focused on managing our business to support our customers' needs when they are ready. So with that, let's look at the third court reform for both GES and PMT groups in more detail.

Greg: Given our inventory position, we believe we will continue to ship many incoming orders from stock as we were able to do in Q3.

Greg: This resulted in significant inventory reduction.

Which we expect will convert into cash in the coming quarters as receivables are collected.

Greg: We remain focused on managing our business to support our customers' needs when they are ready.

Greg: So with that lets look at the third quarter performance for both Ges and PMT groups in more detail.

Gregory J. Peloquin: GSLs were $11.5 million in the quarter, up from $11.4 million in the prior year's third quarter and up over 342% from the prior quarter, driven by a larger customer base, mainly for the Ultra 3000, as well as increased new product revenue from designs with our component technology partner, and continue to grow market share with customers meeting our niche power management focused patent green energy. Beginning in Q3 FY24, we saw an increase in the budget for individual site We're excited to see this and expect to see positive trends continue in Q4 FY24. We also continue to beta test our patent-pending Ultra UPS 3000, which replaces lead acid batteries in the UPS system at the base or down tower of the wind turbine. The Altra UPS 3000 will be used by other owner operators of GE and Siemens wind turbines.

Greg: Dsos were $11 5 million in the quarter up from $11 4 million in the prior year's third quarter.

And up over 342% from the prior quarter driven by a larger customer base, mainly for the Altra 3000, as well as increased new product revenue from designs with our component technology partners.

Greg: We continue to grow market share with the customers meeting our niche power management focused patent green energy products.

Greg: Beginning in Q3, FY 'twenty four we saw an increase in the budget for individual site rollouts for our wind customers.

Greg: With over 53 million shipped program to date.

Greg: We're excited to see this and I expect to see positive trends continue in Q4 FY 'twenty four.

Greg: We also continue to beta test our patent pending ultra <unk> 3000, which replaces lead acid batteries and the <unk> system at the base or downtown of the wind turbine.

Greg: The ultra <unk> 3000 will be used by other owner operators of GE and Siemens wind turbines Tessa.

Gregory J. Peloquin: Tests are going well, and we have led to important improvements in the product. We anticipate generating production revenue from the Altra UPS 3000 product line in late 2024 as beta testing is completed with our customers. We're also testing the Altra PEM3000, a multi-brand product, which serves the same function as the Altra 3000 but in different mechanical designs with other wind turbine platforms such as SSB, Suzlan, Sembian, and Nordic, expanding our market outside of North America. One major program I mentioned in Q2 for the UltraPem 3000 is beta testing with Suzlon on both an OEM and replacement.

Greg: Tests are going well and we have led to an important improvements in the product we anticipate generating production revenue from the <unk> 3000 product line in late September 2024, as beta testing is completed with their customers.

Greg: We're also testing the altra P M 3000, or multi brand products.

Greg: Which serve the same function as the altra 3000, but in different mechanical designs with other wind turbine platforms, such as SSB, Suzanne Symbion and Nordics.

Greg: Expanding our market outside of North America.

Greg: One major program I mentioned in Q2 for the Ultra Pen 3000 is beta testing with <unk>, both in OEM and replacement basis. The replacement opportunity is for more than 7000 turbines in India alone with several thousand more in North America and Europe, We expect to ship production orders for the <unk> program starting in late October 2012.

Gregory J. Peloquin: The replacement opportunity is for more than 7,000 turbines in India. Several thousand more North American, We expect to ship production orders for the Suzlon program starting in late October 2020. The UltraPem 3000 is also in final testing with several owner-operators in Latin America and North America which manage Suzlon SSD Pitch Sensors.

Greg: Four.

Greg: The Altra Pen 3000 is also in final testing with several owner operators in Latin America, and North America, which manage Susan SSB pitch systems will be rolling out four new versions of Sandy and Suzanne Nordics and SSB in Europe at the clean energy show in Hamburg, Germany in September 2024.

Gregory J. Peloquin: We'll be rolling out four new versions of Sendian, Suzlon, Nordex, and SSB in Europe at the Clean Energy Show in Hamburg, Germany, in September 2013. In the EV locomotive segment, due to supply chain issues for piece parts for our suppliers and design changes, our prototype superstructure builds for Long Island Railroad and BNSF electric locomotives will now be completed this quarter and into Q1 of next fiscal year. We anticipate production units will begin shipping in the third and fourth quarters of calendar 2020. We have beta orders for a patented UltraGen 3000 Starter Module with two large diesel and EV locomotives. It is important to note that we are exclusive to both of these manufacturers.

Greg: And the EV locomotive segment due to supply chain issues for piece parts for our suppliers and design changes are prototypes superstructure builds for long Island Railroad and BNS CF electric locomotives will now be completed this quarter and into Q1 of next fiscal year.

Greg: We anticipate production units will begin shipping in the third and fourth quarters of calendar 2024.

Greg: We have beta orders for our patented ultra Gen 3000 starter module with two large diesel and EV locomotive manufacturers.

Greg: Is important to note that we are exclusive to both of these manufacturers.

Greg: If all continues as planned we anticipate production orders will begin in late July 2024.

Greg: In summary last quarter, we anticipated sequential revenue growth in Q3, and Q4 with energy business unit, driven by new products customers and technology suppliers and supported by the forecast and backlog from a project based customers we.

Gregory J. Peloquin: If all continues as planned, we anticipate production orders will begin in late July 2024. In summary, last quarter, we anticipated sequential revenue growth in Q3 and Q4 within our GES business. Driven by new products, customers, and technology suppliers and supported by the forecast and backlog from our project-based customers, we saw a large increase in sales over Q2 and year-over-year growth in Q3. We're expecting quarter over quarter growth again in Q4. I want to stress that despite the slow growth in the first six months of the fiscal year, we did not lose any market share. In fact, we continue to increase our market share with new products, new applications, and new customers. Turning to the Powered Microwave Technologies Group, or PMT, which includes the Electron Device Group, or EDG, and our Legacy II business, and the Powered Microwave Group, or PMG, our Powered Microwave Component. Sales decreased 33% from $46.8 million to $31.2 million.

Greg: We saw that large increase in sales over Q2 and year over year growth in Q3.

Greg: We are expecting quarter over quarter growth again in Q4.

Greg: I want to stress that despite the slow growth in the first six months of the fiscal year, we did not lose any market share. In fact, we continue to increase our market share with new products, new applications and new customers.

Greg: Turning to power and microwave technologies group or PMT, which include the electron device group or EDG, and our legacy business and the power and microwave group or PMG powered micro components group sales decreased 33% from $46 8 million to $31 2 million.

Greg: This decline was primarily due to the slowdown in our semiconductor wafer fabrication equipment business.

Greg: The decline in the semiconductor wafer fab business was slightly offset by growth in the RF and microwave power components group.

Greg: We expect to see quarter over quarter growth for semiconductor wafer fabrication equipment business in Q4, FY 'twenty four based on customer feedback and market predictions and with a book to bill of over $1. One four for PMT overall coming out of Q3.

Gregory J. Peloquin: This decline was primarily due to the slowdown in our semiconductor wafer fabrication equipment business. However, the decline in the semiconductor wafer fab business was slightly offset by growth in the RF and microwave power components. We expect to see quarter over quarter growth for our semiconductor wafer fabrication equipment business in Q4 FY24 based on customer feedback and market predictions, and with a book to bill of over 1.14 for PMT overall coming out of Q3. Our engineering solutions strategy is led by our global technology partners. In Q3, we continue to add technology partners who fill technological gaps in our offering and support our growth, including Wolfspeed, Ideal Power, and MCI Components. Often, through these partnerships, we identify opportunities for new products that we design and manufacture in-house. This increases the value we provide customers and allows us to capture more revenue while expanding and diversifying our customer base. In April, we are excited to be expanding our RF and microwave portfolio with the addition of Wolfspeed Cree Semiconductor, through our global relationship with MAKO.

Greg: Our engineering solution strategy is led by our global Technology partners. In Q3, we continue to add technology partners, who fill technology gaps in our offering and support our growth, including will speed ideal power and Mci components.

Greg: Often through these partnerships, we identify opportunities for new products that we designed and manufactured in house. This increases the value we provide customers and allows us to capture more revenue, while expanding and diversifying our customer base.

Greg: In April we are excited to be expanding our RF and microwave portfolio with additional will be increased semiconductors through a global relationship with makeup.

Greg: These long term supplier relationships are extremely strong.

Greg: And when appropriate we work with them on strategic long term purchases to maintain proper levels of supply we negotiate special terms stock adjustment privileges and shipping schedules to help improve cash flow.

