Q2 2026 Richardson Electronics Ltd Earnings Call

January 8, 2026

Good day, and thank you for standing by. Welcome to the Richardson Electronics earnings call for the second quarter of fiscal year 2026. At this time, all participants are in the listen-only mode. After this speaker's presentation, we will open up for questions. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's call is being recorded, and I'd like to hand it over to your speaker, Ed Richardson, CEO. Please go ahead.

Speaker #1: After the speakers' presentation, we'll open up for questions. To ask a question during the session, you will need to press star one one on your telephone, and you will then hear an automated message advising your hand is raised.

Speaker #1: To withdraw your question, please press star one one again. Please be advised that today's call is being recorded, and I'd like to hand it over to your speaker, Ed Richardson, CEO.

Speaker #1: Please go

Speaker #1: ahead. Good morning, and thank

Edward J. Richardson: Good morning, and thank you all for joining Richardson Electronics conference call for the second quarter of fiscal year 2026. We appreciate your continued support and interest in Richardson Electronics. Joining me today are Bob Ben, Chief Financial Officer; Wendy Diddell, Chief Operating Officer; Greg Peloquin, General Manager of our Power and Microwave Technologies and Green Energy Solutions Groups; and Jens Ruppert, General Manager of Canvys. As a reminder, this call is being recorded and will be available for playback. I would also like to remind you that we're making forward-looking statements. They're based on current expectations and involve risks and uncertainties. Therefore, our actual results could be materially different. Please refer to our press release and SEC filings for an explanation of our risk factors.

Speaker #2: Thank you all for joining the Richardson Electronics conference call for the second quarter of fiscal year 2026. We appreciate your continued support and interest in Richardson Electronics.

Speaker #2: Joining me today are Robert Ben, Chief Financial Officer; Wendy Diddell, Chief Operating Officer; Gregory Peloquin, General Manager of our Power and Microwave Technologies and Green Energy Solutions Groups; and Jens Ruppert, General Manager of Qambus.

Speaker #2: As a reminder, this call is being recorded and will be available for playback. I would also like to remind you that we're making forward-looking statements; they're based on current expectations and involve risks and uncertainties.

Speaker #2: Therefore, our actual results could be materially different. Please refer to our press release and SEC filings for an explanation of our risk factors. I'm pleased to report that Richardson Electronics has achieved six consecutive quarters of year-over-year growth, underscoring the progress we're making in executing our multi-year strategy.

I'm pleased to report that Richardson Electronics has achieved six consecutive quarters of year-over-year growth, underscoring the progress we're making in executing our multi-year strategy. This growth reflects our continued repositioning toward higher growth end markets and expanding contribution from our engineered solutions. Equally important, these results are driven by the strength of our people. While investors are familiar with our senior leadership team, we've been intentionally investing across the organization to build depth, diversity, and technical expertise throughout our ranks. I believe we have assembled one of the strongest and most motivated teams in the company's history, positioning Richardson Electronics for long-term sustainable value creation. Looking at our Q2 FY26 results, total sales were $52.3 million, up from $49.5 million in Q2 of last year. Driven by sales growth in our green energy and Canvys businesses, operating income improved to $132,000 versus a loss of $667,000 last year.

Speaker #2: This growth reflects our continued repositioning toward higher-growth end markets and the expanding contribution from our engineered solutions. Equally important, these results are driven by the strength of our people.

Speaker #2: While investors are familiar with our senior leadership across the organization, to build depth, diversity, and technical expertise throughout our ranks, I believe we have assembled one of the strongest and most motivated teams in the company's history, positioning Richardson Electronics for long-term sustainable value creation.

Speaker #2: Looking at our Q2 FY26 results, total sales were $52.3 million, up from $49.5 million in Q2 of last year. Driven by sales growth and our Green Energy and Qambus businesses, operating income improved to $132,000 versus a loss of $667,000 last year.

