Q4 2024 Richardson Electronics Ltd Earnings Call

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Operator: Ladies and gentlemen, thank you for standing by. Welcome to Richardson's Electronics Earnings Call for the fourth quarter of fiscal year 2024. At this time, all participants are in a listen-only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Ladies and gentlemen, thank you for standing by welcome Chip Richardson Electronics earnings call for the fourth quarter of fiscal year 'twenty 'twenty four.

Speaker Change: Time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you would need to press star one on your telephone.

Speaker Change: Didn't hear an automated message it bites in your hand, it's true.

I would draw your question. Please press star one wanted again.

Please be advised that today's conference is being recorded.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to your speaker today, Ed Richardson, Chief Executive Officer. Please go ahead.

I'd like now to turn the conference over to your Speaker today, Ed Richardson.

Speaker Change: Exactly that's Sir please go ahead.

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

Speaker Change: Joining me today are Robert Ben Chief Financial Officer, Wendy did Dell, Chief operating Officer, and General manager for Richardson healthcare.

Speaker Change: Greg powered carton general manager of our power and microwave technologies group.

Which includes Green energy solutions, and Yen's Rupert General manager canvas.

As a reminder, this call's being recorded and will be available for playback.

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

I'd also like to remind you that we'll be making forward looking statements are based on current expectations and involve risks and uncertainties.

Speaker Change: Therefore, actual results could be materially different.

Edward J. Richardson: Please refer to our press release and SEC filings for an explanation of our risk factor. Fiscal 2024 was a difficult year for Richardson Electronics due to challenging conditions within our semiconductor wafer fab market and program delays across several of our green energy solutions opportunities. Economic uncertainties and higher interest rates also contributed to lower sales in certain segments of our business.

Speaker Change: Please refer to our press release and SEC filings for an explanation of our risk factors.

Speaker Change: Fiscal 2024, it was a difficult year for Richardson electronics due to challenging conditions within our semiconductor wafer fab market.

And program delays across several of our Green energy solutions opportunities.

Speaker Change: Economic uncertainties and higher interest rates also contributed to lower sales in certain segments of our business.

Edward J. Richardson: While these trends impacted sales and profitability during the year, our teams focused on improving gross margins, reducing inventory levels, strengthening our strong balance sheet, and investing in our long-term strategic growth opportunities. In fact, the fourth quarter marked the second consecutive quarter where we experienced a reduction in inventory and the first year over year decline in inventory since fiscal 2017. In addition, the company generated $7.2 million in operating cash flow during the fourth quarter, and we ended the year with no debt and $24.3 million in cash and cash equivalents.

Speaker Change: While these trends impacted sales and profitability during the year.

Speaker Change: <unk> team is focused on improving gross margins, reducing inventory levels strengthening our strong balance sheet and investing in our long term strategic growth opportunities.

Speaker Change: The fourth quarter marked our second consecutive quarter.

Speaker Change: Where we experienced a reduction in inventory in the first year over year decline in inventory since fiscal 2017.

Speaker Change: In addition, the company generated $7 2 million in operating cash flow during the fourth quarter and we ended the year with no debt and $24 $3 million in cash and cash equivalents.

Edward J. Richardson: While it was a tough year for sales growth, our business remained strong, and I'm pleased with the direction we're headed. The strategies we're pursuing include increased engineered solutions, leveraging our distribution partners and global customer base, and supporting opportunities such as green energy. During fiscal 2024, key successes included achieving a significant milestone in the number of wind turbine generator modules sold, expanding our global customer base and green energy solutions market, and the launch of starter modules used to replace lead acid batteries and locomotives. In fact, within our GES business, we now offer multiple solutions for lead acid battery replacements and several OEM turbines compared to the Ultra 3000 elastomer.

Speaker Change: Well it was a tough year for sales growth our business remains strong and I'm pleased with the direction we're headed.

Speaker Change: The strategies. We are pursuing include increased engineered solutions, leveraging our distribution partners and global customer base and supporting opportunities such as Green energy.

Speaker Change: During fiscal 'twenty 'twenty four key successes included achieving a significant milestone and the number of wind turbine generator module. So expansion of our global customer base in Green energy solutions market and the launch of starter modules used to replace lead acid batteries and locomotives.

Speaker Change: In fact within our Ges business, we now offer multiple solutions for a lead acid battery replacements, and several OEM turbines compared to the ultra 3000 last year.

Speaker Change: Greg Wendy <unk>, who will provide more details on our business unit performance, including an update on our growth strategies.

Greg Wendy: New product development and program wins and expanded customer relationships.

Edward J. Richardson: Greg, Wendy, and Jens will provide more details on our business unit performance, including an update on our growth strategy: New Product Development, Program Wins, and Expanding Customer Relationships. But first, I will turn the call over to Bob Ben, our Chief Financial Officer, to review our fourth quarter and fiscal year 2024 financial performance. Thank you, Ed, and good morning.

Greg Wendy: First I will turn the call over to Bob <unk>, Our Chief Financial Officer to review, our fourth quarter and fiscal year 2024 financial performance.

Robert J. Ben: I will review our financial results for our fourth quarter of fiscal year 2024, followed by a review of our cash position. In addition, please note that I will be discussing non-GAAP financial measures. A reconciliation of non-GAAP items to the comparable GAAP measures is available in our fourth quarter fiscal year 2024 press release that was issued yesterday. Net sales for the fourth quarter of fiscal 2024 were $47.4 million, compared to net sales of $58.8 million in the prior year's fourth quarter.

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

Speaker Change: In addition, please note that I will be discussing non-GAAP financial measures.

Speaker Change: A reconciliation of non-GAAP items to the comparable GAAP measures is available in our fourth quarter fiscal year 2024 press release that was issued yesterday.

Robert J. Ben: PMT sales decreased by 1.0 million from last year's fourth quarter, primarily due to lower sales of RF and microwave products. Sales for GES declined $10.6 million from last year's fourth quarter, which included approximately $11 million of EV locomotive battery money that did not recur in fiscal 2024. Canvas sales decreased by $0.5 million, primarily due to economic conditions impacting medical OEM sales in North America.

Speaker Change: Net sales for the fourth quarter of fiscal 2024 were $47 4 million.

Speaker Change: Compared to net sales of $58 8 million in the prior year's fourth quarter.

Speaker Change: PMT sales decreased by 1.1 million from last year's fourth quarter, primarily due to lower sales of RF and microwave products.

Speaker Change: Sales for Ges declined $10 6 million from last year's fourth quarter, which included approximately $11 million of EV locomotive battery modules that did not recur in fiscal 2024.

Bob: Canvas sales decreased by 0.5 million, primarily due to economic conditions impacting medical OEM sales in North America.

Robert J. Ben: Richardson healthcare sales increased by $0.7 million, or 24.3%, compared to the fourth quarter of fiscal 2023 as a result of higher backlog. Backlog totaled $147.8 million at the end of the fourth quarter of fiscal 2024 versus $147.7 million at the end of the third quarter of fiscal 2024. The sequential increase was in GES, partially offset by slight decreases, primarily in PMT and Canvas, which remain healthy GES's backlog of $42.3 million increased by $5.5 million since the third quarter of fiscal 2024.

Bob: Richardson healthcare sales increased by zero point $7 million or 24, 3% compared to the fourth quarter of fiscal 2023 as.

Bob: As a result of higher systems, Cte tube and parts demand.

Bob: Backlog totaled $147 8 million at the end of the fourth quarter fiscal 2024 versus 147 7 million at the end of the third quarter of fiscal 2024.

Bob: The sequential increase was in Ges, partially offset by slight decreases primarily in PMT and canvas, which remain healthy.

Bob: Ges backlog of $42 3 million increased by $5 5 million since the third quarter of fiscal 2024.

Robert J. Ben: Consolidated gross margin for the fourth quarter was 31.1% of net sales, a significant improvement compared to 27.9% in last year. All of our business units had higher gross margins in the quarter versus the prior year. PMT's gross margin increased to 31.1% from 29.0% due to a favorable product. GES gross margin increased in the fourth quarter of fiscal 2024 to 25.5% from 23.4% in the prior year's fourth quarter due to product. Healthcare's gross margin increased to 32.5% in the fourth quarter of fiscal 2024, compared to 23.7% in the prior year's forecast, as a result of an improved product mix and lower scrap cost.

Bob: Consolidated gross margin for the fourth quarter was 31, 1% of net sales a significant improvement compared to 27, 9% in last year's fourth quarter.

Bob: All of our business units at higher gross margin in the quarter versus prior year.

Bob: Pmt's gross margin increased to 31, 1% from 29.8% due to a favorable product mix.

Bob: Ges gross margin increased in the fourth quarter of fiscal 2024 to 25, 5% from 23, 4% in the prior year's fourth quarter due to product mix.

Bob: Healthcare's gross margin increased to 32, 5% in the fourth quarter of fiscal 2024.

Bob: Compared to 23, 7% in the prior year's fourth quarter as a result of an improved product mix and lower scrap costs.

Robert J. Ben: Canvas's gross margin increased in the fourth quarter of fiscal 2024 to 33.5% from 32.9% in the prior years because of the product. Operating expenses were $14.8 million for the fourth quarter of fiscal 2024 compared to $15.0 million in the fourth quarter of fiscal 2023. The decrease in operating expenses resulted from lower incentive expenses, partially offset by higher R&D.

Bob: Canvas as gross margin increased in the fourth quarter of fiscal 2024 to 33, 5% from 32, 9% in the prior year's fourth quarter because of product mix.

Bob: Operating expenses were $14 8 million for the fourth quarter of fiscal 2024 compared to 15.1 million in the fourth quarter of fiscal 2023.

Bob: The decrease in operating expenses resulted from lower incentives expense partially.

Bob: Offset by higher R&D expense.

Robert J. Ben: The company reported an operating loss of $0.1 million for the fourth quarter of fiscal 2024 versus operating income of $1.4 million in the fourth quarter of last year. Other expense for the fourth quarter of fiscal 2024, including interest income and foreign exchange, was less than $0.1 million, compared to other income of $0.1 million in the fourth quarter of fiscal 2023. The income tax benefit was less than $0.1 million, and the non-GAAP income tax benefit was $0.4 million, for the fourth quarter of fiscal 2024, vs. an income tax benefit of $2.6 million and non-GAAP income tax benefit of $0.2 million in the prior year.

Bob: The company reported an operating loss of 0.1 million for the fourth quarter of fiscal 2024 versus operating income of $1 4 million in the fourth quarter of last year.

Bob: Other expense for the fourth quarter of fiscal 2024, including interest income and foreign exchange was less than 0.1 million.

Bob: Compared to other income of 0.1 million in the fourth quarter of fiscal 2023.

Bob: Income tax benefit was less than 0.1 million and non-GAAP income tax benefit was <unk> 4 million for the fourth quarter of fiscal 2024.