Greg: In addition, having inventory on hand allows us to capture and maintain market share, we collaborate with our customers suppliers and leverage our customers' forecast to help us strategically invest in inventory and ensure we can meet our customers' needs.

Greg: Our growing customer base and strong relationships with these customers help us develop new products and opportunities. We will continue to invest in infrastructure to support our growth we are bringing on talented design and field engineers and making investments to enhance our manufacturing capabilities.

Gregory J. Peloquin: These long-term supplier relationships are extremely strong, and when appropriate, we work with them on strategic long-term purchases to maintain proper levels of supply. We negotiate special terms, stock adjustment privileges, and shipping schedules to help improve cash flow. In addition, having inventory on hand allows us to capture and maintain market share. We collaborate with our customers and suppliers and leverage our customers' forecasts to help us strategically invest in inventory and ensure we can meet our customers' needs. Our growing customer base and strong relationships with these customers help us develop new products and opportunities. We will continue to invest in our infrastructure to support our growth. We are bringing on talented design and field engineers and making investments to enhance our manufacturing capability; our growing in-house design engineering and manufacturing teams are doing a great job supporting the increased demand for current and new product design. With this team, we'll continue to identify, develop, and introduce new products and technologies for green energy and other power management and microwave applications. I cannot stress enough the value Richardson Electronics brings to our customers. Unparalleled capability and a global go-to-market strategy are unique to the power energy and RF microwave and green energy markets.

Greg: Our growing in house design engineering and manufacturing teams are doing a great job supporting the increased demand for current and new product designs with this team will continue to identify develop and introduce new products and technologies for Green energy and other power management and microwave applications.

Greg: I cannot stress enough the value of Richardson Electronics' model brings to our customers and suppliers are unparalleled capability and global go to market strategy, our unique to the power energy and RF microwave and Green energy markets. We.

Greg: We developed a strong business model, including legacy products, and new technology partners that fit well with our engineered solutions capabilities.

Greg: Steadfast and create a focus on customers, we will continue to excel, but taking advantage of opportunities as they arise the execution of our strategy has never been better Theres No question, our customers and technology partners need Richardson's products and support more than ever.

Greg: And with that I'll turn it over to Wendy to Dell to discuss Richardson healthcare.

Wendy: Thanks, Greg Good morning, everyone.

Wendy: Third quarter sales for the health care Division with $3 1 million, an improvement of 29, 6% compared to the third quarter of last year and a slight increase over the second quarter.

Wendy: G tube and part sales were up versus the prior years third quarter, while system sales were down primarily due to the timing of cash receipts from our customers in Latin America.

Wendy: In the quarter, we again benefited from sales of our repaired Siemens Stratton Z kids.

Wendy: Healthcare's gross margin in the quarter improved to 41, 6% compared to 14, 8% and our most recent second quarter.

Gregory J. Peloquin: We have developed a strong business model including legacy products and new technology partners that fit well with our engineered solutions capability. Through our steadfast and creative focus on customers, we will continue to excel by taking advantage of opportunities as they arise. The execution of our strategy has never been better.

Wendy: Gross margin in the same period last fiscal year was 39, 8%.

Wendy: The gross margin improvement was primarily due to a favorable product mix, including higher parts and Siemens tube sales.

Wendy: We also realized the benefit of restructuring done at the end of the second quarter and reallocation of resources focused on the Siemens repair tube program.

Wendy S. Diddell: There's no question our customers and technology partners need Richardson's products and support more than ever. And with that, I'll turn it over to Wendy Diddell to discuss Richardson Health. Thanks, Greg. Good morning, everyone.

Wendy: We continue to make excellent progress with the Siemens program. The Siemens repair program includes four tube type strategy.

Wendy S. Diddell: Third quarter sales for the healthcare division were $3.1 million, an improvement of 29.6% compared to the third quarter of last year and a slight increase over the second quarter. CT tube and part sales were up versus the prior year's third quarter, while system sales were down primarily due to the timing of cash receipts from our customers in Latin America. In the quarter, we again benefited from sales of our repaired Siemens Stratton Z2. Healthcare's gross margin in the quarter improved to 41.6% compared to 14.8% in our most recent second quarter. Gross margin in the same period last fiscal year was 39.8%. The gross margin improvement was primarily due to a favorable product mix, including higher volumes and Siemens tube sails. We also realized the benefit of restructuring done at the end of the second quarter and reallocation of resources focused on the Siemens Repaired Tube Program. We continue to make excellent progress with the Siemens program. The Siemens repair program includes four tube types, the Stratton Z, MX, MXP, and MXP-46.

The next day and next day 46 three.

Wendy: The repaired strategy is in full production and performing well in the field.

Wendy: Stratton resales are starting to ramp up as we have a steadier flow of production and can expand our customer base.

Wendy: The repaired Nx series tubes are performing well in beta in life test well and may be able to sell a small number of repaired tubes in the next two quarters. We anticipate the full release of the Amex series later this summer when we were able to replace critical components.

Wendy: We continue to closely monitor healthcare's financial performance with the goal of achieving a breakeven point in the fourth quarter.

Wendy: With limited sales have repaired Siemens theories. This will remain challenging but we are taking the right steps to balance our investments with other opportunities in the company.

I will now turn the call over to <unk> to discuss the results of canvas.

Speaker Change: Thanks, Wendy and good morning, everyone.

Speaker Change: And with engineers manufactures and sells custom displays to original equipment manufacturers across global industrial and medical markets.

Speaker Change: Canada sales.

Speaker Change: Third quarter of fiscal 2024.

Speaker Change: Flex certain customer push outs, primarily in North America.

Speaker Change: As a result sales were $6 6 million for the third quarter compared to a very strong quarter last year with sales up $9 7 billion.

Speaker Change: One area I'd like to highlight is our $46 2 million backlog as you can see our backlog remains robust.

Wendy S. Diddell: The repaired Stratton Z is in full production and performing well in the field. Stratton's e-sales are starting to ramp up as we have a steadier flow of production and can expand our customer base. The repaired MX series tubes are performing well in beta and life tests.

Speaker Change: Riding us with strong foundation for future revenue growth.

Speaker Change: This backlog not only demonstrates the confidence of our clients have in our products and services, but also reflect our ability to secure long term contracts in a competitive market environment.

Wendy S. Diddell: While we may be able to sell a small number of repaired tubes in the next two quarters, we anticipate the full release of the MX series later this summer when we are able to replace critical components. We continue to closely monitor Healthcare's financial performance with the goal of achieving a break-even point in the fourth quarter. With limited sales of the repaired Siemens series, this will remain challenging, but we are taking the right steps to balance our investments with other opportunities in the company. I will now turn the call over to Jens Ruppert to discuss the results of Canvas. Thanks, Wendy, and good morning, everyone.

Speaker Change: Another notable highlight from the third quarter of fiscal 2024 is the improvement in our gross margin.

Speaker Change: We are pleased to report that our gross margin as a percentage of net sales increased to 34, 4% compared to 32.0% during the same period last year.

Speaker Change: This improvement underscores our relentless focus on operational excellence and cost management.

Speaker Change: Through strategic initiatives and operational enhancements, we've been able to enhance our efficiency and optimize our cost structure, resulting in improved margin.

Speaker Change: During the quarter, we received seven new orders from both existing and first time medical OEM customers.

Speaker Change: Some of these applications include patient monitoring.

Jens Ruppert: Canvas engineers, manufactures, and sells custom displays to original equipment manufacturers across global industrial and medical markets. Can the sales for the third quarter of fiscal 2024 reflect certain customer push-outs primarily in North America? As a result, sales were $6.6 million for the third quarter compared to a very strong quarter last year with sales of $9.7 million.

Speaker Change: Skippy surgical navigation Super puts laser systems and robotic assisted surgery.

Speaker Change: These applications underscore our commitment to providing innovative solutions that meet the evolving needs of our customers in the medical sector.

Speaker Change: More the highlight our ability to establish and cultivate long term relationships with both existing and new clients positioning us for sustaining growth in this key market segments.

Jens Ruppert: One area I'd like to highlight is our 46.2 million backlog. As you can see, our backlog remains robust, providing us with a strong foundation for future revenue growth. This backlog not only demonstrates the confidence our clients have in our products and services but also reflects our ability to secure long-term contracts in a competitive market environment. Another notable highlight from the third quarter of fiscal 2024 is the improvement in our cross-margin. We are pleased to report that our cross-marginalized percentage of net sales increased to 34.4% compared to 32.0% during the same period last year.