Speaker #2: Within our GES business unit, we're very pleased with the year-over-year growth, as well as sequential quarter-over-quarter growth. Both onshore wind and EV sales were up over the prior year in the Green Energy segment, reflecting higher sales from existing customers as well as sales from new products and an expanded customer base. Qambus revenue exceeded the prior year by 28% on improved demand from our medical OEMs.

Edward J. Richardson: Within our GES business unit, we're very pleased with the year-over-year growth as well as sequential quarter-over-quarter growth. Both onshore wind and EV sales were up over the prior year in green energy segment, reflecting higher sales from existing customers as well as sales from new products, and expanded customer base. Canvys revenue exceeded the prior year by 28% on improved demand from our medical OEMs. It's important to note that the sales growth was partially offset by the inclusion of our healthcare business in both the current year and the prior quarters. As a reminder, we sold the majority of our healthcare business in Q3 of FY25, so this will impact our year-over-year comparisons through the end of Q3 this year. We also remain focused on managing expenses and improving inventory turns.

Within our GES business unit, we're very pleased with the year-over-year growth as well as sequential quarter-over-quarter growth. Both onshore wind and EV sales were up over the prior year in green energy segment, reflecting higher sales from existing customers as well as sales from new products, and expanded customer base. Canvys revenue exceeded the prior year by 28% on improved demand from our medical OEMs. It's important to note that the sales growth was partially offset by the inclusion of our healthcare business in both the current year and the prior quarters. As a reminder, we sold the majority of our healthcare business in Q3 of FY25, so this will impact our year-over-year comparisons through the end of Q3 this year. We also remain focused on managing expenses and improving inventory turns.

Speaker #2: It's important to note that the sales growth was partially offset by the inclusion of our healthcare business in both the current year and the prior quarters.

Speaker #2: As a reminder, we sold the majority of our healthcare business in Q3 of FY25, so this will impact our year-over-year comparison through the end of Q3 this year.

Speaker #2: We also remain focused on managing expenses and improving inventory turns. Our cash position remains strong at $33.1 million, providing us with ongoing operations and strategic flexibility to support both our growth opportunities.

Edward J. Richardson: Our cash position remains strong at $33.1 million, providing us with flexibility to support both our ongoing operations and strategic growth opportunities. I'll now turn the call over to Bob Ben, our Chief Financial Officer, who will provide a detailed review of our second quarter results and capital positions. Following Bob's remarks, Greg and Jens will provide updates on our business units, and then Wendy will follow up with the progress we're making, executing again on our multi-year growth strategies.

Our cash position remains strong at $33.1 million, providing us with flexibility to support both our ongoing operations and strategic growth opportunities. I'll now turn the call over to Bob Ben, our Chief Financial Officer, who will provide a detailed review of our second quarter results and capital positions. Following Bob's remarks, Greg and Jens will provide updates on our business units, and then Wendy will follow up with the progress we're making, executing again on our multi-year growth strategies.

Speaker #2: I'll now turn the call over to Robert Ben, our Chief Financial Officer, who will provide a detailed review of our second quarter results and capital positions.

Speaker #2: Following Bob's remarks, Greg and Jens will provide updates on our business units, and then Wendy will follow up with the progress we're making executing again on our multi-year growth.

Speaker #2: Strategies. Thank you, Ed, and good morning.

Robert Ben: Thank you, Ed, and good morning. I will review our financial results for our second quarter and first six months of fiscal year 2026, followed by a review of our cash position. Consolidated net sales increased 5.7% to $52.3 million, compared to net sales of $49.5 million in the prior year's second quarter. When excluding healthcare, for which the majority of assets were sold in January 2025, net sales increased by 9.0%. Please note that healthcare results, including prior periods, are consolidated into the PMT segment beginning in fiscal 2026. This was our sixth consecutive quarterly year-over-year increase in sales. Second quarter net sales growth was led by a 39.0% increase in GES sales, driven by an increase in power management products. Canvys sales increased 28.1%, which primarily reflected higher sales in North America. Sales for PMT were 4.0% below the second quarter of fiscal 2025.