Bob: <unk> and income tax benefit of $2 6 million and non-GAAP income tax benefit of <unk> 2 million in the prior year's fourth quarter.

Robert J. Ben: The fourth quarter of fiscal 2024 included $0.4 million for an R&D tax credit for the current fiscal year and a one-time total credit of $0.5 million for fiscal years 2020 through 2023. In addition, the fourth quarter of fiscal 2024 included $0.9 million in income tax expense for the establishment of an Illinois State Tax Valuation Allowance related to the limitation of NOL. Net loss for the fourth quarter of fiscal 2024 was $0.1 million, and non-GAAP net income was $0.3 million, compared to net income of $4.1 million and non-GAAP net income of $1.8 million in the fourth quarter of fiscal 2023.

Bob: The fourth quarter of fiscal 2024 included <unk> 4 million for an R&D tax credit for the current fiscal year and a one time total credit of <unk> 5 million for fiscal years 2020 through 2023.

Bob: In addition, the fourth quarter of fiscal 2024 included <unk> 9 million and an income tax expense for.

Bob: For the establishment of an Illinois state tax valuation allowance related to the limitation of Nols.

Bob: Net loss for the fourth quarter of fiscal 2024 was 0.1 million.

Bob: non-GAAP net income was <unk> 3 million compared to net income of $4 1 million and non-GAAP net income of $1 8 million in the fourth quarter of fiscal 2023.

Bob: Loss per common share diluted was <unk>.

Bob: Per share and non-GAAP earnings per common share diluted for <unk> in the fourth quarter of fiscal 2024 compared to earnings per common share diluted of <unk> 27.

Bob: And non-GAAP earnings per common share diluted of 11.

Bob: In the fourth quarter of fiscal 2023.

Robert J. Ben: Loss per common share diluted was one cent per share and non-GAAP earnings per common share diluted were $0.02 in the fourth quarter of fiscal 2024 compared to earnings per common share diluted of $0.27 and non-GAAP earnings per common share diluted of $0.11 in the fourth quarter of fiscal 2023. Turning to a review of the results for fiscal year 2024, on a year-to-date basis. Net sales for fiscal year 2024 were $196.5 million, a decrease from $262.7 million in fiscal year 2023. Net sales decreased by $35.6 million for PM.

Bob: Turning to a review of the results for fiscal year 2024.

Bob: On a year to date basis net sales for fiscal year 2024 were $196 5 million a decrease from $262 7 million in fiscal year 2023.

Bob: Net sales decreased by $35 6 million for PMT $24 4 million for Ges.

Robert J. Ben: $24.4 million for GES and $6.9 million for CANVAS, while sales increased by $0.7 million for Richardson Healthcare. Gross margin for fiscal 2024 was 30.5% of its sales compared to 31.9% during fiscal 2023, primarily because of product mix and manufacturing under absorption in PMT. Product Mix and GES, and Increased Manufacturing Under Absorption in Healthcare, partially offset by a favorable product mix and lower freight costs for Canva. Operating expenses were $59.5 million for the fiscal year, which represented an increase of $0.8 million from last fiscal year. The increase in operating expenses resulted from higher R&D and salaries expenses, partially offset by lower incentives.

Bob: And $6 9 million for canvas, while sales increased by 0.7 million for Richardson healthcare.

Bob: Gross margin for fiscal 2024 was 35% of net sales compared to 31, 9% during fiscal 2023, primarily because of product mix and manufacturing under absorption in PMT.

Bob: Product mix in Ges.

Bob: And increased manufacturing under absorption and healthcare, partially offset by a favorable product mix and lower freight costs for canvas.

Bob: Operating expenses were $59 5 million for the fiscal year, which represented an increase of zero point $8 million from last fiscal year.

Bob: The increase in operating expenses resulted from higher R&D in salaries expenses, partially offset by lower incentives.

Robert J. Ben: Operating income for fiscal year 2024 was $0.3 million compared to an operating income of $25 million for fiscal year 2023. Other Expenses for Fiscal 2020, Unknown Executive, Jens Ruppert; Income tax expense was $0.1 million, and non-GAAP income tax benefit was $0.3 million for fiscal 2020. The income tax expense of $0.1 million for fiscal 2024 resulted from the $0.9 million establishment of an Illinois state tax valuation allowance.

Bob: Operating income for fiscal year, 2024, zero point $3 million compared to an operating income of 25 million for fiscal year 2023.

Bob: Other expenses for fiscal 2024, including interest income and foreign exchange were zero point $2 million as compared to other income of less than 0.1 million for fiscal 2023.

Bob: Income tax expense was <unk> 1 million and non-GAAP income tax benefit was <unk> 3 million for fiscal 2020 for.

Bob: The income tax expense of <unk> 1 million for fiscal 2024 resulted from the 0.9 million establishment of an Illinois state tax valuation allowance.

Robert J. Ben: Offset by both the current year R&D tax credit of $0.4 million and the prior year's R&D tax credits of $0.5 million. The income tax expense was $2.7 million, and the non-GAAP income tax expense was $5.0 million, for fiscal 2023. Net income for fiscal 2024 was $0.1 million, and non-GAAP net income was $0.5 million versus net income of $22.3 million and non-GAAP net income of $20.0 million during fiscal 2020. Earnings per common share diluted were 0 cents and non-GAAP earnings per common share diluted, [inaudible] for fiscal 2024 compared to earnings per common share diluted of $1.55 and non-GAAP earnings per common share diluted of $1.39 for fiscal 2023.

Bob: Offsetting by both current year R&D tax credit of <unk> 4 million in prior year's R&D tax credits of zero point $5 million.

Bob: The income tax expense was $2 7 million and non-GAAP income tax expense was five 9 million for fiscal 2023.

Bob: Net income for fiscal 2024 was <unk> 1 million.

Bob: And non-GAAP net income was <unk> 5 million versus net income of $22 3 million.

Bob: non-GAAP net income of $21 million during fiscal 2023.

Bob: Earnings per common share diluted where zero cents and non-GAAP earnings per common share diluted <unk>.

Bob: For fiscal 2024 compared to earnings per common share diluted of $1 55.

Bob: And non-GAAP earnings per common share diluted of $1 39.

Bob: For fiscal 2023.

Robert J. Ben: Moving to a review of our cash position, cash and cash equivalents at the end of fiscal 2024 were $24.3 million, compared to $18.9 million at the end of the third quarter of fiscal 2024 and $25.0 million at the end of fiscal 2023. Cash Generated, 5.4 million in the fourth quarter of fiscal 2024, was primarily due to decreases in accounts receivable and inventory. Partially offset by lower accounts payable. U.S. Cash and Cash Equivalent were $6.5 million at the end of fiscal 2024 versus $5.2 million at the end of the third quarter of fiscal 2024 and $7.6 million at the end of fiscal 2023.

Bob: Moving to a review of our cash position cash and cash equivalents at the end of fiscal 2024.

Bob: Were $24 3 million compared to $18 9 million at the end of the third quarter of fiscal 2024, and 25 point home mailing at the end of fiscal 2023.

Bob: Cash generated.

Bob: A $5 4 million in the fourth quarter of fiscal 2024 was primarily due to decreases in accounts receivable and inventory.

Bob: Partially offset by lower accounts payable.

Bob: U S cash and cash equivalents.

Bob: Were $6 5 million.

Bob: At the end of fiscal 2024 versus $5 2 million at.

Bob: At the end of the third quarter of fiscal 2024, and $7 6 million at the end of fiscal 2023.

Gregory J. Peloquin: Capital expenditures of $1 million in the fourth quarter of fiscal 2024 were primarily related to our facilities and IT services, versus $2.4 million in the fourth quarter of fiscal year 2023. Total capital expenditures were $4.0 million in fiscal 2020, as compared to $7.4 million in fiscal 2023. We paid $0.8 million in cash dividends in the fourth quarter and a total of $3.4 million in fiscal year 2024. In addition, based on our current financial position, our Board of Directors declared a regular quarterly cash dividend of $0.06 per common share, which will be paid in the first quarter of fiscal 2025.

Bob: Capital expenditures of $1 million in the fourth quarter of fiscal 2024 were primarily related to our facilities and it systems.

Bob: Versus $2 4 million in the fourth quarter of fiscal year 2023.

Bob: Total capital expenditures were $4 8 million in fiscal 2024.

Bob: As compared to $7 4 million in fiscal 2023.

Bob: We paid zero point $8 million in cash dividends in the fourth quarter and a total of $3 4 million in fiscal year 2024.

Bob: In addition, based on our current financial position our board of directors declared a regular quarterly cash dividend of <unk> <unk> per common share.

Bob: Which will be paid in the first quarter of fiscal 2025.

Gregory J. Peloquin: As of the end of fiscal 2024, the company had no outstanding debt on its $30 million revolving line of credit with PNC Bank. 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.

Bob: As of the end of fiscal 2024, the company had no outstanding debt and a $30 million revolving line of credit with PNC Bank.

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

Gregory J. Peloquin: Well, our fiscal 2024 fourth-quarter results for both PMT and our GES strategic business units were challenging. However, we remain optimistic about the future, both short and long term. First, looking at GES, with bookings and backlog being a strong indicator of the health of a business, we were excited to see Q4 was our strongest booking quarter this fiscal year, growing our backlog 16% over Q3. In addition, our bookings in Q4 FY24 were up 70% versus Q4 FY23.

Greg Wendy: Thank you Bob and good morning, everyone.

Greg Wendy: Fiscal 2020 for fourth quarter results for both PMT and our Ges strategic business units. We are challenging we remain optimistic about the future both short and long term.

Greg Wendy: First looking at Ges with the bookings and backlog being a strong indicator of the health of our business. We were excited to see Q4 was our strongest booking quarter this fiscal year.

Greg Wendy: Growing our backlog, 16% over Q3.

Greg Wendy: In addition, our bookings in Q4, FY 'twenty four we're up 70% versus Q4 FY2023.

Gregory J. Peloquin: Strong bookings include sales to new customers for recently introduced products, including our UltraGen Starter Modules for locomotives and Pitch Energy Modules and new wind turbine platforms. The increase in bookings led to a higher backlog in GES during the fourth quarter and gives us confidence that Q1 FY25 will show sequential growth. In addition, I'm pleased to report that our gross margin in GES improved over the previous year. Looking at our results in more detail, after showing revenue growth in our green energy group in Q3, our revenue decreased to $4.7 million in the quarter.

Greg Wendy: <unk> bookings include sales to new customers for our recently introduced products, including our ultra Gen started modules for locomotives and pitch energy modules and new wind turbine platforms.

Greg Wendy: The increase in bookings led to a higher backlog in ges during the fourth quarter and gives us confidence that Q1, FY 'twenty five we'll show a sequential growth.