Speaker Change: In the nonmedical space our products are used in a variety of commercial and industrial applications. This includes displays used in the public consultation space such as train driver consoles and passenger information monitors air traffic control <unk> or human machine interface applications for surface inspection machines.

Speaker Change: <unk> tailored, prompting and talent monitors and clocks used in the broadcast market.

Speaker Change: As we navigate through the dynamic market environment, it's important economics that some of our customers have exhibited a cautious approach due to prevailing uncertainties. However, despite this caution we remain optimistic about the recovery of demand in the coming quarters beef obsessed promising indicators and anticipate.

Speaker Change: Gradual rebound.

Speaker Change: Market conditions stabilize.

Speaker Change: Our ongoing dialogue with customers.

Jens Ruppert: This improvement underscores our relentless focus on operational excellence and cost management. Through strategic initiatives and operational enhancements, we've been able to enhance our efficiency and optimize our cost structure, resulting in improved margins. During the quarter, we received several new orders from both existing and first-time medical OEM customers. Some of these applications include patient monitoring, colposcopy, surgical navigation, superpulsed laser systems, and robotic-assisted Xerox.

Supports our confidence into potentially a caveat.

Speaker Change: One of the key drivers of our optimism has increased business stemming from new design wins these wins.

Speaker Change: Underscore the recognition and acceptance of our products and solutions in the market.

Speaker Change: Our engineering teams have been diligently engaged demonstrating a high level of activity and commitment close strategic objectives.

Speaker Change: <unk> the challenges posed by incentive sectors. Our engineering team has remained focused on innovation and product development laying the groundwork for future growth opportunities.

Jens Ruppert: These applications underscore our commitment to providing innovative solutions that meet the evolving needs of our customers in the medical sector. Furthermore, they highlight our ability to establish and cultivate long-term relationships with both existing and new clients, positioning us for sustaining growth in this key market sector. In the non-medical space, our products are used in a variety of commercial and industrial applications, including displays used in the public consultation space, such as train driver consoles and passenger information monitors, air traffic control, HMI or human machine interface applications for surface inspection machines, and teleprompting and talent monitors and clocks used in the broadcast market.

Speaker Change: Strategically positioned ourselves to capitalize on emerging opportunities and these design wins validate the effectiveness of our approach as we continue to leverage these wins.

Speaker Change: Further penetrating target markets, we participate in a positive impact on our revenue growth and market share.

Speaker Change: From the variety of customers and applications as well as the value of orders from existing and new customers. It is clear we offer our global customers outstanding products and localized service.

Speaker Change: While our sales organization stays focused on new opportunities.

Speaker Change: Focusing on executing our strategic initiatives to drive sustainable growth and create long term value for our shareholders.

Speaker Change: I will now turn the call back over to Ed.

Jens Ruppert: As we navigate this dynamic market environment, it's important to acknowledge that some of our customers have exhibited a cautious approach due to prevailing uncertainty. However, despite this caution, we remain optimistic about the recovery of demand in the coming quarters. We have observed promising indicators and anticipate a gradual rebound as market conditions stabilize. Our ongoing dialogue with customers supports our confidence in the potential recovery ahead. One of the key drivers for optimism is increased business stemming from new design wins. These wins underscore the recognition and acceptance of our products and solutions in the market.

Edward J. Richardson: Thanks, James I know customer push outs have been a source of frustration for you and your team.

Edward J. Richardson: But our strong backlog and recent wins, we are confident that the business will improve sequentially.

Edward J. Richardson: Despite handwriting's from economic conditions higher interest rates lagging economy in China.

Edward J. Richardson: We maintain our optimism and remain committed to our long term growth strategies.

Edward J. Richardson: We continue to pursue significant projects and develop new engineered solutions that take advantage of opportunities created by recent government stimulus programs in global energy transition trends.

Edward J. Richardson: We believe we are well positioned to capitalize on large rapidly growing global markets.

Jens Ruppert: Our engineering teams have been diligently engaged, demonstrating a high level of activity and commitment to our strategic objectives. Despite the challenges posed by external factors, our engineering team has remained focused on innovation and product development, laying the groundwork for future growth opportunities. We strategically positioned ourselves to capitalize on emerging opportunities, and these design wins validate the effectiveness of our approach as we continue to leverage these wins, further penetrating target markets. We're experiencing a positive impact on our revenue growth and market share. From the variety of customers and applications, as well as the value of orders from existing and new customers, it is clear we offer our global customers outstanding products and localized service. While our sales organization stays focused on new opportunities, I will focus on executing our strategic initiatives to achieve sustainable growth and create long-term value for our shareholders. I will now turn the call back over to Al. Thanks, Jens.

Edward J. Richardson: This is exactly why we maintain a strong balance sheet with access to additional sources of capital if necessary to fund this growth.

We're convinced our ever expanding product roadmap for Green energy solutions to a large global customers who will be crucial.

Edward J. Richardson: Is it part of our revenue growth doing going forward.

Edward J. Richardson: The solutions, we offer not only achieve lower carbon emission goals, but they also create cost savings for our growing customer base.

Edward J. Richardson: In the wind market for example lead acid batteries must be replaced every one or two years.

Edward J. Richardson: Our ultra capacitor 3000, as a life expectancy of more than 10 years with.

Wind turbine wrappers may never have to replace after 3000 before replacing the wind turbine.

Edward J. Richardson: This saves customers' labor cost as well as insurers greater uptime, resulting in more power generated.

Edward J. Richardson: International growth opportunities as well as expansion to other wind turbine brands within the U S provides more evidence that demand for ultracapacitor modules, there and growing.

Edward J. Richardson: I know customer pushouts have been a source of frustration for you and your team, but with strong backlog and recent wins, we're confident that the business will improve sequentially. Despite hindrances from economic conditions, higher interest rates, and a lagging economy in China, we maintain our optimism and remain committed to our long-term growth strategy.

Edward J. Richardson: Last quarter, we referred to opportunities created by the inflation reduction Act of 2022.

Edward J. Richardson: That's just the 100 kilowatt generators to power pilot reactors to make crystal lean diamond materials for high Tech applications.

Edward J. Richardson: And this quarter, we will ship the first generator. These generators are over $100000 a piece.

Edward J. Richardson: We continue to pursue significant projects and develop new engineered solutions that take advantage of opportunities created by recent government stimulus programs and global energy transition trends. We believe we're well positioned to capitalize on large, rapidly growing global markets. This is exactly why we maintain a strong balance sheet with access to additional sources of capital if necessary to fund this growth. We're convinced our ever-expanding product road map for green energy solutions for large global customers will be crucial as a part of our revenue growth going forward. The solutions we offer not only help achieve lower carbon emission goals, but they also create cost savings for our growing customer base. In the wind market, for example, lead-acid batteries must be replaced every one or two years. Our ultracapacitor 3000 has a life expectancy of more than 10 years, so wind turbine operators may never have to replace Ultra 3000 before replacing the wind turbine.

Edward J. Richardson: We expect this will be the first of many of the demands for large chips used in many applications such as AI and electric vehicles.

Edward J. Richardson: <unk> also have a positive impact on the demand for semiconductor wafer fab equipment.

Edward J. Richardson: Electric vehicle rail is still in its infancy, but states like California are mandating that the transition from diesel locomotives. So while this may be rolling out slower than we originally anticipated the opportunity remains significant.

Edward J. Richardson: Other applications like mining are outside the United States and the emphasis on alternative Green solutions remains a top priority for us.

Edward J. Richardson: We're working closely with customers' engineering teams that are an integral player in their supply chain.

Edward J. Richardson: I want to stress again that our customers' products and opportunities are growing none of these projects are programs. We've discussed have been lost or canceled.

Our balance sheet remains strong with nearly $19 million in cash and no debt.

Edward J. Richardson: This saves customers labor costs as well as ensures greater uptime resulting in more power generated. International growth opportunities as well as expansion to other wind turbine brands within the US provide more evidence that demand for ultracapacitor modules is there and growing. Last quarter, we referred to opportunities created by the Inflation Reduction Act of 2022, such as the 100 kilowatt generators to power pilot reactors to make crystalline diamond materials for high-tech applications. This quarter, we'll ship the first generator. These generators cost over $100,000 a piece. We expect this will be the first of many demands for large chips used in many applications such as AI and electric vehicles. This will also have a positive impact on the demand for semiconductor wafer fab equipment. Electric vehicle rail is still in its infancy, but states like California are mandating the transition from diesel locomotives. So while this may be rolling out slower than we originally anticipated, the opportunity remains significant. Other applications, like mining, are outside the United States, and the emphasis on alternative green solutions remains a top priority.

Edward J. Richardson: We're working hard to improve our working capital position and convert inventory to cash.