Speaker #3: I will review our financial results for our second quarter and first six months of fiscal year 2026, followed by a review of our cash position.

Speaker #3: Consolidated net sales increased 5.7% to $52.3 million, compared to net sales of $49.5 million in the prior year's second quarter. When excluding Healthcare, for which the majority of assets were sold in January 2025, net sales increased by 9.0%.

Speaker #3: Please note that healthcare results, including prior periods, are consolidated into the PMT segment beginning in fiscal 2026. This was our sixth consecutive quarterly year-over-year increase in sales.

Speaker #3: Second quarter net sales growth was led by a 39.0% increase in GES sales, driven by an increase in power management products. Qambus sales increased 28.1%, which primarily reflected higher sales in North America.

Speaker #3: Sales for PMT were 4.0% below the second quarter of fiscal 2025. Excluding healthcare, PMT sales were approximately flat. Consolidated gross margin for the second quarter was 30.8% of net sales, compared to 31.0% during the second quarter of fiscal 2025.

Robert Ben: Excluding healthcare, PMT sales were approximately flat. Consolidated gross margin for the second quarter was 30.8% of net sales, compared to 31.0% during the second quarter of fiscal 2025. The slight decrease in consolidated gross margin was primarily due to lower margin in PMT and GES, partially offset by higher margin in Canvys. Operating expenses, as a percentage of net sales, improved to 30.5% for the second quarter of fiscal 2026, compared to 32.3% in the second quarter of fiscal 2025. Operating income improved to $0.1 million for the second quarter of fiscal 2026, from an operating loss of $0.7 million in the prior year's second quarter. Net loss was $0.1 million for the second quarter of fiscal 2026, compared to $0.8 million in the second quarter of fiscal 2025.

Excluding healthcare, PMT sales were approximately flat. Consolidated gross margin for the second quarter was 30.8% of net sales, compared to 31.0% during the second quarter of fiscal 2025. The slight decrease in consolidated gross margin was primarily due to lower margin in PMT and GES, partially offset by higher margin in Canvys. Operating expenses, as a percentage of net sales, improved to 30.5% for the second quarter of fiscal 2026, compared to 32.3% in the second quarter of fiscal 2025. Operating income improved to $0.1 million for the second quarter of fiscal 2026, from an operating loss of $0.7 million in the prior year's second quarter. Net loss was $0.1 million for the second quarter of fiscal 2026, compared to $0.8 million in the second quarter of fiscal 2025.

Speaker #3: The slight decrease in consolidated gross margin was primarily due to lower margin in PMT and GES, partially offset by higher margin in Qambus. Operating expenses, as a percentage of net sales, improved to 30.5% for the second quarter of fiscal 2026, compared to 32.3% in the second quarter of fiscal 2025.

Speaker #3: Operating income improved to $0.1 million for the second quarter of fiscal 2026, from an operating loss of $0.7 million in the prior year's second quarter.

Speaker #3: Net loss was $0.1 million for the second quarter of fiscal 2026, compared to $0.8 million in the second quarter of fiscal 2025. Net loss per common share diluted was $0.01 in the second quarter of fiscal 2026, compared to $0.05 in the second quarter of fiscal 2025.

Robert Ben: Net loss per common share diluted was $0.01 in Q2 of fiscal 2026, compared to $0.05 in Q2 of fiscal 2025. EBITDA for Q2 of fiscal 2026 improved to $0.7 million versus break-even in the prior year's Q2. Please note that EBITDA is a non-GAAP financial measure, and a reconciliation of the non-GAAP item to the comparable GAAP measure is available in our Q2 fiscal year 2026 press release that was issued yesterday after the market closed. Turning to a review of the results for H1 fiscal year 2026, net sales were $106.9 million, an increase of $3.6 million from $103.2 million in H1 fiscal year 2025, which reflected higher sales across our business segments except for PMT. When excluding healthcare, consolidated net sales increased by 7.8%, and PMT net sales increased by 5.2%.