Greg Wendy: In addition, I'm pleased to report that our gross margin in Ges improved over the previous year.

Greg Wendy: Looking at our results in more detail after showing revenue growth in our Green Energy group in Q3, our revenue decreased to $4 7 million in the quarter.

Gregory J. Peloquin: We had a number of Q4 pushouts into Q1 FY25 that negatively impacted our shipments during the quarter. However, as we predicted, the second half of FY24 was up over 131%, with revenues of $16.2 million versus $7 million in the first half of the year. Our GS growth strategy is still somewhat in its infancy stage.

Greg Wendy: We had a number of Q4 push outs into Q1 FY 'twenty five.

Greg Wendy: <unk> impacted our shipments during the quarter.

Greg Wendy: However, as we predicted the second half of FY 'twenty four it was up over 131% with revenues of $16 2 million versus $7 million in the first half of the year.

Greg Wendy: Our <unk> growth strategy is still somewhat in its infancy stage and as our new products mature, we will see sales fluctuate from quarter to quarter on.

Gregory J. Peloquin: And as our new products mature, we'll see sales fluctuate from quarter to quarter. On the positive side, for FY24, we had sales of $23.2 million, with numerous new customers, products, and technology partners added throughout the year. The team continues to do a good job identifying customer requirements, establishing design and manufacturing capabilities, and launching beta site testing. In a short amount of time, we have designed numerous products, received several patents, and developed a growing list of key customers.

Greg Wendy: On the positive side for FY 'twenty four we had sales of $23 2 million with numerous new customers products and technology partners added throughout the year.

Greg Wendy: The team continues to do a good job identifying customer requirements established in design and manufacturing capabilities and launching beta site testing.

Greg Wendy: In a short amount of time, we are designing to numerous products receive several patents.

Greg Wendy: We developed a growing list of key customers.

Gregory J. Peloquin: All of this will help develop a more predictable quarterly revenue stream. Last year, GES benefited from several large projects, including prototype electric locomotive development and a large-scale rollout of pitch energy modules to replace lead-acid batteries with major owner-operators of GE wind turbines such as Nextera, Enel, and Enver Energy. In FY24, we saw market share grow with an agreement to outfit 1,000 diesel locomotives with our patent-pending starter modules. In addition, our pitch energy modules were selected by four new wind turbine platforms, including SUSELAN, SENVION, NORDEX, and SSB.

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

Speaker Change: Last year <unk> benefited from several large projects, including prototype electric locomotive development and large scale rollout of pitch energy modules to replace lead acid batteries with major owner operators of GE wind turbines, such as Nextera <unk> and <unk> energy.

Speaker Change: In FY 'twenty four we saw the market share growth with an agreement to outfit 1000 diesel locomotives with our patent pending starter module.

Greg Wendy: In addition, our pitch energy module as reflected by four new wind turbine platforms, including Suzanne send beyond Nordics and SSB.

Gregory J. Peloquin: We now have over 18 wind turbine owner-operators purchasing numerous products from us, and we are expanding globally with the rollout of the new wind turbine platforms in Europe, Latin America, and Southeast Asia. Our customers repeatedly tell us that we have maintained our market share for our core GES power management applications. Suggesting the slowdown in shipments in FY24 was primarily a timing issue. In fact, our customer pipeline and the number of opportunities continue to increase as we take advantage of significant energy transformation projects globally.

Greg Wendy: We now have over 18 wind turbine owner operators purchasing numerous products from us and we're expanding globally with the rollout of the new wind turbine platforms in Europe, Latin America and Southeast Asia.

Greg Wendy: Our customers repeatedly tell us that we have maintained our market share for core <unk> power management applications.

Greg Wendy: Testing the slowdown in shipments in FY 'twenty four it was primarily a timing issue in fact, our customer pipeline and the number of opportunities continue to increase as we take advantage of significant energy transformation projects globally.

Gregory J. Peloquin: Turning to Power and Microwave Technologies, or PMT, which includes the Electron Device Group, EDG, our Legacy II business, and the Power and Microwave Group, or PMG, sales decreased 3% from $31.5 million to $30.5 million in the fourth quarter. This decline was primarily due to the slowdown in our semiconductor wafer fabrication equipment business.

Greg Wendy: Turning to power and microwave technologies are PMT, which includes the electron device group EDG, our legacy <unk> business and power and microwave group, our PMG sales decreased 3% from $31 5 million to $30 5 million in the fourth quarter.

Gregory J. Peloquin: However, we saw semi-fab demand increase during the quarter as we experienced higher shipments and bookings. In fact, Q4 FY24 was our largest revenue quarter this year for the semi wafer fab business, up 71% over Q3. We expect to see year-over-year growth for the semiconductor wafer fabrication equipment business in FY25 based on customer feedback and market predictions. On the RFN wireless side, we are extremely happy to see a book-to-bill of 1.38 going into FY25.

Greg Wendy: This decline was primarily due to a slowdown in our semiconductor wafer fabrication equipment business. However, we saw semi fab demand increase during the quarter as we experienced higher shipments and bookings in fact Q4 FY 'twenty four was our largest revenue quarter. This year for the semi wafer fab business up 71% over Q3.

Greg Wendy: We expect to see year over year growth for semiconductor wafer fabrication equipment business in FY 'twenty five based on customer feedback and market predictions.

Greg Wendy: On the RF and wireless side, we're extremely happy to see a book to Bill of 138 going into FY 'twenty five.

Gregory J. Peloquin: Our combined GES and PMT backlog remains strong at over 102 million. Given our inventory position, we will continue to ship many incoming orders from stock as we were able to do in Q3 and Q4 this past fiscal year. This results in a reduction of inventory, which will convert to cash in the coming quarters as receivables are collected.

Greg Wendy: Our combined <unk> and PMT backlog remains strong at over 102 million given our inventory position will continue to ship many incoming orders from stack as we are able to do in Q3 and Q4 this past fiscal year.

Greg Wendy: All in a reduction of inventory, which will convert to cash in the coming quarters as receivables are collected.

Gregory J. Peloquin: We remain focused on managing our business to support customers' needs when they are ready. Having inventory on hand allows us to capture and maintain market share. We collaborate with both our customers and suppliers and leverage our customers' forecasts to help us strategically invest in inventory and ensure we can meet our customers' needs. A key to our growth strategy is selectively expanding our global technology partners. In Q4, we added technology partners who fill technological gaps in our offering and support our growth strategy.

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

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

Greg Wendy: A key to our growth strategy of selectively expanding our global technology partners. In Q4, we added technology partners, who fill technology gaps in our offering and support our growth strategy.

Gregory J. Peloquin: Often, in these partnerships, we identify opportunities for new products that we design, manufacture, and test in-house. This increases the value we provide customers and allows us to capture more revenue while expanding and diversifying our customer base. These long-term supply relationships are extremely strong, and when appropriate, we work with them on strategic purchases to maintain proper inventory levels.

Greg Wendy: And these partnerships, we identify opportunities for new products that we design manufacture and test in house. This.

Greg Wendy: This increases the value, we provide customers and allows us to capture more revenue, while expanding and diversifying our customer base.

Greg Wendy: These long term supplier relationships are extremely strong and when appropriate we work with them on strategic purchases to maintain proper inventory levels.

Gregory J. Peloquin: We negotiate special payment terms, stock adjustment privileges, and shipping schedules to help improve cash flow. We continue to invest in our infrastructure to support our growth. We are bringing on talented engineers, both field engineers and design engineers, and making investments to enhance our design and manufacturing capabilities. Our growing in-house design, engineering, and manufacturing teams are doing a great job supporting increased demand for current products and new product design. With this team and our field sales engineers, we will continue to identify, develop, and introduce new products and technologies for green energy and other power management applications, along with microwave applications. Going into FY25, we remain excited about the opportunities with our PMT and GES business. Bookings in Q4 FY24 exceeded bookings in Q4 FY23. Consequently, we did not lose any market share in FY24.

Greg Wendy: We negotiate special payment term stock adjustment privileges and shipping schedules to help improve cash flow.

Greg Wendy: We continue to invest in our infrastructure to support our growth.

Greg Wendy: We are bringing in talented engineers, both field engineers and design engineers, and making investment to enhance our design and manufacturing capabilities.

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

Greg Wendy: Applications.

Speaker Change: Going into FY 'twenty five we remain excited about the opportunities with our PMT and Ges businesses bookings in Q4, FY 'twenty four exceeded bookings in Q4 FY2023 we did not lose any market share in FY 'twenty for in fact, we gained market share with our current customers and grew our share with the addition of new products and customers.

Gregory J. Peloquin: In fact, we gained market share with our current customers and grew our share with the addition of new products and customers. With the positive outlook in the semi-fab market, key customers forecasting growth in FY25, and our technology partners continuing to drive our business and unique global business model, we have many reasons to be excited about our growth strategies and the future of our business. I cannot stress enough the value of Richardson Electronics to our customers and suppliers.

Greg Wendy: With the positive outlook in the semi fab market key customers forecasting growth in FY 'twenty, five and our technology partners continuing to drive our business and the new global business model.

Greg Wendy: We have many reasons to be excited about our growth strategies and the future of our business.

Greg Wendy: I cannot stress enough the value of Richardson electronics' model to our customers and suppliers.

Gregory J. Peloquin: Our unparalleled capability and global go-to-market strategy are unique to the power and energy, RF and microwave, and green energy markets. We have developed a strong business model, including legacy products and new technology partners that fit well with our engineered solutions capabilities. Through our steadfast and creative focus on customers, we will continue to excel by taking advantage of opportunities when they arise. The execution of our strategy has never been better.

Greg Wendy: Our unparalleled capability and global go to market strategy unique to the power and energy RF and microwave and Green energy markets. We have developed a strong business model, including legacy products and new technology partners that fit well with our engineered solutions capabilities.

Greg Wendy: We are steadfast in creative focus on customers, we will continue to excel by taking advantage of opportunities when they arise.

Wendy S. Diddell: The execution of our strategy has never been better Theres No question, our customers and technology partners need Richardson products and support more than ever and with that I'll turn it over to Wendy to Delta to discuss Richardson healthcare.

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

Wendy S. Diddell: Fourth quarter sales for the Healthcare Division were $3.5 million, an improvement of 24.3% compared to the fourth quarter of last year and a $400,000 or 13.3% increase over the most recent. CT tubes, parts, and system sales were up versus the prior year. During the quarter, we continue to benefit from sales of our repaired Siemens Stratton Z2. On a full year basis, healthcare sales were $12.1 million, reflecting a 5.7% increase over FY

Wendy S. Diddell: Thanks, Greg Good morning, everyone.

Wendy S. Diddell: Fourth quarter sales for the health care Division were $3 5 million, an improvement of 24, 3% compared to the fourth quarter of last year, and a 400000 dollar or 13, 3% increase over the most recent third quarter.