Our approach will remain focused on maintaining healthy cash position and a strong balance sheet, while we focus on improving profitability and producing positive operating cash flow in FY 'twenty five overall, we remain extremely excited by the direction, we're headed in and the global opportunities.

Edward J. Richardson: We are pursuing to create value for our shareholders.

Speaker Change: At this time, we'll be happy to answer your questions.

Speaker Change: Thank you, ladies and gentlemen, due to time constraints, we ask that you. Please limit yourself to one question and one follow up.

Speaker Change: Again, we ask that you. Please limit yourself to one question and one follow up until we have had a chance to ask until all have had a chance to ask a question after which we will answer additional questions from you as time permits.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.

Speaker Change: Sure. Your question. Please press Star one one again, please standby, while we compile the Q&A roster.

Edward J. Richardson: We're working closely with customers' engineering teams, which are an integral player in their supply chain. I want to stress again that our customers, products, and opportunities are growing. None of these projects or programs we've discussed have been lost or cancelled.

Speaker Change: So first question is from Anja Soderstrom from Sidoti. Your line is now open.

Anja Marie Theresa Soderstrom: Good morning.

Anja Marie Theresa Soderstrom: And then.

Anja Marie Theresa Soderstrom: Good morning.

Unknown Executive: Our balance sheet remains strong with nearly $19 million in cash and no debt. We're working hard to improve our working capital position and convert inventory to cash. Our approach will remain focused on maintaining a healthy cash position and a strong balance sheet while we focus on improving profitability and producing positive operating cash flow in FY25. Overall, we remain extremely excited by the direction we're headed in and the global opportunities we're pursuing to create value for our shareholders. At this time, we'll be happy to answer your questions. Thank you.

Anja Marie Theresa Soderstrom: Nice to see a sequential jump in the quarter.

Anja Marie Theresa Soderstrom: Well that was it.

Anja Marie Theresa Soderstrom: Large project I'll ask to several different projects that Doug.

Anja Marie Theresa Soderstrom: Drove that that business increase.

Speaker Change: Yes, it's actually a great increase in the customer base.

A major portion of the increase was the Altra 3000.

Business, just starting example last year we.

Speaker Change: Five six customers.

Past quarter we.

Speaker Change: Up to over 12.

New customers for this product as it becomes market accepted the word gets out people are doing at the budget got approved in.

Unknown Executive: 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 one follow-up until we have had a chance to ask, until all have had a chance to ask a question, after which we will answer additional questions from you as time permits. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. The first question is from Anja Soderstrom from Sidoti. Your line is now open. Good morning, Anja.

We said from the very beginning that Q1 and Q2, they are putting their capital capex together and that those two would be slow and we'd see an increase in Q3 and Q4 and that was exactly what happened that the capex approved for 2024, and the started placing orders and we had built up stock to support.

That based on their forecasting we're able to ship from stock. So it was actually an increase in.

The number of customers and the largest increase in terms of a product was the altra three.

Speaker Change: Okay and Thats. The one you had a press release out in March with that you compete in that space, one that shipping 50000 modules.

Speaker Change: Exactly yes.

Speaker Change: They looked at it.

Speaker Change: They review it and everything is in phases.

Anja Marie Theresa Soderstrom: Hi Adam. Good morning. It's nice to see that sequential jump in the quarter. And what was it, a specific large project, or was it several different projects that grew that grew that and drove that GS business increase? Yeah, it's actually a great increase in the customer base. A major portion of the increase was the Ultra 3000 business.

Speaker Change: And according to them they are phase one capex approvals and that generated about 53000, and we started seeing phase II in Q3 start up so that was another reason.

Speaker Change: And what do you think we can expect from the phase two is that going to be the same magnitude or could it be Alex. Thanks, gentlemen, as you have more customers now.

Gregory J. Peloquin: Just for an example, last year, we had five, six customers. This past quarter, we shipped to over 12 new customers for this product. As it becomes market accepted, the word gets out, people are doing it, the budget gets approved. We said from the very beginning that Q1 and Q2, when they're putting their capital at CapEx together, those two would be slow, and we'd see an increase in Q3 and Q4. And that was exactly what happened.

Alex: It'll be that in a little bit higher based on the forecast from these customers again, we started with and good way.

Alex: <unk> largest owner operators of GE wind turbines, the balance or the smaller group, but if you add them all together it could be about the same amount. So we're expecting that plus for phase III.

Alex: Okay. Thank you and in terms of that you're expecting to ask the question well the increase.

Alex: In the fourth quarter.

Alex: The confidence in that what kind of visibility do you have.

Gregory J. Peloquin: They got their CapEx approved for 2024, and they started placing orders, and we had built up a stock to support that based on their forecast, and we were able to ship from stock. So there was actually an increase in the number of customers, and the largest increase in terms of a product was the Ultra 3000. Okay, and that's the one you had a press release out in March, right, that you computed at phase one of the shipping 50,000 modules. Exactly.

Alex: We're very careful about it based on the deliveries.

Alex: And the backlog and the inventory we have to shift to that and so far like we saw in Q3 the.

Alex: Customer base, meaning their forecast, which is surprising because people can't forecast very well again.

Alex: It's mainly based on our book to Bill being over one <unk>.

Alex: Backlog in the schedule for that backlog and the fact that we have inventory to support it.

Alex: Going forward.

Alex: Okay.

Gregory J. Peloquin: Yeah, they looked at it, and they reviewed it, and everything was in phases. And according to them, you know, their phase one, CapEx approvals, and that generated about 53,000. And we started seeing phase two and Q3 start up. So that was another reason.

Speaker Change: Okay, I'm going to squeeze one more in here about the inventory. So that was a nice work now and you expect growth to continue should we expect inventory.

Speaker Change: Could that continue to decline in dollar amount.

Speaker Change: Thanks, flatten or even increase maybe in the coming quarters.

Gregory J. Peloquin: And what do you think we can expect from Phase 2? Is that going to be of the same magnitude, or could it be an expansion since you have more customers now? It will be that and a little bit higher based on the forecast from these customers. Again, we started with, in a good way, the four largest owner-operators of GE wind turbines. The balance is the smaller groups, but if you add them all together, it could be about the same amount.

Speaker Change: I'll touch on Ges, we expect.

Speaker Change: Sales to increase in inventory to go down specific to the Ges.

Speaker Change: Let the other SBU people, yes, I would just add to that on you that we do have the entire management team focused on it.

Speaker Change: While we wouldn't go so far as to say, it's absolutely going to decrease that is everybody's intent is to make that happen. So we're all on board, we're pushing out where we can we're cutting back where we can and trying to negotiate different arrangements with certain suppliers.

Gregory J. Peloquin: So, we're expecting that plus for phase two. Okay, thank you. And in terms of expecting the sequential growth to increase and continue in the fourth quarter, what gives you confidence in that? What kind of visibility do you have?

Speaker Change: Okay. Thank you I wonder if we respect to go to that is on the call. So I'll get back in queue. Thank you. Thanks Danielle.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of Ross Taylor from <unk> investment partners.

Gregory J. Peloquin: We are very confident about it based on the deliveries and the backlog and the inventory we have to shift to that. And so far, like we saw in Q3, the customer base is meeting their forecast, which is surprising because people can't forecast very well; no one can. So it's mainly based on our book to bill being over one, the backlog and the schedule for that backlog, and the fact that we have inventory to support it going forward. Okay, I'm gonna squeeze one more in here about the inventory. So that was a nice job done. But now, when you expect the growth to continue, should we expect inventory? to continue to decline in dollar amounts, or should it be staying flat or even increasing, maybe in the coming quarter?

Ross Taylor: Well Ed team congratulation.

Ross Taylor: Congratulations on a.

Ross Taylor: Our strong operating performance in the quarter was nice to see you back in and the Green profitability wise.

Ross Taylor: And.

Ross Taylor: You indicated on this call.

Ross Taylor: That you think that we're basically we're at the nadir for the semi cap equipment business and Thats been a major driver to the drop in profitability.

Ross Taylor: You also indicated that you expect calendar your customers expect calendar 'twenty five to be a record year.

Ross Taylor: For them in that area, so would I be right to assume you think that calendar 'twenty five those 12 months should be producing a record level of revenues for you guys.

Gregory J. Peloquin: I'll touch on GES; we expect sales to increase and inventory to go down specific to GES, and let the other Yeah, I would just add to that, Anja, that, you know, we do have the entire management team focused on it. Well, we wouldn't go so far as to say it's absolutely going to decrease, but everybody's intent is to make that happen.

Speaker Change: Yes, I mean, we are listening.

Speaker Change: On a regular basis.