Net loss per common share diluted was $0.01 in Q2 of fiscal 2026, compared to $0.05 in Q2 of fiscal 2025. EBITDA for Q2 of fiscal 2026 improved to $0.7 million versus break-even in the prior year's Q2. Please note that EBITDA is a non-GAAP financial measure, and a reconciliation of the non-GAAP item to the comparable GAAP measure is available in our Q2 fiscal year 2026 press release that was issued yesterday after the market closed. Turning to a review of the results for H1 fiscal year 2026, net sales were $106.9 million, an increase of $3.6 million from $103.2 million in H1 fiscal year 2025, which reflected higher sales across our business segments except for PMT. When excluding healthcare, consolidated net sales increased by 7.8%, and PMT net sales increased by 5.2%.

Speaker #3: EBITDA for the second quarter of fiscal 2026 improved to $0.7 million, versus break-even in the prior year's second quarter. Please note that EBITDA is a non-GAAP financial measure, and a reconciliation of the non-GAAP item to the comparable GAAP measure is available in our second quarter fiscal year 2026 press release that was issued yesterday after the market closed.

Speaker #3: Turning to a review of the results for the first six months of fiscal year 2026, net sales were $106.9 million, an increase of $3.6 million from $103.2 million in the first six months of fiscal year 2025.

Speaker #3: This reflected higher sales across our business segments except for PMT. When excluding Healthcare, consolidated net sales increased by 7.8%, and PMT net sales increased by 5.2%.

Speaker #3: Gross margin was 30.9% of net sales, which was a slight increase from the first six months of fiscal 2025. As a percentage of net sales, operating expenses for the first six months of the fiscal year improved to 29.8%, from 31.1% for the first six months of the prior fiscal year.

Robert Ben: Gross margin was 30.9% of net sales, which was a slight increase from the first six months of fiscal 2025. As a percentage of net sales, operating expenses for the first six months of the fiscal year improved to 29.8% from 31.1% for the first six months of the prior fiscal year. Operating income for the first six months of fiscal year 2026 was $1.1 million, as compared to an operating loss of $0.4 million for the first six months of fiscal year 2025. The company reported net income of $1.8 million, or $0.12 per diluted common share for the first six months of fiscal year 2026, versus a net loss of $0.2 million, or $0.01 per diluted common share for the first six months of fiscal year 2025.

Gross margin was 30.9% of net sales, which was a slight increase from the first six months of fiscal 2025. As a percentage of net sales, operating expenses for the first six months of the fiscal year improved to 29.8% from 31.1% for the first six months of the prior fiscal year. Operating income for the first six months of fiscal year 2026 was $1.1 million, as compared to an operating loss of $0.4 million for the first six months of fiscal year 2025. The company reported net income of $1.8 million, or $0.12 per diluted common share for the first six months of fiscal year 2026, versus a net loss of $0.2 million, or $0.01 per diluted common share for the first six months of fiscal year 2025.

Speaker #3: Operating income for the first six months of fiscal year 2026 was $1.1 million, as compared to an operating loss of $0.4 million for the first six months of fiscal year 2025.

Speaker #3: The company reported net income of $1.8 million, or $0.12 per diluted common share, for the first six months of fiscal year 2026, versus a net loss of $0.2 million, or $0.01 per diluted common share, for the first six months of fiscal year 2025.

Speaker #3: EBITDA for the first six months of fiscal 2026 was $4.0 million, versus $1.7 million in the prior year's first six months. Turning to a review of our cash position, cash and cash equivalents at the end of the second quarter of fiscal 2026 were $33.1 million, compared to $35.7 million at the end of the first quarter of fiscal 2026.

Robert Ben: EBITDA for the first six months of fiscal 2026 was $4.0 million, versus $1.7 million in the prior year's first six months. Turning to a review of our cash position. Cash and cash equivalents at the end of the second quarter of fiscal 2026 were $33.1 million, compared to $35.7 million at the end of the first quarter of fiscal 2026. Capital expenditures of $1.6 million in the second quarter of fiscal 2026 were primarily related to our manufacturing business, facilities improvements, and IT systems, versus $0.5 million in the second quarter of fiscal year 2025. We paid $0.9 million in the second quarter for cash dividends. 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 third quarter of fiscal 2026.