Speaker Change: D G tube parts and systems sales were up versus the prior year's fourth quarter.

Wendy S. Diddell: During the quarter, we continued to benefit from sales of our repaired Siemens Stratton Z tubes on a full year basis healthcare sales were $12 1 million, reflecting a five 7% increase over FY2023 full year sales.

Wendy S. Diddell: Sales of both CT tubes and parts improved over the prior year by 8% and 6%, respectively. However, system cells were down by nearly. We sold more Siemens tubes in FY20, which were offset by lower sales of the Alta 750. Healthcare's gross margin in the quarter improved to 32.5% compared to 23.7% in the same period last year. The gross margin improvement was primarily due to a favorable product mix, including higher parts and Siemens tube sails and lower scrap charges. On a full year basis, gross margin was 30.4%, versus 30.7% in FY20, primarily related to a positive product.

Wendy S. Diddell: Sales of both <unk> and parts improved over the prior year by 8% and 6% respectively.

Wendy S. Diddell: <unk> sales were down by nearly 4%.

Wendy S. Diddell: We sold more Siemens Jameson FY, 'twenty, four which were offset by lower sales of the Alt a 750 inserts to China.

Wendy S. Diddell: Health Care's gross margin in the quarter improved to 32, 5% compared to 23, 7% gross margin in the same period last fiscal year.

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

Wendy S. Diddell: On a full year basis gross margin was 34% versus 37% in FY2023.

Wendy S. Diddell: This was primarily related to a positive product mix, including Siemens teams offset by manufacturing under absorption.

Wendy S. Diddell: Offset by Manufacturing Under Absorption. During the quarter, we made significant improvements to the Siemens repair program. Payments The repair program includes four: Stratton Zee, MX, MXB, and MXBC.

Wendy S. Diddell: During the quarter, we made significant improvements to the Siemens repair program. The Siemens repair program includes four tube types.

Wendy S. Diddell: <unk>, Nx and XD and NXP 46.

Wendy S. Diddell: While the repaired Stratton Z is in full production and performing well in the field, we were not able to meet demand in the quarter due to supply chain challenges. We focused on production processes, which we'll carry over to the MX Series repairs beginning. Unfortunately, we failed to meet our objective on the MX LifeTube test. However, with a critical patent expiring in June, we're now in a better position to repair the M&

Wendy S. Diddell: While the repaired strategy is in full production and performing well in the field, we were not able to meet demand in the quarter due to supply chain challenges.

Wendy S. Diddell: We focused on production processes, which will carry over to the Nx series repairs beginning this summer.

Wendy S. Diddell: Unfortunately, we failed to meet our objective on the Amex life tube test however, with a critical patent expiring in June we're now in a better place to repair the nx tubes.

Wendy S. Diddell: As a result of our supply chain challenges and limited production in the fourth quarter, we did not achieve breakeven in the fourth quarter. While we are continuing efforts to improve sales and profitability, the company is beginning to evaluate strategic options for the health. I will now turn the call over to Jens Ruppert to discuss the results. Thanks, Wendy, and good morning.

Wendy S. Diddell: As a result of our supply chain challenges and limited production in the fourth quarter, we did not achieve breakeven in the quarter.

Wendy S. Diddell: While we are continuing efforts to improve sales and profitability the company's beginning to evaluate strategic options for the health care business.

Speaker Change: I will now turn the call over to <unk> to discuss the results for Kansas.

<unk>: Thanks, Wendy and good morning, everyone.

<unk>: Engineered estimate of Texas and status of custom displays to original equipment manufacturers across global industrial and medical markets.

Jens Ruppert: Original Equipment Manufacturers across global, industrial, and camera supported revenues of $8.7 million in the fourth quarter of fiscal year 2019, modest degrees, two million in the same quarter, at a 31.8% sequential on 6 million in sales during the third quarter of fiscal year 2020. Financial improvement and Sales for this quarter were driven by recovering demand within the North American economy. In fiscal year 2024, sales dropped by 17.5%, largely due to the push out earlier in the year.

Speaker Change: <unk> reported revenues of $8 7 million in the fourth quarter of fiscal year 2020 for a modest decrease from the $9 $2 million in the same quarter of the previous year by the 31, 8% sequential improvement from the $6 6 million in sales during the third quarter of fiscal year 2024.

Speaker Change: The sequential improvement in sales for this quarter driven by recovering demand within the North American market.

Speaker Change: In fiscal year 2024 hour sales dropped by 17, 5% to $32 4 million largely due to push out.

Wendy S. Diddell: For the year from our North American customers.

Jens Ruppert: We ended the quarter with $42.9 million in backlog, providing a strong base of business for fiscal year 2020. A significant achievement in the fourth quarter was the improvement of our cross- margin as a percentage of net sales rose to 33.5%, up from 32.9% in the fourth quarter of this year. Our fiscal year 2024 cross margin as a percentage of sales will be 33.8% from 31.5% in fiscal year 2020. The increase highlights our unwavering commitment to operational excellence and stringent quality control. In the quarter, our firm received orders from both repeat and first time medical OEM customers. Systems for Polymerase Chain Reaction.

Wendy S. Diddell: We ended the quarter with $42 9 million in backlog, providing a strong base of business for fiscal year 'twenty five.

Wendy S. Diddell: A significant achievement in the fourth quarter with improvement of our gross margin our gross margin as a percentage of net sales rose to 33, 5%.

Wendy S. Diddell: Up from 32, 9% in the fourth quarter of fiscal year 'twenty three.

Wendy S. Diddell: Our fiscal year 2020 for gross margin as a percentage of sales increased to 33, 8% from 31, 5% in fiscal year 2023.

Wendy S. Diddell: The increase highlights our unwavering commitment to operational excellence and stringent cost control.

Wendy S. Diddell: During the quarter or firm received orders from both repeat and first time medical OEM customers. Some of these applications include.

Wendy S. Diddell: Distance for polymerase chain reaction or Pcr.

Jens Ruppert: I feel obliged patient monitoring, medical device control, microsurgery, dental displays, and robotic assistants. These new design wins demonstrate our dedication to delivering solutions that address the changing demands of our medical customers. Additionally, they showcase our capabilities to build and maintain long-term relationships with current and prospective customers who demand high standards, ensuring our ongoing expansion within the school. In fact, today we serve more than half of the top 10 global medical devices. We also provide solutions for numerous commercial and industrial purposes. Our products are used in control rooms, train cockpits, as human machine interface, for large-size printing machines, ticket vending machines, and packaging.

Wendy S. Diddell: Phil ablation.

Wendy S. Diddell: Monitoring medical device controller, microsurgery dental displays and robotic assisted surgery.

Wendy S. Diddell: These new design wins demonstrate our dedication to delivering solutions that address the changing demands of our customers.

Wendy S. Diddell: Additionally, they showcase our capabilities to build and maintain long term relationships with current and prospective customers, who demand high standards, ensuring our ongoing expansion within this quarterly industry.

Wendy S. Diddell: In fact today with more than half of the top 10 global medical device companies.

Wendy S. Diddell: We also provide solutions for numerous commercial and industrial purposes.

Wendy S. Diddell: Our products are used in control rooms train cockpits as human machine interface for large sized printing machines ticket vending machines and packaging machines.

Jens Ruppert: Furthermore, we secured a sizable order for all-in-ones used in connection with product dispensers in retail embassies. Nevertheless, due to significant market uncertainties, including economic challenges, regulatory changes, and other factors, we recognize that many of our customers have adopted a conservative stance. Welcome back to New Product Development and Imaging. Nevertheless, we remain cautiously optimistic, customer demand will continue to improve in the upcoming months. We are noticing encouraging signs, and expect a steady recovery if the market environment becomes more stable. We hear directly from our customers, which reinforces this.

Wendy S. Diddell: We secured a sizable order for all in ones used in connection with product expensive and retail environments.

Wendy S. Diddell: Due to significant market uncertainties, including economic challenges regulatory changes and other factors, we recognize that many of our customers have adopted a conservative stance with respect to new product development and the inventory.

Wendy S. Diddell: Nevertheless, we remain cautiously optimistic that customer demand will continue to improve in the upcoming year.

Wendy S. Diddell: We are noticing in quality in science and expect a steady recovery if the market environment becomes more stable.

Wendy S. Diddell: What we hear directly from our customers reinforces this belief.

Jens Ruppert: Another key indicator is the increased number of projects our teams are working on. These new opportunities underscore growth within the markets we serve and the recognition and acceptance of our products and services. While our sales organization stays focused on new opportunities, I remain focused on executing our strategic initiative, achieving sustainable growth, and creating long-term value for our shareholders. I will now turn the call back over to Jens.

Wendy S. Diddell: Another key indicator is the increased number of projects. Our teams are working on these new opportunities underscore our growth within the markets, we serve and the recognition and acceptance of our products and services.

Wendy S. Diddell: While our sales organization stay focus on new opportunities I remain focused on executing our strategic initiatives to drive sustainable growth and create long term value for our shareholders.

Wendy S. Diddell: I will now kind of claw back over to Ed.

Edward J. Richardson: While it was a tough year for Canvas, your strong backlog and a pipeline of new opportunities with key medical OEMs support our confidence in a return to growth in FY25. As a result, we believe Canvas will continue to produce exceptional operating performance in the future. Despite headwinds from uncertain economic conditions and higher interest rates, we're optimistic and committed to our long-term growth strategy. The list of our opportunities within our green energy solutions business unit continues to grow.

Edward J. Richardson: Thanks, <unk>, where it was a tough year for Kansas, Youre, a strong backlog and pipeline of new opportunities with key medical Oems supports our confidence in a return to growth in FY 'twenty five.

Edward J. Richardson: As a result, we believe Canada will continue to produce exceptional operating performance in the future.

Edward J. Richardson: Despite headwinds from uncertain economic conditions and higher interest rates, we're optimistic and committed to our long term growth strategies.

Edward J. Richardson: The list of opportunities within our Green energy solutions business.

Edward J. Richardson: While the projects have taken more time to develop than we initially thought, we know we are making a positive impression on a growing list of customers in the global wind energy market, transportation, and power management. None of the opportunities we've discussed over the past several quarters have been lost, and we continue to leverage our unique market position with leading technology partners to drive interest in our engineered solutions. A key component to our growth is to cultivate new opportunities within our green energy business.

Wendy S. Diddell: Unit continues to grow.

Wendy S. Diddell: While the projects I've taken more time to develop than we initially thought we know we are making positive impression on growing list of customers in the global wind energy market transportation and power management.

Wendy S. Diddell: One of the opportunities we have discussed over the past several quarters have been lost and we continue to leverage our unique market position with leading technology partners to drive interest in our engineered solutions.

Wendy S. Diddell: A key component to our growth is to cultivate new opportunities within our green energy business Brian.