Speaker Change: The Lam research, who is our largest customer, but we also saw the Tokyo electron and applied materials in a number of other customers in that space.

Speaker Change: And they're all telling us that in 2025, the semi wafer fab business will be higher than ever.

Speaker Change: Last year, we did $40 million in that space at a very nice margin and this year, it's less than 20.

Robert J. Ben: So we're all on board. We're pushing out where we can. We're cutting back where we can and trying to negotiate different arrangements with certain suppliers. Okay, thank you.

Speaker Change: So if you can count on it being over 40 next year should be a record year.

Speaker Change: And should you be able to do.

Same kind of margins are better that you saw back a year ago.

Speaker Change: Yes, I mean were proprietary and a lot of those products. So our margins are very good.

Anja Marie Theresa Soderstrom: I want to be respectful to the address on the call, so I'll get back in queue. Thank you. Thanks, Anja.

Speaker Change: Historically, there has been kind of almost like a one to one type sell through it appears.

Unknown Executive: Thank you. One moment for our next question. Our next question comes from the line of Ross Taylor from ARS Investment Partners. Well, Ed, team, congratulations.

Speaker Change: Our correlation.

Also you indicated on this call and you've indicated previously that the.

The Green energy business is looking at a tremendous number of opportunities that come on over the next 12 to 18 months. So I would assume you would think that you guys think that the green business should be able to produce.

Ross Taylor: Congratulations on a strong operating performance in the quarter. It's nice to see you back in the green profitability wise. And you indicated on this call and in that you think that we basically are at the nadir for the semi-capital equipment business, and that's been a major driver of the drop in profitability.

Speaker Change: Third level of performance as well as.

Speaker Change: Let's say looking at the 12 months of calendar 'twenty five.

Speaker Change: Well, we've seen a lot of push outs in that space, we think that it's a matter of when that yes. There is certainly a tremendous opportunity in all kinds of areas not only the ultra capacitors or wind turbines, but especially with the electric locomotives and the battery starting through diesel locomotives, but it.

Gregory J. Peloquin: You've also indicated that your customers expect calendar 25 to be a record year for them in that area. So would I be right to assume you think that calendar 25, those 12 months, should be producing a record level of revenues for you guys? Yes, I mean, we're listening on a regular basis to LAM Research, who's our largest customer, but we also sell the Tokyo Electron and applied materials and a number of other customers in that space, and they're all telling us that in 2025, the semi wafer fat business will be higher than ever. As you know, last year we did $40 million in that space by a very nice margin, and this year it's less than $20. So if you can count on it being over 40, next year should be a record year.

Speaker Change: Seems as if it is rolling out much slower than we anticipated.

Speaker Change: Okay.

Speaker Change: Thank you one moment far next question.

Our next question comes from the line of Barry Mendel from Mendel money management.

Speaker Change: Yes.

Barry M. Mendel: Hi, guys.

Barry M. Mendel: Wendy I remember.

Barry M. Mendel: A year ago, you assess progress rail, but that maybe could be the biggest customer going forward.

Barry M. Mendel: Heard much about them so what is going on.

Barry M. Mendel: With progress rail.

Barry M. Mendel: But the main thing going on currently progress well, we've met all the commitments.

Barry M. Mendel: Are there.

Barry M. Mendel: Initial orders for the prototypes, both in North America and Brazil.

Barry M. Mendel: <unk> customers as I think you know are in Australia, and then <unk>.

Gregory J. Peloquin: And should you be able to get the same kind of margins or better that you saw back a year ago? Yes, I mean, we're proprietary in a lot of those products. So our margins are very, Yeah, historically, there's been kind of almost like a one to one type sell through, it appears, or correlation. Also, you indicated on this call, and you've indicated previously, that the green energy business is looking at a tremendous number of opportunities that will come on over the next 12 to 18 months. So I would assume that you guys think that the green business should be able to produce a record level of performance as well, as let's say, looking at the 12 months of calendar 25. Well, we've seen a lot of pushouts in that space.

In our railroad and Burlington, Northern so we've built the product we shipped it to them. They are now building up the entire train and then working with those customers through long design in phase. However, I think in 2020 FY 'twenty five.

Barry M. Mendel: The two main programs, we have gone in the locomotives.

Barry M. Mendel: Market are the two startup module that we make for the two largest owner operators.

Barry M. Mendel: So locomotives.

Barry M. Mendel: We just got a release for 25 trains.

Probably because designed and developed here in La Fox.

Barry M. Mendel: So for example, one of the owner manufacturers of diesel locomotives, there's 25000 trains.

Gregory J. Peloquin: You know, we think that it's a matter of when, not if. There's certainly a tremendous opportunity in all kinds of areas, not only the ultra capacitors for wind turbines but especially with electric locomotives and battery starts for diesel locomotives. But it seems as if it's rolling out much slower than we anticipated. Thank you.

Barry M. Mendel: This project will go into over time so.

Barry M. Mendel: If I look at FY 'twenty five.

Barry M. Mendel: When you look at sequentially in the fourth quarter.

Barry M. Mendel: Their end customers will start buying electric trains.

Barry M. Mendel: But in the meantime.

Barry M. Mendel: Continuing to identify other opportunities in the locomotive space and in this case.

Barry M. Mendel: It's the start of modules that we have designed for them.

Unknown Executive: One moment for our next question. Our next question comes from the line of Barry Mendel from Mendel Money Management. Yeah, I remember.

Speaker Change: So are you, saying you can start shipping up in your fiscal fourth quarter.

Speaker Change: The the actual orders for the diesel locomotives that we've already shipped to our battery modules and are superstructures in our fourth quarter of FY 'twenty five yes, but going forward, we have a release starting in Q1, where our starter modules that we've designed.

Barry M. Mendel: Hi guys. Um, Wendy, I remember about a year ago you assessed Progress Rail, but that maybe could be the biggest customer going forward. I really haven't heard much about them, so what is going on with Progress Rail? Well, the main thing going on currently at Progress Rail is that we've met all the commitments for their initial orders for the prototypes, both in North America and Brazil. They're customers, as I think you know, are in Australia and then Long Island Railroad in Burlington, New York.

Speaker Change: The developed for their diesel locomotives, obviously the other step is for the electric locomotives. So we have a great relationship with them, we're finding new opportunities for them. There are some <unk> modules that were looking at designing for them. So.

Speaker Change: Yes, Theres no question once the electric locomotive business is accepted by the their end customers and they start placing orders for those.

Wendy S. Diddell: So we've built the product. We shipped it to them. They're now building up the entire train and then working with their customers through a long design in phase. However, I think in 2020, FY25, the two main programs we have going in the locomotives market are the two starter modules that we make for the two largest owner operators. Diesel Locomotives.

Speaker Change: I think you're aware the largest dollar amount content, we have on those trains that progress.

Speaker Change: Those two manufacturers will be our largest customers.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Wendy S. Diddell: We just got a release for 25 trains. That product is designed and developed here at LaFox. So, for example, one of the owner manufacturers of diesel locomotives, there are 25,000 trains that this product will go into over time. If I look at FY 25, we look at potentially in the fourth quarter, their end customers will start buying electric trains. But in the meantime, we've continued to identify other opportunities in the locomotive space. And in this case, starter modules that we have designed for them. Are you saying you can start shipping them out in your fiscal fourth quarter? The actual orders for the diesel locomotives that we've already shipped for our battery modules and our superstructures in our fourth quarter of FY25, yes, but going forward, we have a release starting in Q1 for our starter modules that we've designed and developed for their diesel locomotives. Obviously, the other stuff is for their electric locomotives.

Our next question comes from the line of Chip Rewey from <unk> asset management.

Chip Rewey: Good morning, Wendy Thanks for taking the call.

Chip Rewey: Just.

Chip Rewey: Focusing on the balance sheet, a little bit the inventories.

Chip Rewey: $112 6 million combined with the cash.

Chip Rewey: Rock solid to me compared to the market value of the company and.

Chip Rewey: Given that I wonder if you could talk a little bit about the quality of the inventory the ability to deliver if theres any aging issues anything that would prevent.

Chip Rewey: That inventory being delivered kind of.

Chip Rewey: Cost on the balance sheet and of course better than that.

Chip Rewey: And I think as.

Chip Rewey: As of last quarter you in the Q. It was $99 million of finished good inventories just wondering if you could.

Wendy S. Diddell: So we have a great relationship with them, and we're finding new opportunities for them. There are some IGBT modules that we're looking at designing for them. So, yeah, there's no question. Once the electric locomotive business is accepted by their end customers and they start placing orders for those, I think you're aware of the large dollar amount content we have in those trains. Progress and those two manufacturers will be our largest customers. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our next question comes from the line of Chip Rui from Rui Asset Management. Good morning, Wendy, and thanks for taking the call.