EBITDA for the first six months of fiscal 2026 was $4.0 million, versus $1.7 million in the prior year's first six months. Turning to a review of our cash position. Cash and cash equivalents at the end of the second quarter of fiscal 2026 were $33.1 million, compared to $35.7 million at the end of the first quarter of fiscal 2026. Capital expenditures of $1.6 million in the second quarter of fiscal 2026 were primarily related to our manufacturing business, facilities improvements, and IT systems, versus $0.5 million in the second quarter of fiscal year 2025. We paid $0.9 million in the second quarter for cash dividends. 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 third quarter of fiscal 2026.

Speaker #3: Capital expenditures of $1.6 million in the second quarter of fiscal 2026 were primarily related to our manufacturing business, facilities improvements, and IT systems, versus $0.5 million in the second quarter of fiscal year 2025.

Speaker #3: We paid $0.9 million in the second quarter for cash dividends. 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 third quarter of fiscal 2026.

Speaker #3: As of the end of the second quarter of fiscal 2026, the company had no outstanding debt on its revolving line of credit with PNC Bank.

Robert Ben: As of the end of the second quarter of fiscal 2026, the company had no outstanding debt on its revolving line of credit with PNC Bank. Now, I will turn the call over to Greg, who will provide more details for our PMT and GES business groups.

As of the end of the second quarter of fiscal 2026, the company had no outstanding debt on its revolving line of credit with PNC Bank. Now, I will turn the call over to Greg, who will provide more details for our PMT and GES business groups.

Speaker #3: Now I will turn the call over to Greg, who will provide more details on our PMT and GES business.

Speaker #3: Groups. Thank you, Bob, and good morning,

Gregory Peloquin: Thank you, Bob, and good morning, everyone. GES and PMT are key components of our multi-year growth plan. Coming out of FY25, we had strong backlog, launched several new products, expanded our customer base, and advanced multiple development programs from beta testing to pre-production. This momentum continued into Q1 and into Q2. Building on this progress, in Q2 of fiscal year 2026, GES grew to $8.3 million, a 39% increase over prior year, and a 14% increase over this year's first quarter. As we continue to see the amazing adoption of our pitch energy modules for various wind turbine platforms with owner-operators and other related power management products throughout the world, PMT sales were $35.2 million in the quarter, a 4% decrease over prior year. This reflects a slight slowdown in the electron device MRO business, offset by growth in the RF and wireless components business unit.

Speaker #2: Everyone, GES and PMT are key components of our multi-year growth plan. Coming out of FY25, we had a strong backlog, launched several new products, expanded our customer base, and advanced multiple development programs from beta testing to pre-production.

Speaker #2: This momentum continued into Q1 and into Q2. Building on this progress, in Q2 of fiscal year 2026, GES grew to 8.3 million, a 39% increase over the prior year, and a 14% increase over this year's first quarter.

Speaker #2: As we continue to see the amazing adoption of our pitch energy modules for various wind turbine platforms with owner-operators, and other related power management products throughout the world, PMT.

Speaker #2: Sales were $35.2 million in the quarter, a 4% decrease over the prior year. This reflects a slight slowdown in the electron device MRO business, offset by growth in the RF and wireless components business unit.

Speaker #2: Our GES strategy centers on power management applications. We've rapidly designed multiple products, secured patents, and built a strong base of customers and partners. Our success is evident in our growing sales pipeline as we capitalize on numerous growth opportunities to support new power management requirements and significant energy transformation opportunities.