Edward J. Richardson: By leveraging our core engineering capabilities and relationships with our technology partners, we're expanding our product lines into a large, fast-growing global market. Over the past two years, we've announced wins on large global platforms within the wind, transportation, and power management markets, and we believe each new platform supports meaningful multi-year revenue opportunities. To support our growth strategies, we believe it's critical and important to maintain a strong balance sheet.

Wendy S. Diddell: By leveraging our core engineering capabilities and relationships with our technology partners, we're expanding our product lines into our large fast growing global markets.

Brian: Over the past two years, we've announced wins on large global platforms within the wind transportation and power management markets and we believe each new platform supports medium growth multi year revenue opportunities.

Brian: To support our growth strategies, we believe it's critical and important to maintain a strong balance sheet throughout fiscal 2024, we focused on improving our working capital levels and converting our inventory to cash.

Edward J. Richardson: Throughout fiscal 2024, we focused on improving our working capital levels and converting our inventory to cash. I'm pleased with the progress we made this year. We continue to closely manage our balance sheet to provide us with the flexibility to support our growth initiatives. We believe investing in growth produces the greatest return on investment compared to other uses of capital at this point.

Brian: I'm pleased with the progress we made this year, we continue to closely manage our balance sheet to provide us with the flexibility to support our growth initiatives.

Wendy S. Diddell: We believe investing in growth produces the greatest return on investment compared to the uses of capital at this point.

Edward J. Richardson: As our growth strategies scale and we're further solidifying our operating cash flow, we look at additional opportunities to allocate capital. While sales mix will impact gross margin on a quarter-to-quarter basis, we believe our compelling financial model is positioned to produce operating leverage as sales grow. We're starting to see early indications of improved demand within the semiconductor wafer fab markets, which combined with our existing growth strategies support our optimism that we will return to year over year sales growth and higher profitability in fiscal 2025. On behalf of everyone at Richardson Electronics, I look forward to updating you on the progress we're making, and we'll be happy to answer your questions. Thank you, ladies and gentlemen.

Wendy S. Diddell: As our growth strategies scale and we're further solidifying our operating cash flow, we look at additional opportunities to allocate capital.

Wendy S. Diddell: Well sales mix will impact gross margin on a quarter to quarter basis, we believe our compelling financial model is positioning to produce operating leverage of sales growth.

Wendy S. Diddell: We're starting to see early indications of improved demand within the semiconductor wafer fab market.

Wendy S. Diddell: Which combined with our existing growth strategies support our optimism that we will return to year over year sales growth and higher profitability in fiscal 2025.

Speaker Change: On behalf of everyone at Richardson Electronics, I look forward to updating you on the progress we're making.

Speaker Change: And we will be happy to answer your questions.

Operator: 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 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.

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.

Again, we ask that you. Please limit yourself to one question and one follow up and tell 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 one on your telephone and wait for your name to be announced.

Speaker Change: Your question. Please press star one again.

Operator: One moment, please, while we compile the Q&A roster. Your first question comes from Bobby Brooks with Northland Capital Markets. Your line is open. Hey, good morning, guys. Thank you for taking my call. So you know, Good morning.

Speaker Change: One moment, please while we compile the Q&A roster.

Speaker Change: Your first question comes from Bobby Brooks with Northland Capital markets. Your line is now open.

Robert J. Ben: Hey, good morning, guys. Thank you for taking my call.

Robert J. Ben: So, you know, in the third quarter, something that you guys had talked about, and you mentioned it a bit in the prepared remarks, was just a healthy broadening of customers wanting the Ultra 3000. And, you know, in the third quarter, GES revenues were really strong. Obviously, GES revenues stepped down sequentially, so I'm just curious to hear if that broadening trend seen in the third quarter was extended into the fourth quarter.

Robert J. Ben: Alright.

Speaker Change: Good morning.

Speaker Change: So on the third quarter something that you guys had talked about and you mentioned it a bit in the prepared remarks was just a healthy broadening of customers wanting to ultra 3000.

Speaker Change: And.

Speaker Change: Third in the third quarter GFS revenue is really strong.

Robert J. Ben: And could you quantify that for us at all? And then maybe just talk about if that trend continued, then what was the driver? A sequential step down and, Sure, Bobby.

Speaker Change: GFS revenue step down sequentially. So I'm, just curious to hear if that broadening trend seen in the third quarter was extended into the fourth quarter could you quantify that for us at all and then maybe just talk about if that trend continued and then what was the driver of this.

Speaker Change: Sequential step down in Ges.

Gregory J. Peloquin: Good to hear from you again. You know, having fluctuations from quarter to quarter in both revenues and bookings is very, very common when you're introducing new products to the NPI process, virtually a business startup. So we're seeing that that's common.

Robert J. Ben: Sure Bobby.

Robert J. Ben: To hear from you again.

Speaker Change: Having fluctuations from quarter to quarter.

Speaker Change: In both revenues and bookings is very very common when you're introducing new products to NPI process.

Gregory J. Peloquin: But if you look at the fiscal year, what keeps us excited about those numbers, we've added a number of new products and a number of new customers throughout the year. So in Q2, Q1, Q2, that became revenue in Q3. And so we had a large increase in bookings and actually year-over-year growth coming out of a record year. And then throughout the year, we've added over 20 new owner-operators buying wind turbine pitch energy modules. In addition to that, throughout the year, we've added four new platforms with Suzlon, Senvion, Nordics, and SSB. We also designed and developed starter modules with two of the largest locomotive manufacturers, one ultracapacitor-based and one lithium-ion phosphate-based.

Speaker Change: Virtually business startup so we're seeing that that's common but.

Speaker Change: If you look at just the fiscal year.

Speaker Change: Keeps us excited in those numbers.

Speaker Change: We've added a number of new products, a number of new <unk>.

Speaker Change: Customers throughout the year. So in Q2 Q1 Q2.

Speaker Change: That became revenue in Q3.

Speaker Change: And so we had.

Speaker Change: A large increase in bookings in accident year over year growth coming out of a record year and then throughout the year we've added.

Speaker Change: Over 20, new owner operators buying.

Speaker Change: Wind turbine pitch energy modules and.

Speaker Change: In addition to that throughout the year, we have added four new platforms with Susan Lyons and beyond Nordics.

Speaker Change: And SSB, we also designed and developed with two largest locomotive manufacturers.

Speaker Change: Start modules, one ultracapacitor base, one lithium iron phosphate based and some of the large bookings you saw in Q4 were from that.

Gregory J. Peloquin: And some of the large bookings you saw in Q4 were from that. So you're going to see fluctuations in both revenues and bookings. We had strong bookings in Q2, which turned into shipments in Q3. We had excellent bookings in Q4, and that's transitioning into what's looking at a very strong Q1 FY25 Q1. So that's kind of the premise of where the growth comes from and why it fluctuates. We're adding more and more new customers that are buying this product as it becomes well-known in the very niche market of wind turbine manufacturers. And then we continue to add.

Speaker Change: Youre going to see Lucky.

Speaker Change: Fluctuations in both revenues and bookings.

Speaker Change: We had strong bookings in Q2, which turned into shipments in Q3, we had excellent bookings in Q4 and thats transitioning into whats looking at a very strong.

Speaker Change: Q1, FY 'twenty five.

Speaker Change: Q1.

Speaker Change: So that's kind of the premise of where the growth comes and why it fluctuates, we're adding more and more new customers that are.

Speaker Change: Buying this product as it becomes well known in the very niche market of wind turbine manufacturers and then we continue to add.

Gregory J. Peloquin: New technology partners and new products to keep that pipeline going. But until it gets to more of a consistent revenue stream, we're going to see fluctuations quarter to quarter. But the end result is, you know, $23.2 million in revenue, margins up, profits are up, a strong backlog of nearly $50 million going into Q1, four new pitch energy platforms with four new wind turbine manufacturers, which, by the way, with those like we are with GE, we are exclusive.

Speaker Change: New technology partners, and new products to keep that pipeline going.

Speaker Change: But until until it gets to more of a consistent revenue stream, we're going to see fluctuations.

Speaker Change: Quarter to quarter, but the end result is.

Speaker Change: $23 2 million in revenue margins up profits are up.

Speaker Change: Strong backlog of nearly $50 million going into Q1.

Speaker Change: For new pitch energy platforms with four new wind turbine manufacturers, which by the way with those like we are with GE we are exclusive.

Gregory J. Peloquin: And adding new products to our very large EV and diesel locomotive manufacturers. Again, as I mentioned, the starter modules; we also have IGBT inverter modules that we're working on, have small orders for those both in the wind turbine market and the electric locomotive and diesel locomotive market. And then to tie one last thing out of that, Bobby, and we talked about that when you were here, we're now expanding that globally. So this has mainly been North America where we launched it, but as of next week, we have beta site testing going on in Italy and France.

Speaker Change: And adding new products to our very large.

Speaker Change: And diesel locomotive manufacturers again as I mentioned started modules. We also have.

Speaker Change: The GBT Invertor modules that were working on and have small orders for those both in the wind turbine market and the electric locomotive.

Speaker Change: Locomotive and diesel locomotive market and then the Taiwan last thing out of that Bobby and we talked about that when you are here.

Speaker Change: We're now expanding that globally. So this has mainly been North America is where we launched it.

Speaker Change: But as of next week, we have beta site testing going on in Italy, and France.

Gregory J. Peloquin: And as you already know, from the press release, we're nearing the end of the beta testing with Suzalon in India. And if you look at these manufacturers, Suzalon has 12,000 turbines worldwide, while Senvian has 4,000.

Speaker Change: And as you already know through the press release.

Speaker Change: We're nearing the end of the beta testing with <unk> in India.

Speaker Change: And if you look at these manufacturers Suzanne has 12000 turbines worldwide San VNS 4000, Nordics close to 2000 and the SSB is about 3500, so we havent touched the surface at present I am concerned.

Gregory J. Peloquin: Nordex is close to 2,000, and the SSB is about 3,500. So we haven't touched the surface as far as I'm concerned. And once we get these products introduced into a more consistent revenue stream, you're gonna kind of see these upticks, from a positive point of view in revenue and bookings, but also, you know, kind of updating from quarter to quarter.

Speaker Change: And once we get there.

These products introduced in a more consistent revenue stream, you're going to kind of see these upticks from a positive point of view and revenue and bookings, but also kind of updating and quarter to quarter.

Robert J. Ben: That's really good to hear, and I'm just switching topics to PMT. You know, Greg, you mentioned that the sales in the wafer fab were up 71% sequentially, but then PMT sales overall stepped down sequentially. So what was weaker within PMT that offset that 71% increase or maybe just that 71% increase in the semi? The semi-wafer fab stuff was off of a very small base in the third core. Yeah, I mean, you get numbers like that of 171% because it's compared to the prior year.