Chip Rewey: Let us know the finished good inventories.

Chip Rewey: Percentage of inventories as you talk about.

Chip Rewey: Really what's there on the shelf is what on the shelf going to get taken kind of as is versus needs to be modified or other things like that.

Chip Rewey: Hi, Chip this is Bob Ben.

Robert J. Ben: We feel very good about the quality of our inventory as you noted we have a total of about $113 million.

Robert J. Ben: And right now we have about a $5 million total reserve on that which is reviewed every quarter. We review just so you understand we review every product.

Robert J. Ben: In our inventory once a year.

Chip Rui: Focusing on the balance sheet a little bit, the inventories, at $112.6 million, combined with the cash, look rock solid to me compared to the market value of the company. And given that, I wonder if you could talk a little bit about the quality of the inventory, the ability to deliver if there are any aging issues, anything that would prevent that inventory being delivered kind of, you know, at cost on the balance sheet and, of course, better than that. And I think, you know, as of last quarter, you in the queue, it was 99 million finished goods inventories. Just wondering if you could let us know the finished goods inventories percentage of inventories as you talk about, you know, really what's there on the shelf and is what on the shelf going to get taken kind of as is versus needs to be modified or other things like that. Hi Chip. This is Bob Ben.

Robert J. Ben: And some more than that.

Robert J. Ben: Note that that also gets reviewed by our auditors. So overall, we feel very good.

Robert J. Ben: I'm looking for the exact amount of finished goods, but as you would expect almost most of that is finished goods and the highest amount would be in the electron device group.

Robert J. Ben: Specifically, our core to business.

Robert J. Ben: As well as.

Robert J. Ben: Products that we have for our canvas division.

Robert J. Ben: In our healthcare Division.

Robert J. Ben: Certainly as Greg noted our Ges segment.

Robert J. Ben: <unk> has about $15 million of inventory right now.

Speaker Change: And again I am sorry, I don't have it at my Fingertips, we will have it in our 10-Q later today.

Speaker Change: But we do break out in the footnotes the finished goods.

Speaker Change: Amount.

Speaker Change: Yeah.

Speaker Change: Yes, I, just don't have that handy, but.

Robert J. Ben: We feel very good about the quality of our inventory. As you noted, we have a total of about $113 million. And right now, we have about a $5 million total reserve on that, which is reviewed every quarter. We review, just so you understand, we review every product in our inventory once a year and some more than that.

Speaker Change: Did I answer your question or did you have more specific questions.

Speaker Change: Hi, Matt.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from the line of Ross Taylor from <unk> investment partners.

Ross Taylor: I got to be careful how I phrase. This since we got a very severe disciplinary and on the questions.

Robert J. Ben: I might note that this also gets reviewed by our auditors. So overall, we feel very good. I'm looking for the exact amount of finished goods, but as you would expect, almost or most of that is finished goods.

Ross Taylor: What I wanted to get out and I think the prior question are starting to get to this is you have a company or stop that selling basically about one dollar above net net working capital you are selling under book value you have no debt on the balance sheet, you've talked on this call about monetizing inventory as you said the infant.

Robert J. Ben: And the highest amount would be in the electron device group, specifically our core two businesses, as well as products that we have for our canvas division and our healthcare division. And certainly, as Greg noted, our GES segment has about $15 million of inventory right now. And again, I'm sorry; I don't have it at my fingertips.

Ross Taylor: Tories are money good and are mostly finished goods, which means basically stored profitability that's sitting there and they also reflect effectively overstated.

Robert J. Ben: We'll have it in our 10 Q later today, but we do break it out in the footnotes, the finished goods. [inaudible] Yeah, I just don't have that handy.

Ross Taylor: Cost impact.

Ross Taylor: Looking at all of that and at the advice of Warren Buffett, who tells people that you are supposed to buy when others are fearful.

Robert J. Ben: But, did I answer your question, or did you have more specific questions? Thank you. One moment for our next question. Our next question comes from the line of Ross Taylor from ARS Investment Partners. I have to be careful how I phrase this since we got a very severe disciplinarian on the questions.

Ross Taylor: Why has this company not been really aggressive in buying back its own stock not only youre not aggressive youre not even buying it back yet and that's just baffles me because I hear you talk about next year calendar year, being but should be a record year.

Ross Taylor: What I wanted to get at, and I think the prior questioner started to get to this, is you have a company or stock that's selling basically about a dollar above net net working capital. You're selling under book value. You have no debt on the balance sheet.

Ross Taylor: Your prior year was over $1 50, there were some onetime items in that but let's call it $1 40.

Ross Taylor: You're trading at 10 Bucks in here $10, which.

Ross Taylor: You've talked on this call about monetizing inventories. You said the inventories are money good and are mostly finished goods, which means they're basically stored profitability that's sitting there, and they also reflect effectively an overstated cost impact. Looking at all of that, and at the advice of Warren Buffett, who tells people that you are supposed to buy when others are fearful, why has this company not been really aggressive in buying back its own stock? Not only are you not aggressive, you're not even buying it back, and it just baffles me because I hear you talk about next year's calendar year being what should be a record year. Your prior year was over $1.50.

Is less than what the book value is and I have to believe you think this company is worth more than book value. So what is keeping you.

<unk> got a long history your bankers have to believe that your money. Good they've known you for a long time, if they don't then get better bankers why arent you.

Ross Taylor: Putting a little debt on the balance sheet and taking advantage of the severe dislocation in front of what should be a rocket ship in 'twenty five.

Ross Taylor: Well, we talk about it every board meeting and the possibility of buying stock back right now as we mentioned, we really pushing trying to keep positive cash.

Ross Taylor: And reduce the inventory to do that.

Ross Taylor: And once we get to a position where our cash flow positive. We will certainly look at the possibility of buying stock.

Ross Taylor: There were some one-time items in that, but let's call it $1.40. You're trading at $10 here, $10, which is less than what the book value is. And I have to believe you think this company is worth more than book value. So what is keeping you?

Ross Taylor: You have some idea when we sold our FTE in 2011, we bought $65 million with the stack back and every time, we bought the stock back the price of the stock would go down.

Edward J. Richardson: I mean, you've got a long history. Your bankers have to believe that your money is good. They've known you for a long time. If they don't, then get better bankers. Why aren't you?

So the investment people were looking at the value of the company on cash only.

Ross Taylor: We achieved was to drive the price of the stock down.

Edward J. Richardson: Putting a little debt on the balance sheet and taking advantage of the severe dislocation in front of what should be a rocket ship in 25. Well, we talk about it every board meeting the possibility of buying stock back right now. As we mentioned, we are really pushing to keep positive cash and reduce the inventory to do that. And, you know, once we get to a position where cash flow is positive, we'll certainly look at the possibility of buying stock. To give you some idea, when we sold our FPD in 2011, we bought $65 million worth of stock back. And every time we bought the stock back, the price of the stock would go down.

Ross Taylor: We don't have a very good experience on buying stock back.

Speaker Change: Well I hate to tell you, but I think was Edison made that famous quote about how many times have failed is there any light bulb any kept trying I mean, the idea that it didnt work in the past to me.

Speaker Change: I mean, it just honestly if you hear a southern THAAD, which can be banging my head on the desk. The fact that it didnt work youre not that business you have much more of a broader base of business you have a lot more growth opportunities if you're bored can't see that you are a different company today than you were then and if you can't yourselves see it then we need a different.

Speaker Change: Board, we need to bolt, who actually has some vision that has a little bit of courage.

Edward J. Richardson: So the investment people were looking at the value of the company in cash only, and all we achieved was to drive the price of the stock down. You know, we don't have a very good experience with buying stock. Well, I hate to tell you, but Edison made that famous score about how many times he failed in getting the light bulb. And he kept trying.

Speaker Change: I think we brought Warren Buffett into one of your board meetings.

Next year you guys on how you are literally letting a golden opportunity go by and what happened in the past.

Speaker Change: That type of thing.

Speaker Change: That doesn't advance progress that stifles.

Ross Taylor: I mean, the idea that it didn't work in the past. To me, I mean, just honestly, if you hear a sudden thud, it's me banging my head on the desk. The fact that it didn't work; you're not that business. You have much more; you have a broader base of business. You have a lot more growth opportunities. If your board can't see that you're a different company today than you were then, and if you can't yourself see it, then we need a different board. We need a board who actually has some vision and has a little bit of courage. I mean, I think we should have brought Warren Buffett into one of your board meetings. He would lecture you guys on how you're literally letting a golden opportunity go by.