Gregory Peloquin: Our GES strategy centers on power management applications. We've rapidly designed multiple products, secured patents, and built a strong base of customers and partners. Our success is evident in our growing sales pipeline as we capitalize on numerous growth opportunities to support new power management requirements and significant energy transformation opportunities. Our pitch energy modules and related wind energy products led GES quarter-over-quarter growth. We continue to gain market share by developing new products and solutions that are accepted by our customers, and the team is doing a great job expanding this program globally. We serve dozens of wind turbine owners and operators, including exclusive partnerships with the top four owner-operators of GE wind turbines, such as RWE, Invenergy, Enel, and NextEra. We also saw growth from our new multi-brand PEM turbine platforms.

Our GES strategy centers on power management applications. We've rapidly designed multiple products, secured patents, and built a strong base of customers and partners. Our success is evident in our growing sales pipeline as we capitalize on numerous growth opportunities to support new power management requirements and significant energy transformation opportunities. Our pitch energy modules and related wind energy products led GES quarter-over-quarter growth. We continue to gain market share by developing new products and solutions that are accepted by our customers, and the team is doing a great job expanding this program globally. We serve dozens of wind turbine owners and operators, including exclusive partnerships with the top four owner-operators of GE wind turbines, such as RWE, Invenergy, Enel, and NextEra. We also saw growth from our new multi-brand PEM turbine platforms.

Speaker #2: Our pitch energy modules and related wind energy products led GES's quarter-over-quarter growth. We continue to gain market share by developing new products and solutions that are accepted by our customers, and the team is doing a great job expanding this program globally.

Speaker #2: We serve dozens of wind turbine owners and operators, including exclusive partnerships with the top four owner-operators of GE wind turbines, such as RWE, Inver Energy, Enel, and Nexterra.

Speaker #2: We also saw growth from our new multi-brand PEM turbine platforms. We continue to grow this program internationally, expanding into Europe and Asia with new products for other turbine platforms such as Suzlon, Senvion, Nordex, and SSB.

Gregory Peloquin: We continue to grow this program internationally, expanding into Europe and Asia with new products for other turbine platforms such as Suzlon, Senvion, Nordex, and SSB. We have now received orders from customers in Brazil, Australia, India, France, and Italy, in addition to our strong rollout in North America. We are entering the back half of FY26 with solid momentum. We recently added key technology partners such as Kehua, Gotion, and Wolong, who play critical roles in both wind power management and energy storage systems. Key initiatives include faster design-to-production cycles supported by a new design center in Sweetwater, Texas. Sweetwater has one of the largest concentrations of wind turbine and power management engineers in North America. Expanding our design team to accelerate and enhance design cycles prior to transitioning work to our world-class manufacturing and test group in LaFox, Illinois.

We continue to grow this program internationally, expanding into Europe and Asia with new products for other turbine platforms such as Suzlon, Senvion, Nordex, and SSB. We have now received orders from customers in Brazil, Australia, India, France, and Italy, in addition to our strong rollout in North America. We are entering the back half of FY26 with solid momentum. We recently added key technology partners such as Kehua, Gotion, and Wolong, who play critical roles in both wind power management and energy storage systems. Key initiatives include faster design-to-production cycles supported by a new design center in Sweetwater, Texas. Sweetwater has one of the largest concentrations of wind turbine and power management engineers in North America. Expanding our design team to accelerate and enhance design cycles prior to transitioning work to our world-class manufacturing and test group in LaFox, Illinois.

Speaker #2: We have now received orders from customers in Brazil, Australia, India, France, and Italy, in addition to our strong rollout in North America. We are entering the back half of FY26 with solid momentum.

Speaker #2: We recently added key technology partners such as Kiba, Goshen, and Wulong, who play critical roles in both wind power management and energy storage systems.

Speaker #2: Key initiatives include faster, design-to-production cycles supported by a new design center in Sweetwater, Texas. Sweetwater has one of the largest concentrations of wind turbine and power management engineers in North America.

Speaker #2: Expanding our design team to accelerate and enhance design cycles prior to transitioning work to our world-class manufacturing and test group in La Fox, Illinois.

Speaker #2: This is one of our most critical strategic priorities underway. We expect to have the Sweetwater design center fully operational in Q3 of FY26. We are also adding key people from the industry to help expedite growth.