Speaker Change: Got it that's really good to hear.

Speaker Change: Thanks, Richard switching topics PMT Greg.

Greg you mentioned that the sales in the wafer fab were up 71% sequentially, but then PMT sales overall step down sequentially. So what was weaker within PMT, then offset that 71% increase or maybe just said 71% increase in the SME.

Semi wafer fab stuff was off of a very small base in the third quarter.

Robert J. Ben: And as you know, in the prior year, it was a record year for those products, so comparatively, year over year, they were dealing with that comparison. And the fourth quarter was our lowest year in terms of revenue and bookings for our semiconductor wafer fab companies.

Speaker Change: Yes, I mean, you get numbers like that of 171% because as compared to the prior year and as you know in the prior year.

Speaker Change: It was a record year for.

Those products so comparatively.

Year over year.

Speaker Change: They were dealing with that comparison in the fourth quarter was our lowest year.

In terms of revenue and bookings for our semiconductor wafer fab companies and we just had a stronger as it comes to pick up.

Gregory J. Peloquin: And we just had the stronger as it comes to pick up their forecast and that backlog. That's why you're seeing your numbers like that. It's a comparison, but it's quarter over quarter growth in bookings and billing. Just to clarify, yeah, Q4 was stronger than Q3 in revenue for the semiconductor market, and to your point, though, it was still considerably lower than the run rate it was in FY23. Right. Okay, so it was that that nice sequential growth was because it was off by a small margin and what we're looking at. All right. Thank you. I'll return to the key.

Speaker Change: They are forecast in that backlog.

Thats why youre seeing in your numbers like that but it's it's.

As a comparison, but it's.

Quarter over quarter growth in bookings and billings.

Just to clarify yes Q4.

Was stronger than Q3 in revenue for the semiconductor market and to your point, though it is still we're still considerably lower than the run rate. It was in FY2023.

Speaker Change: Right.

Yeah.

Okay.

Does that nice sequential growth was because it was off of a small base and what were exactly that.

Alright, Thank you I'll return to the queue.

Thanks, Bobby.

Robert J. Ben: Thanks, Bobby. And the next question comes from Anja Soderstrom with Sidoti. Your line is open. I have a follow-up on this WAFER FAB. Do you still expect an uptick in fiscal 2025, or do you see it maybe building up slower than you previously anticipated? Yeah, according to the customers, and then some of the market reports, which you also see, the real uptick that they're suggesting will be in calendar year 2025, or our second half of our FY 25.

And the next question comes from Anya Soderstrom with Sidoti Your line is open.

Thank you Brian.

Uh huh.

On this.

Do you still expect.

I think in fiscal 2025, where do you see that maybe building up slower than you previously anticipated.

According to the to the customers and then some of the market reports, which all of you see also.

Speaker Change: The real uptick that they're suggesting will be in calendar year 2025, or our second half of our FY 'twenty five so we're going to see growth.

Robert J. Ben: So we're going to see growth, as Bobby mentioned, off a smaller base in Q1 and Q2, but the real uptick, getting back to some, you know, normal numbers from the past, will be in calendar year 2025. Okay, thank you.

As Bobby mentioned off a smaller base.

Speaker Change: Q1, and Q2, but the real uptick getting back to some.

Normal numbers from the past will be in calendar year 2025.

Anja Marie Theresa Soderstrom: And it sounds like the margin seems like it was helped a lot by product mix and last year was a little bit pressured, I think, by the prototype for the locomotive you shipped. Can we expect something similar to occur in the coming quarters, or is this margin sort of sustainable from here? Yeah, the margins we make are obviously stronger on products we design, manufacture, and test and lower on products like technology partners where we're designing their components into customers' applications.

Okay. Thank you and at the margin. It seems like that was helped a lot by product mix and <unk>.

Lastly, I will maybe pressured I think by the prototype.

So the locomotive.

Tight ship.

Can we expect something similar to occur in the coming quarters as far as this margin sort of sustainable from here.

Yes, the margins, we make obviously stronger.

On products, we design manufacture and test and lower <unk>.

Products like technology partners, where we're designing and their components into customers' applications. So if we as the uptake grows in our engineered solutions capability that margin will be maintained and as we just talked about we're expecting both lam and our.

Anja Marie Theresa Soderstrom: So, if we, as the uptick grows in our engineered solutions capability, that margin will be maintained. And as we just talked about, we're expecting both LAM and our green energy engineering solutions to grow quarter over quarter and year over year in FY 25. Okay, thank you.

<unk> Green energy engineered solutions to grow quarter over quarter and year over year in FY 'twenty five.

Anja Marie Theresa Soderstrom: And then in terms of inventory, you've been working that down, but it seems like you need to keep some inventory for strategic purposes. How should we think about inventory going forward? Should we do you think that should that continue to decline or will it start increasing? Yeah, the inventory itself, we made some strategic purposes because, funny how people forget we were dealing with for almost a year and a half of supply chain issues where we couldn't get products for 50 to 55 weeks. And so these are.

Okay. Thank you and then in terms of inventory you'd been working that down but it seems like you.

And need to keep some inventory for strategic purposes, how should we think about inventory. So unfortunately do you think that should that continue to decline.

Yes.

We will start increasing.

Yes.

Inventory itself, we've made some strategic purposes because.

Funny, how people forget we were dealing with for almost a year and a half of supply chain issues, where we can get products grew 50% to 55 weeks.

Anja Marie Theresa Soderstrom: Infrastructure rollouts, I'll call it, my background is in the RF base station market, but it's very similar to the wind turbine market. We made a very strategic decision to buy product so we could support this growth because, again, as I mentioned before, customers are increasing, new products are increasing, and that's why we were able to have pretty strong bookings and shipments, you know, in the quarter, and we expect to see that in FY25 as the business grows.

So these.

Infrastructure Rollouts I'll call. It because that's my background is in the RF base station market, but it is very similar to the wind turbine market. We made a very strategic decision to byproduct. So we can support this growth because we again as I mentioned before customers are increasing new products are increasing.

And that's why we were able to have pretty strong bookings and shipments.

In the quarter and we expect to see that in FY 'twenty five as the business grows.

Anja Marie Theresa Soderstrom: But yeah, we just made a strategic decision, brought that product in, and now we're seeing sales increase, and so that will have a direct effect on lowering our inventory. What will impact that, Anja, is we still have one significant vendor that is doing last time builds for us because they're going to be exiting manufacturing. So that'll offset it.

But yes, we just made a strategic decision brought that product in and now we're seeing sales increase and so that will have a direct effect on lowering our inventory.

What will impact that Anya is we still have one significant vendor that is doing last time builds for us because theyre going to be exiting manufacturing, so that'll offset but the team will continue to focus on.

Gregory J. Peloquin: But the team will continue to focus on, and strongly focus on inventory reduction as we go forward to help offset that other vendor's product line growth. Does that make sense to you? Yes, thank you for reminding me of that. That was all from me. Thanks, Tonya. Our next question comes from P. Taylor with ARS Investment Partners. Your line is open. Thank you.

And strongly focus on inventory reduction as we go forward to help offset that other vendor.

Vendors' product line growth that makes sense for you.

Yes, Thank you for reminding me of that.

That will come from me.

Thanks Barry.

Our next question comes from Keay <unk> with <unk> investment partners. Your line is open.

Porter Ross Taylor: Congratulations, first of all, on converting inventory to cash. That was a very impressive performance in the last quarter. Also, on beginning the Strategic Alternative Exploration Forum, the medical imaging side, and just generally how you guys manage the business through what's been a pretty difficult period. If we were to see, in the calendar year 2025, a return to and peak level demand out of your semi-capital equipment companies, how much would we expect to see the revenues there drop? It's kind of an inverted question in the sense of how much did revenues drop in that area in the 20-year fiscal 2024 over 23.

Thank you.

The curse of a first initial.

Yes.

Congratulations first of all on converting inventory to cash that was very impressive.

<unk> in the last quarter also on beginning the T J <unk> alternative exploration form.

The medical imaging side.

And just generally how you guys manage the business through what's been a pretty difficult period.

If we were to see in the calendar year 2025, a return to kind of peak level demand out of your semi cap equipment companies.

How much would we expect to see the revenues there drop it's kind of an inverted question in the sense of how much did revenues drop in that area in 'twenty fiscal 'twenty for over 23, and given that you carry I think high 40% or even 50% kind of operating margins in that space that.

Porter Ross Taylor: And given that you carry, I think, high 40s or even 50% kind of operating margins in that space, that would, I think, be a very major driver of what both free cash flow and earnings will be going forward. So what kind of numbers are we looking at being able to get back to as this industry recovers? Yeah, you're exactly right. The revenue from the largest customer was down 25 million in FY 24 versus FY 23. That was very hard to make up.

What I think is there.

The major driver.

Free cash flow and earnings will be going forward. So what kind of numbers are we looking at being able to get back to.

Peter will cover.

Yes, youre exactly right the revenue.

The largest customer was down $25 million.

Bruce FY 'twenty four versus FY2023.

That was very hard to make up and Thats, a strong margin business, because we do manufacture that ourselves and engineering involved.

Gregory J. Peloquin: And that's, you know, a strong margin business because we do manufacture that ourselves. Engineering Involved. Based on again what the customers are saying, they are saying they expect to get back to FY23 levels in FY25. So from there, it's just math, and that has a huge impact on both revenue and profits going forward. I don't know if Bob has a breakdown of what that would mean, but that's kind of what we're looking at for calendar year FY25.

Based on again, what the customers are saying they are saying they expect to get back to FY2023 levels in FY 'twenty five.

So from there, it's just math and that has a huge impact on both revenue and profits going forward I don't know if Bob has a breakdown of what that would mean, but that's kind of what we're looking at.

For calendar year FY 'twenty five.

Robert J. Ben: Yeah, calendar year FY25. Just to clarify, that's calendar year FY25. Yeah, so and you said the largest customer was a $25 million hit. You do have other customers in the space. What do you think this the semi-cap equipment space as a whole acted as a dragon last year in terms of revenue? Last year was 40 million, and this year is down in the low-12, 14-14 million, so you can see the decline, and they're telling us that by the end of calendar 25, it's going to be a higher growth rate than it was in 23. So, you know, if it exceeds 40 million and the margins are very strong, you can get an idea of what the impact is on our company. Now, that's hugely powerful.

Kevin just to clarify that calendar year.

Yes, so and you said the largest customer was $25 million hit you do have other customers in the space what do you think this.

Semi cap equipment space as a whole after that so Greg in this last year on the revenues.

Okay.

Last year was $40 million and this year is down in the low what 12 14.

$14 million. So you can see the decline and they are telling us that.

By the end of calendar 'twenty, five, but its going to be a higher growth rate than it was in 'twenty three so.