Speaker Change: And I've talked to you we know each of Europe very bright man you know better than I think that's something that's happened in the past under a different collection of holders in a different business environment with a different company is an effective measure of what you are today and what you should be doing today.

Speaker Change: Right certainly appreciate your opinion.

Speaker Change: Okay.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of Joseph marriages from sovereign investments.

Joseph Marriages: Good morning. Thank you for taking my question I was very.

Joseph Marriages: We are interested in our press release from last month.

Ross Taylor: And what happened in the past... That's the type of thing that doesn't advance progress, that stifles it, and you know, I've talked to you, we know each other, you're a very bright man, you know better than to think that something that happened in the past under a different collection of holders in a different business environment with a different company is an effective measure of what you are today and what you should be doing Well, we certainly appreciate your opinion. Thank you.

Joseph Marriages: When you signed that global distribution.

Joseph Marriages: Ideal power.

Joseph Marriages: And I guess my key question here is do we have any plans to develop our proprietary products.

Joseph Marriages: The bi directional.

Joseph Marriages: Technology.

Speaker Change: Absolutely we have.

Speaker Change: Two calls a months specific to that and.

Speaker Change: And Thats really fits right into the model that we've built here and there.

Speaker Change: I came back we sign.

Speaker Change: Technology partners, who have some disruptive technology that is focused on our two key markets, which is power management and.

Joseph Nergis: One moment for our next question. Our next question comes from the line of Joseph Nergis from Segrin Investments. Good morning.

Speaker Change: In RF and ideal power does that all that they have disruptive technology, it's unique or exclusive we're global and we're already talking to them about a couple of other products for one of our designs that we're looking at.

Gregory J. Peloquin: Thank you for taking my question. I was very interested in a press release from last month that signed that global distribution agreement with ideal power. And I guess my key question here is, do we have any plans... around their bi-directional wave technology? Absolutely.

Speaker Change: So absolutely there'll be both.

Designing and their components into our suppliers.

Speaker Change: A lot of our battery manufacturers could use this technology for their modules, obviously into our customers and then to use it internally.

Gregory J. Peloquin: We have two calls a month specific to that. And that's really, it fits right into the model that we've built here when, when I came back, we signed technology partners who have some disruptive technology that is focused on our two key markets, which are power management and RF, and ideal power does that all because they have disruptive technology. It's unique.

Speaker Change: For our engineered solutions and there is a couple of products that we're working on right now that I can't announce by any means at this point, but we will absolutely be using ideal power for that and they've been great. We.

Speaker Change: Have a great engineering relationship already.

Speaker Change: That is exactly what we do.

Gregory J. Peloquin: We're exclusive. We're global. And we're already talking to them about a couple of their products for one of our designs that we're looking at. So, absolutely. They'll be designing in their components into our suppliers. A lot of our battery manufacturers could use this technology for their modules, obviously, for our customers, and then use it internally for our engineered solutions. And there's a couple of products that we're working on right now that I can't announce by any means at this point, but we'll absolutely be using ideal power for that. And they've been great.

Speaker Change: When we when you see a press release with the <unk>.

Speaker Change: Company like this that has a disruptive technology, it's threefold, it's to design it into our competitors.

Speaker Change: Our suppliers design it into our customers and then also use it for our engineered solutions opportunities as they come to fruition.

Well again.

Speaker Change: Great I mean the application.

Speaker Change: Yes.

<unk> technology seem to be very widespread I'm thinking of.

Speaker Change: We have.

Gregory J. Peloquin: We have a great engineering relationship already. That is exactly what we do when we, when you see a press release with a company like this that has disruptive technology, it's threefold. It's to design it into our competitors. I mean, our suppliers design it into our customers and then also use it for our engineered solutions opportunities as they come to fruition. Well, again, it's great.

Speaker Change: Our <unk> product that we offer <unk> 3000.

Speaker Change: I'm just wondering.

Speaker Change: Can we entered against some pretty big.

Competitors in these markets, but do you think we can successfully enter let's say the data center market.

Speaker Change: <unk> product or something similar to that.

Speaker Change: Yes, yes, the <unk> product in that technology.

Gregory J. Peloquin: I mean, the applications of their technology seem to be very widespread, and I'm thinking of... We have a UPS product, the Ultra UPS 3000, and I'm just wondering whether we can enter against these are some pretty big companies and Barry Mendel, Jens Ruppert, Richardson Electronics Ltd. Yes, yes, the UPS product net technology can be used in so many applications. I will tell you, it is a major, major program. It's an inverter application for one of our key customers that we will be using Ideal Power for. And again, it's a new relationship.

Speaker Change: Can be used in so many applications I will tell you. It is a major major program.

Speaker Change: And Burger application.

Speaker Change: One of our key customers that we will be using ideal power for and again, it's a new relationship. It's a few months, but although we've talked to them and we know the people there it's a small.

Speaker Change: Incestuous market. So I've worked with many of the people that are there in other capacities over the years.

Speaker Change: The answer to your question is yes.

Gregory J. Peloquin: It's been a few months, but although we've talked to them and we know the people there, it's a small and shady market. So I've worked with many of the people that are there in other capacities over the years. But, the answer to your question is yes, and specifically, there is one right now that's a major program for an inverter application, an inverter module, that would be the product that we're using.

Speaker Change: Specifically there is one right now thats a major program for an inverter application that we're gonna module that this will be the product that we're using and we think.

Speaker Change: With their technology.

It will separate the spec sheet from anything Thats out there today so yes.

Speaker Change: Yes.

Speaker Change: Excited about hydropower and also all of our technology partners. That's the process we go through.

Gregory J. Peloquin: And we think, with their technology, it'll separate the spec sheet from anything that's out there today. Yeah, we're excited about IU Power and also all of our technology partners. That's the process we go through. Well, I look forward to seeing what you guys come up with in the next. Thank you.

Speaker Change: Yes.

Speaker Change: I look forward to seeing what you guys come up within the next step.

Speaker Change: Several months. Thank you thanks again for the.

Speaker Change: Great. Thanks for your question.

Thank you.

Speaker Change: One one moment for our next question.

Gregory J. Peloquin: Thank you. One moment for our next question. Our next question comes from the line of Barry Mendel from Mendel Money Management. Yeah, a follow-up on the Progress Rail and Wabtex. What's the ASP on the, and the mod, and the starter modules?

Speaker Change: Our next question comes from the line of Barry Mendel from Mendel money management.

Barry M. Mendel: Yes Hello.

Barry M. Mendel: Up on the progress rail and Bob Tech.

Barry M. Mendel: What's the ASC on the.

Barry M. Mendel: Yeah, we have NDAs with them. I can't share our cost or our resale to those applications or even those types of customers. Too many competitors out there. Okay, and in terms of ideal power, I mean, how big or how important could that be for you? Valor amount you could put on there, and Andrew, isn't it somewhat of a distribution Agreement as well?

Barry M. Mendel: And the model started modules with them.

Robert J. Ben: Yes, we have NBA is with them I can't hear or our cost of our <unk> sales to those apps.

Robert J. Ben: Applications are even on those type of customers.

Speaker Change: Too many competitors out there listening.

Speaker Change: Okay.

Speaker Change: And in terms of.

Speaker Change: Ideal power.

Speaker Change: Hey, good how important could that be for you.

Hey.

Dollar amount you can put on there.

Speaker Change: And actually.

Speaker Change: Somewhat of a distribution agreement as well.

Gregory J. Peloquin: Yeah, it's both, you know; it's all based on the number of new products they introduce. Right now, their portfolio is very limited. They are developing a module, and they have a couple of discrete devices. But if you just look at the markets that they are going into, it's millions of dollars. But, you know, I've had a lot of experience with technology partners and this type of go-to-market strategy. And, you know, if one of these programs that we're doing from an engineering solutions point of view, it's millions, right? From a discrete point of view, it's a pure MPI process, you know, a new product introduction process. But with our global capabilities, we're, I feel, the best in the world at bringing technology companies to market as they invest in technology, and we have the infrastructure to bring it to market. But it's millions of dollars.

Speaker Change: Yeah, it's both it's all based on.

Speaker Change: The number of new products. They introduced right now the portfolio is very limited.

They are developing a module and they have a couple of discrete devices.

Speaker Change: But if you just look at the markets that they go into its millions of dollars but.

Speaker Change: I've had a lot of experience with technology partners in this type of go to market strategy.

Speaker Change: If one of these programs that we're doing from an engineered solutions point of view its million dollars right from a discrete point of view, it's Pierre <unk>.