If it exceeds $40 million and the margins are very strong you can get an idea of what the impact is in our company.

Porter Ross Taylor: You're looking at it, you know, measurable in dollars per share. So looking at and looking at that, how much did the CT2 business lose or cost us in 24? You were able to see a nice recovery at the end of the year, but still not get back to break even. So what was the drag there?

Yes, yes, that's hugely powerful youre looking at.

You mentioned below $1 per share.

So looking at and looking at that.

How much did the <unk>.

<unk> business Luo cost us in 'twenty four you were able to see a nice recovery at the end of the year, but still not get back to breakeven.

Porter Ross Taylor: Yeah, we're still right at that $3 million, just right under $3 million. Okay, okay, so what we're looking at is calendar year 25, which could see both a resolution to the CT2 business, either you get back to breakeven and start making money out of it, or perhaps it moves to a new home, and a significant recovery in the semi-cap business, where you're looking at perhaps a 20, you know, mid $20 million plus increase in revenues at high margins. So really, calendar year 25 is setting up to be a pretty exciting year, isn't it?

Right.

Yes, it's still right at that $3 million, just right under $3 million.

Okay. Okay. So what we're looking at is calendar year 'twenty five.

Could see both a resolution to the <unk> business, either you get back to breakeven and start making money out of it or perhaps move to a new home.

And a significant recovery in the semi cap business, where youre looking at perhaps a 20.

Mid $20 million plus increase in revenues at high margin.

So really calendar year 'twenty five is setting up to be a pretty exciting year.

Porter Ross Taylor: We think so, for sure. Yeah, and Ross, you didn't even really factor in all of the programs that Greg mentioned about green energy. Go ahead, Greg.

We think so for sure yes.

Ross you didn't even really factor in all of the programs that Greg mentioned on Green Energy go ahead, yes, one thing I mentioned.

Gregory J. Peloquin: Yeah, one thing, you know, I mentioned the number of programs and new products, but let's remember also within the green energy group, about twenty-two million dollars in that repeat. And, you know, we hit every schedule that the end customer asked us for, the products that were great. However, they're still not delivering the actual fully electric locomotive until September to their end customer, and then that customer will test it throughout the next six months.

A number of programs and new products, but let's remember also within the Green Energy group.

$22 million in that repeat.

And we.

We hit every scheduled at the end customer asked us the products that were great.

However, there is still not delivering the actual full electric locomotives until September to their end customer and then that customer will test it throughout the next six months.

Porter Ross Taylor: And so there's a chance that in FY26 or the second half of the calendar year, FY25, the electric locomotive business that we experienced in that record year in FY23 will also start coming back, and that's big numbers too. So yeah, there's a lot of things. We're juggling a lot of things, and a lot of things have to do with things kind of, unfortunately, outside of our control, but as We've kept the pedal to the metal and got ourselves in a position with new products, new technology partners, and have not lost any market share on these products. So when it does come back, we'll be able to support it all. And one quick question. There's a lot of negative press on offshore wind, but the industry is primarily onshore, is it not?

So there is a chance that in FY 'twenty six.

For the second half of calendar FY 'twenty five the electric locomotive.

Business that we experienced in that record year in FY2023 we will also start coming back and Thats.

Big numbers too so yes. It is.

There's a lot of things juggling a lot of things that a lot of things have to do with things that kind of unfortunate outside of our control, but as a company.

We've kept the pedal to the metal and got ourselves in a position with new products, New technology partners and have not lost any market share on these products. So when it does come back we.

We will be able to support at all.

And one quick.

There's a lot of negative press on offshore wind, but the industry is primarily onshore is it not.

Porter Ross Taylor: Yes, yes, and all of our businesses onshore. And yeah, we talked to them, you know, the GEs of the world. And yeah, that that market or that application is not getting as many legs as they thought. So in the meantime, you know, we have a lot of market share to grab a lot of Sam to grab with all the stuff that we've been doing over the last couple of years.

Yes, yes.

All of our businesses.

Onshore and yes, we talk to them the GE Siemens of the world.

Yes.

Market or that application.

It's not getting as many legs as they thought so in the meantime.

We have a lot of market share to grab a lot of Sam to grab with all.

All the stuff that we've been doing over the last couple of years.

Porter Ross Taylor: Well, it does look like, you know, we're coming out of the jungle, and hopefully things 25, calendar 25, particularly the second half of calendar 25, looks like it could be a real bright, lighted up year. Thank you very much.

Well it does.

Does it look like.

Coming out of the jungle.

And hopefully things 'twenty calendar 'twenty five, particularly the second half of calendar 'twenty five it looks like you can be a real life is slightly lumpy.

Porter Ross Taylor: Thank you. Thank you all. Thank you for coming together that way.

Thank you very much.

Thank you you are coming together that way.

Operator: As a reminder, to ask a question, please press star 11 on your telephone. Our next question comes from Chip Rui with Rui Asset Management. Your line is open.

Okay.

As a reminder to ask a question. Please press star one on your telephone. Our next question comes from Chip Rewey went through we asset management. Your line is open.

Chip Rui: Good morning, and thanks for taking my call. Hey guys, the prior question really set up my question really well because I think the cyclical story in PMT is fairly easy to understand.

Good morning, and thanks for taking my call Hey, guys.

The prior question really set up my question really well because.

I think the cyclical story and PMT is fairly easy to understand.

Chip Rui: And, you know, let's hope it comes through. If it's, a quarter late, kind of in my mind, who cares? But maybe Greg, on green energy, it seems to me, all of your growth there, potentially, is into the existing aftermarket, meaning you're not selling on an OEM basis. And if you think about the GE model, the aftermarket model, whether it's aerospace or healthcare, you know, it's compelling. And I think one of the things that's compelling about it is even if it's white space growth for you, it's growth into existing aftermarkets for both wind and rail. So I'm trying to get a better understanding of how quickly those sales could grow.

And let's hope it comes through.

A quarterly kind of in my mind, who cares, but maybe Greg on Green energy It seems to me.

All of your growth there potentially is into existing aftermarket meaning.

Youre not selling on an OEM basis, then if you think about the GE model the aftermarket model, whether it's aerospace or healthcare.

It's compelling and I think one of the things to me what's compelling about it is even if it's white space growth for you.

It's growth in your existing aftermarkets for both wind and rail so.

Chip Rui: The numbers, you know, on wind turbines out there are huge, and existing locomotives where you could replace the lead-acid batteries are huge. So maybe walk through what you think the eventual share of replacement could be. You know, do you think all of the lead acids will be replaced, or some? And maybe, why would an operator not replace them with one of your solutions if it seems to be much better on an operating basis? Is there something else that makes the trade-off not work?

Yes, I'm trying to get a better understanding of how quickly those sales could grow the numbers on wind turbines out there are huge and existing locomotives, where you could replace the lead acid batteries are huge so maybe walk through what you think the eventual share of replacement could be.

Do you think all of the assets will be replaced or some.

And maybe why would <unk>.

Operator, not replace with one of your solutions.

<unk> to be much better on an operating basis.

Is there something else that makes the trade off not work again to me. It seems it's a slam dunk and if it comes through it could come through faster, but maybe just talk through what you see 'twenty five 'twenty six on on where these sales for the rail and the wind could really come in.

Chip Rui: Again, to me, it seems it's a slam dunk, and if it comes through, it could come through fast, but maybe just talk through what you see, 25, 26, on where these sales for the rail and the wind could really come in. Yeah, so the numbers hit the nail on the head. If you look at the TAM, it's obviously huge with the number of wind turbines, you know, globally. However, we started this by, in my opinion, and David Higgins.

Yes, so the numbers you hit it on the head if you look at the Tam.

It's obviously, a huge with a number of wind turbines globally.

However, we started this by.

And my.

Gregory J. Peloquin: All of our partners, after many, many years of doing this, I always tell them the same thing: that's where you can be successful. You have a product that either has a technological or a cost advantage. And we were able to take over that replacement business of lead-acid batteries and existing wind turbines. However, each time, we still looked at getting into the OEM side of it. And I should add, that our first OEM business, meaning it's designed into new wind turbines, will be with Suzalon. We've worked out with them, and we've developed the software.

Many years of doing this.

Look at the Sam Thats, where you can be successful you have a product that either has a technological or a cost advantage.

And we were able to take over that.

Replacement business of lead acid batteries and existing wind turbines. However.

Each time, we still look at getting into the OEM side of it and I should add that is our first OEM business, meaning it's designed into new wind turbines will be with <unk>.

We've worked out with them, but they left the software they've got in India, specifically, they've gotten government approval or financing to produce 1000 turbines a year, which will have our product in it.

Gregory J. Peloquin: They've got, in India specifically, they've gotten government approval or financing to produce 1,000 turbines a year, which will have our product in them. So right now, yes, we look at the aftermarket, but there's another part that's coming up that we're seeing more and more companies like Avestis or Siemens, where many of these companies buy wind turbine farms, and they're servicing GE, Suzlon, you know And it's the whole repowered program. And so what they do is kind of like this. Take your old car when you're in college and just replace everything and get it running.

So right now, yes, we look at the aftermarket, but there is another play that's come up that we're seeing more and more.

Companies like a best guess or Siemens, who many of these companies.

Wind turbine farms and their servicing GE suicide.

Nordics and SSB wind turbines and it's the whole re powered program and so what they do is kind of like.

Take your old car when you're in college, and just replace everything and get it running.

Gregory J. Peloquin: They're making our part standard with that. So when they replace the blades and the UPS and the inverter, they're also, at that time, replacing our product. So what that told me was that that increased the opportunity in terms of the number of wind turbines that will be either replaced through the aftermarket, and then you add on this repowering program, which would include our product. So, it's hard to say what percent of the global wind turbine market they'll do this.

They are making are part standard with that so when they replace.

Replace the blades and the UBS and the inverter, they're also at that time, replacing our product. So what that told me was is that that increased the opportunity in terms of the number of wind turbines that will be either replace through the aftermarket and then you add on this.

Powering program, which would include our product so it's been hard to get what percent of the global wind turbine market they'll do this.

Gregory J. Peloquin: They're all telling us that over time, they want to replace them all because the lifetime of these ultra-capacitor batteries will last for the duration of the turbine itself. So, a wind turbine is not repowered for about fifteen to twenty years. The acid batteries fail every eighteen months.

All telling us that over time, they want to replace them all because of the lifetime of these ultra capacitor batteries will last for the duration of the.

Turbine itself. So a wind turbine is not re powered for about 15% to 20 years the lead acid batteries fail every 18 months our product last 10 to 15 years, but the real thing that we noticed this year specifically was.