Speaker Change: <unk> process, new product introduction process with our global capabilities.

Speaker Change: I feel the best in the world of bringing technology companies to get them to market as they invest in technology, and we have the infrastructure to bring it to market but.

Gregory J. Peloquin: I can't come up with a number, but I've seen companies like this that we started with that became Corvo, and we know how big they are. The sky's the limit, but the thing that excites us about this is that the markets that they're developing products for us are growth markets. You know, I know it's inverters and industrial, but it's great for green energy as people need to reduce the input on their emissions. So, I can't put a dollar amount on it, but it's millions of dollars. It could be one, one, one product that we designed internally, or one major electric vehicle charging station that we end up designing the product. Yeah, I know. I talked to them yesterday, actually, and they spoke highly of what you're doing for them already. Yeah, we, like I mentioned before, you know, we, I don't have a lot of attributes. One of them is never impatience.

Speaker Change: It's millions of dollars I cant come up with a number.

But I've seen companies like this that we started with.

Speaker Change: That became <unk> and we know how big they are.

All right guys limit but.

Speaker Change: The thing that excites us about this is the markets that they are developing product for us our growth markets.

Speaker Change: <unk>.

Speaker Change: I know, it's inverters in industrial but.

Speaker Change: Great for these green energy as people need to reduce the.

Speaker Change: Yes.

Input on their <unk>.

Speaker Change: Emissions so.

Speaker Change: I can't put a dollar amount on it but it's millions of dollars. It could be 111 product that we design internally or one major.

Speaker Change: Electric vehicle charging station that we end up designing their product into.

Yes, I know.

Talked to them yesterday actually and they they spoke highly of what youre doing for them already.

Speaker Change: Yes.

Speaker Change: And before we.

Speaker Change: I don't have a lot of attributes one of 'em, zimbra and patience and Dave.

Gregory J. Peloquin: And, uh, day one, we, uh, we trained the global, uh, field sales engineers. We trained our design engineers. Uh, and we immediately, within 24 hours, um, had their product in front of customers. One of the things I'll just add on the call, which is unique to us. And so I want to say, every one of our customers, we can assign application codes to, so up to five. And so when a customer like Ideal Power comes out with a new product for a specific application, our global field sales engineers can sort their entire customer base and identify anyone who's ever built an inverter or electric charging station, and that product and those samples and those sales tools get to that customer within, I always say within 24 hours.

Speaker Change: We train the global field sales engineers, we trained our design engineers.

Speaker Change: And we immediately within 24 hours.

<unk> had their products in front of customers one of the things I would just add on the call, which is unique to us and so I want to say it every one of our customers.

Speaker Change: Can assign application towards do so up to five and so when a customer like ideal power. It comes out with a new product for a specific application our global field sales engineers can sort their entire customer base and identify anyone who has ever built in and Burger or electric charging station and that product in those samples and those sales tools get to that.

Speaker Change: Customer within I think within 24 hours.

Speaker Change: So yes, we're excited about ideal power and again like I mentioned before.

Gregory J. Peloquin: Um, so, uh, yeah, we're excited about Ideal Power. And again, like I mentioned before, we know the people there cause it's, uh, a small and concessioners market.

Speaker Change: The people there because it's a.

Speaker Change: Small and et cetera was market great.

Speaker Change: Great.

Speaker Change: Thanks.

Speaker Change: You bet.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from the line of David Schneider.

Gregory J. Peloquin: Great. Thanks. Thank you. One moment for our next question. Our next question comes from David Schneider. Hi, hi guys. First of all, I want to give an A plus to Ross Taylor.

David Schneider: Hi, Hi, guys.

David Schneider: First of all.

David Schneider: I want to give an a plus to Ross Taylor.

David Schneider: Yes.

David Schneider: The nail ran in the head, but actually left out a few things, but there's no need to go over that territory again. I'm wondering, you know, the stock has, over the past years, we've gone up and down because of the cyclicality of the semiconductor cap equipment business. Is it possible that

David Schneider: Alright.

David Schneider: Neil ran ahead, but actually left out a few things, but there's no need to go over that territory again.

David Schneider: <unk>.

Speaker Change: I am wondering.

<unk> has over the past.

Speaker Change: Years.

Speaker Change: You have gone up and down because of the cyclicality of the semiconductor capital equipment business.

Gregory J. Peloquin: Things like the relationship with ideal power can smooth some of that out. And, um, You know, your company's being valued as literally a no growth company at this point. Could the new product applications from Ideal Power change the trajectory and maybe the perception of your company so that maybe you could become valued as a growth company again? I think that the model that we have with Ideal Power and the list of other technology partners.

Speaker Change: Is it possible that.

Speaker Change: Things like the relationship with ideal power consuming some of that out.

Speaker Change: And.

It's being your company is being valued as literally a no growth company at this point.

Speaker Change: The new product applications.

Speaker Change: Ideal power.

Speaker Change: Change the trajectory and maybe the perception of your company. So that maybe you could be valued as a growth company again.

Speaker Change: I think that.

Speaker Change: The <unk>.

Speaker Change: Model that we have with ideal power and the list of other technology partners and you've seen obviously as this business developed.

Gregory J. Peloquin: And you've seen, obviously, as this business has developed, press releases on the people we're signing, I think, as they apply to engineered solutions. And, you know, you've heard about all the engineered solutions opportunities. And I think, as I mentioned before the call, reducing new products, Suzlon, Nordic, SEMVI, and SSB, but all that together, absolutely, it will subsidize the, you know, roller coaster ride that the semiconductor manufacturing equipment industry has had for 20 years. We know what's coming next.

Speaker Change: Press releases on the people we are signing I think as they apply to engineered solutions and you've heard about all the engineered solutions opportunities and I think as I mentioned.

Yes.

Before the call, reducing new products <unk>.

Speaker Change: <unk> Nordic semi and SSB, but all of that together absolutely it will subsidize the.

Speaker Change: The.

Speaker Change: Rollercoaster ride that the semiconductor manufacturing equipment industry has had for 20 years, we know what's coming and some are higher than others, but that's kind of the goal a little bit.

Gregory J. Peloquin: Some are higher than others, but that's kind of the goal a little bit, that we're doing this for the profitability and growth and the stock price of the company, but it does help subsidize the rollercoaster ride that we've all experienced for 20, 30 years in the semiconductor wafer fab market. So yes, Ideal will be part of that, but that's the whole list of technology partners and new products in these new high-growth markets. Green Energy and Power Management, etc.

Speaker Change: That where we're doing this for the profitability and growth in the stock price of the company, but it does help subsidize the roller coaster ride that we've all experienced for 2030 years of the semiconductor wafer fab market. So, yes idea will be part of that but.

Speaker Change: The whole list of technology partners in the new products in these new high growth markets like Green energy and power management.

Gregory J. Peloquin: So, And we've done it, obviously. You know, a lot of this business, in terms of green energy, in the past two and a half years, you know, it's $40 million, right, a year or so, that alone subsidized a lot of it. But the downturn in the past year has been so severe, just like the upturn was so severe in a positive way in 2022, just couldn't make up all of it. And that's why you're seeing flat to down in overall sales.

Speaker Change: Et cetera. So.

That's the way we've done it obviously.

Allowed this business sort of in terms of green energy in the past two and a half years.

Speaker Change: $40 million right.

Speaker Change: A year or so.

Speaker Change: That alone subsidize a lot of it but the downturn the past year.

Speaker Change: It's been so severe just like the upturn was so severe in a positive way in 2023 2022.

Speaker Change: Just couldn't make up all of it and Thats why youre seeing.

Speaker Change: Flat to down in overall sales.

Edward J. Richardson: Thank you. At this time, I would now like to turn the conference back over to Ed Richardson for closing remarks. Well, thank you again for joining us today. We appreciate your investment and interest in Richardson Electronics. We look forward to our ongoing discussions and sharing our fiscal 2024 with you in July. Please don't hesitate to give us a call at any time. We're happy to talk to you directly if you want to set up an appointment.

Speaker Change: Thank you at this time I would now like to turn the conference back over to Ed Richardson for closing remarks.

Edward J. Richardson: Well. Thank you again for joining US today, we appreciate your investment and interest in Richardson electronics, we look forward to our ongoing discussions and sharing our fiscal 2024 with you in July.

Edward J. Richardson: Please don't hesitate to give us a call at anytime we're happy to talk to you directly if you want to set up an appointment.

Speaker Change: Thanks very much.

Unknown Executive: Thanks very much. This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: Okay.

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Okay.

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Speaker Change: Yes.

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Speaker Change: Okay.

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Speaker Change: Okay.

Speaker Change: Sure.