Gregory J. Peloquin: Our product lasts ten to fifteen years. But the real thing that, you know, we noticed this year specifically was. And when we say push-outs and delays, it was really capital expenditures. So, you know, wind turbines have a lot of issues with different parts other than the lead-acid battery. So, I don't think they have to borrow money to put in our product, but they definitely have to borrow money to do repowers and to replace and update and fix other products within that wind turbine. And at 8 plus percent, you know, to borrow money, they've had to be very selective in what they need to do.

And we see push outs and delays it was really capital expenditures. So wind turbines. They have a lot of issues with different parts other than the lead acid batteries. So I don't think they have to borrow money to put in our product, but they definitely have to borrow money to do re powers and to replace an.

And fix.

Other products within that wind turbine and at 8% to borrow money they've had to be very selective in what they needed to do so there's some things they needed to fix to keep them going.

Gregory J. Peloquin: So, there are some things they need to fix to keep them going. Ours is a fix from a profit point of view, meaning the cost of climbing a turbine, putting in a lead-acid battery, replacing them every 18 months with a highly paid technician, as opposed to going up one time and replacing them with ours for pretty much the life of the turbine. That has been kind of put on hold.

This is a fixed from a profit point of view, meaning the cost of <unk>.

Timing of turbine putting in a lead acid battery replacement every 18 months.

Really paid technician as opposed to going up one time and replacing with ours for the pretty much the life of the turbine.

Gregory J. Peloquin: But again, as we keep saying, we haven't lost any market share. While we're waiting, we're introducing new platforms. That's kind of the progression of what we're seeing as we learn about this. And I'll call it the wind turbine infrastructure rollout to support the energy needs of a growing world. Does that answer your question, or was it not very helpful? And given what the power industry is saying about the need for power, it is probably compelling.

That has been kind of put on hold but again as we keep saying we haven't lost any market share. While we're waiting we are introducing new platforms.

But that's kind of the progression of what we're seeing as we learned about this and I'll call. It wind turbine infrastructure rollout to support.

Energy needs of.

A growing world.

Does that answer your question or was it.

Very helpful and.

Given what the power industry is saying about the need for power.

Chip Rui: Can you give us the same kind of overview on the electric battery and the starter modules for trains? Yeah, so it's the same scenario where all these companies are trying by 2030 to reach a certain number of, have in their product, fewer emissions. And so part of that is all these products like wind turbines and also electric trains. We talked a little bit about this in the past, maybe in one of the investor presentations about starter modules for refrigeration trucks. But anyway, starter modules replace lead-acid batteries in electric and diesel locomotives.

Probably compelling can you give us the same kind of overview on.

The electric battery and the startup modules for trains.

Yes, so its the same scenario where.

All of these companies are trying by 2030 to reach.

A certain number of.

Having their product.

The less emissions.

And so part of that is these all of these products like wind turbines and also.

Electric trains, we talked a little bit I think in the past maybe in one of the investor presentation.

Starter modules for refrigeration trucks, but anyway, the startup module replace lead acid batteries.

Gregory J. Peloquin: And those products were designed specifically with two of the largest diesel train manufacturers in North America. And kind of similar to how we started out in the Ultra 3000, if you will, from design to orders was about six months, and we have now between the two of them over $4 million in backlog, which will be shipping in FY 25. So that product was based on the UltraGen product, which can be used with companies like Kohler and Generac.

<unk> electric and diesel locomotive.

And those products were designed specifically with two of the largest diesel train manufacturers in North America.

And kind of similar to how we started out in the ultra 3000, if you will from design to orders was about six months and we have now between the two of them over $4 million in backlog, which will be shipping over FY 'twenty five so that product was was based on.

The altra Gen product, which can be used with people like polar and <unk> and we have a lot of things going on but specific to the starter modules that has been a great success and as I mentioned I think.

Gregory J. Peloquin: And we have a lot of things going on, but specific to the starter modules, that have been a great success. And as I mentioned earlier this morning, we have a contract for 1000 trains for one of the largest train manufacturers in North America. So it's kind of taking the same technology, and we have a very, very knowledgeable group on ultracapacitor technology and battery technology. And then we have a very strong design team that understands power management and all these applications. And all these new applications, all these current existing products have to change their power source or power management to meet either green energy needs or for them to introduce new products.

Earlier this morning.

<unk>.

Contract for 1000 trains for one of the largest.

Train manufacturers in North America.

It's kind of taking the same technology and we have a very very knowledgeable group.

Archie capacitor technology and battery technology, and then we have a very strong design team that understands powder management and all of these applications and all these new applications all of these.

Current existing products have to change their power source or power management to meet either green energy needs or for them to introduce new products and we're just in a great place.

Gregory J. Peloquin: And we're just in a great place. In terms of technology partners, the components, for example, the starter modules that we're making have five different technology partners designed into them. So it's such a unique model in this industry where we have better pricing and relationships and know what the next technology is, kind of what they have in terms of new technology coming out before it's even introduced that we can design in. We have those agreements.

In terms of technology partners. The components for example, the starter modules that were making.

Five different technology partners designed into them.

So it's such a unique model in this industry, where we have better pricing and relationships and know what the next technology is kind of what they have in terms of new technology coming out before it's even introduced that we can design and we have those agreements that we have an engineering team that can design test and manufacture.

Gregory J. Peloquin: Then we have an engineering team that can design, test, and manufacture these, I call them, niche products, but at these numbers, they're not so much of a niche to us. And then the ability, as I talked about, to bring these technologies globally to customers throughout the world. It's just, it's just a great model.

Call them niche products, but these numbers, it's not so much niche to us and then the ability as I talked about to bring these technologies globally to customers throughout the world.

It's just it's just a great model and.

<unk>.

We're doing everything we can to continue that pipeline to support all three of those cells.

Thank you.

Gregory J. Peloquin: And, you know, we're doing everything we can to continue that pipeline and support all three of those cells. Thank you. And our last question comes from Andrew Rim with Odenson Partners. Your line is open. Morning, Andrew. Hi, Wendy.

And our last question comes from Andrew Ram with <unk> Partners. Your line is open.

Good morning.

Hi, Matt.

I'm sorry.

Andrew Rim: I'm sorry. Can you maybe give some color on when exactly does the patent expire, and you get a kind of blue sky for your portfolio tubes? So the patent that you're questioning, Andrew, already expired in June, and that was a patent on the window.

Can you maybe give some color on.

When exactly does.

Patent expire and you can kind of blue Sky for your.

Portfolio of tubes.

So the patents that you're questioning Andrew already expired in June.

That was a patent on the window. So what that does is it allows us to repair more too.

Wendy S. Diddell: So what that does is it allows us to repair more tubes in the MX series. So I think that's what you're referring to. Yeah. So then when we think about the breakeven point, you said you lost $3 million on the year. How do we, how should we think about, I mean, what's the kind of go, no go decision? How much time do you give yourself? Cause it sounds like basically just, it just started, or the window just kind of opened. Uh, how long do you allow yourself, how much time do you need to kind of determine if this is worth continuing to own or not?

In the Amex theory.

I think thats, what youre, referring to.

Yeah.

So then when we think about.

The breakeven so you said your loss.

$3 million on the year.

How should we think about I mean.

What's kind of the go no go decision how much time do you give yourself because it sounds like basically just it just started or the window just kind of opened.

How long do you allow how much time do you need to kind of determine this is worth continuing to own or not.

Andrew Rim: Well, I think we've made it clear that we're exploring options while we work on the profitability element. So, there is no defined timeframe. I will tell you that during, you know, our planning session, we definitely showed a significant improvement in the operating performance of the healthcare group as we move forward with the Siemens Repair 2. So, Andrew, that's, I think, all we're prepared to say, right? Can you say what the annualized loss was just in the fourth quarter? In the fourth quarter, it was about, (inaudible). But I'll also, well, I can't tell you anything else.

Well I think we've made it clear that we're exploring options, while we work on the profitability element.

Wendy S. Diddell: That's it. Yeah. And then, Greg, can you just clarify the backlog in TMT specifically? You gave the backlog in GTS, but what was it in TMT?

So there is no defined timeframe I will tell you that during the.

In our planning session.

Definitely show a significant improvement in the operating performance of the health care group as we move forward with this enormous repaired tubes.

Yeah.

So Andrew I think all we're prepared to say right now.

Can you say what.

The annualized loss was just in the fourth quarter.

In the fourth quarter, it was about 600 or 700.

Yeah.

But what I'll also well I can't tell you anything.

Yes.

And then Greg can you just clarify.

The backlog in TMT, specifically, so you gave the backlog in GTS, but what was it in PMT.

Andrew Rim: Do the backlog number real quick, Bob, for PMT. Yeah. And the backlog is made up mainly of engineering solutions, so it would be LAM. And then the balance of that, the largest backlog of it is power and microwave components used for mainly base stations, SATCOM, and one of the biggest growing parts of the RF and wireless group is defense and radar applications.

The backlog number real quick Bob for PMT.

And the backlog is made up.

Mainly of.

Engineered solutions will be Lam and then the balance of that the largest backlog of it is power and microwave components.

Used for mainly base stations Satcom and one.

The biggest growing parts of the RF and wireless group is defense.

And radar applications.

Gregory J. Peloquin: Total $102 million in total, so about $54 million for PMT. Did that answer your question? Yeah, I guess it doesn't quite add up.

Total 102 million totaled.

About 54 for PMT.

Does that answer your question.

Andrew Rim: If it was 54 and you had 42 roughly in GES, and you're saying the total was 102? Yeah. Yeah, then that would be six. Okay, so what was it for being 42.3 for GEF, so 60 for...

Yes, it doesn't quite add up if it was 54 and <unk> had 42 roughly in Ges and we're seeing that total was 102.

Yeah, Yes, then that would be 60.

Yep Okay.

Okay.

Or was it for being two.

Two three for Ges 60 for.

PMT was.

$60 million.

And backlog going into FY 'twenty.

Andrew Rim: Okay, sorry, PMT was 60 million in backline going into FY25. Yep. Okay, thank you. I would now like to turn the call back over to Ed for his closing remarks. Thanks, Michelle. Well, thanks again to all of you who are joining us today, and we appreciate your investment and interest in Richardson Electronics. We look forward to our ongoing discussions and sharing our fiscal 2025 first quarter with you in October. Please don't hesitate to call us anytime. We're happy to take your calls, and thank you very much. This does conclude today's conference call. Thank you for participating. You may now disconnect. Thanks for watching!

Yes.

Okay. Thank you.

Yes, Andrew.

I would now like to turn the call back over to add for closing remarks.

Thanks Michelle.

Well thanks to all of you again, there are joining us today and we appreciate your investment and interest in Richardson electronics.

We look forward to our ongoing discussions and sharing our fiscal 2025 first quarter with you in October.

Please don't hesitate to call us anytime we're happy to take your calls thank you very much.

This does conclude today's conference call. Thank you for participating you may now disconnect.

Okay.

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Okay.

Okay.

Yes.

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