Gregory Peloquin: This is one of our most critical strategic priorities underway. We expect to have the Sweetwater Design Center fully operational in Q3 of FY26. We are also adding key people from the industry to help expedite growth. We are on schedule to complete our Illinois-based demo center in Q4 FY26. This demo site will allow us to showcase our active BES solutions to potential customers. We are currently collaborating with numerous customers on BES systems that we can support with our current technology partners. In fact, we booked our first system at the end of December. Our GES products and technology partners support our niche product strategies. As it appears, federal subsidies will be harder to get under the current administration. Looking at our new ESS project and strategies, we are focused on sales in key states and will continue to offer large subsidies such as Illinois, Massachusetts, and California.

This is one of our most critical strategic priorities underway. We expect to have the Sweetwater Design Center fully operational in Q3 of FY26. We are also adding key people from the industry to help expedite growth. We are on schedule to complete our Illinois-based demo center in Q4 FY26. This demo site will allow us to showcase our active BES solutions to potential customers. We are currently collaborating with numerous customers on BES systems that we can support with our current technology partners. In fact, we booked our first system at the end of December. Our GES products and technology partners support our niche product strategies. As it appears, federal subsidies will be harder to get under the current administration. Looking at our new ESS project and strategies, we are focused on sales in key states and will continue to offer large subsidies such as Illinois, Massachusetts, and California.

Speaker #2: We are on schedule to complete our Illinois-based demo center in Q4 FY26. This demo site will allow us to showcase our active BES solutions to potential customers.

Speaker #2: We are currently collaborating with numerous customers on BES systems that we can support with our current technology partners. In fact, we booked our first system at the end of December.

Speaker #2: Our GES products and technology partners support our niche product strategies. As it appears, federal subsidies will be harder to get under the current administration.

Speaker #2: Looking at our new ESS project and strategies, we are focused on sales in key states and will continue to offer large subsidies, such as Illinois, Massachusetts, and California.

Speaker #2: We are also expediting our efforts to expand global market penetration of our power management products for green energy applications, focusing on Europe and Asia.

Gregory Peloquin: We are also expediting our efforts to expand global market penetration of our power management products for green energy applications, focusing on Europe and Asia. Currently, about 70% of our GES sales are in North America. Turning to Power and Microwave Technologies Group, or PMT, which includes our electron device group, EDG, and our legacy tube semiconductor wafer fab equipment business, and the RF and Microwave Components Group, or PMG. In the quarter, we did see some sales growth led by increased demand in our RF and Microwave Components business, as we see growth in RF and wireless applications such as SATCOM and military applications, including radar and drone technology. While semi-fab sales were flat in the quarter, we are encouraged by our customers' forecast, indicating growth for the rest of the fiscal year.

We are also expediting our efforts to expand global market penetration of our power management products for green energy applications, focusing on Europe and Asia. Currently, about 70% of our GES sales are in North America. Turning to Power and Microwave Technologies Group, or PMT, which includes our electron device group, EDG, and our legacy tube semiconductor wafer fab equipment business, and the RF and Microwave Components Group, or PMG. In the quarter, we did see some sales growth led by increased demand in our RF and Microwave Components business, as we see growth in RF and wireless applications such as SATCOM and military applications, including radar and drone technology. While semi-fab sales were flat in the quarter, we are encouraged by our customers' forecast, indicating growth for the rest of the fiscal year.

Speaker #2: Currently, about 70% of our GES sales are in North America. Turning to the Power and Microwave Technologies group, or PMT, which includes our Electron Device Group, EDG, and our legacy tube, semiconductor wafer fab equipment business, and the RF and Microwave Components Group, or PMG.

Speaker #2: In the quarter, we did see some sales growth, led by increased demand in our RF and microwave components business. As we see growth in RF and wireless applications such as SATCOM and military applications—including radar and drone technology—while Semifab sales were flat in the quarter, we are encouraged by our customers' forecasts indicating growth for the rest of the fiscal year.

Speaker #2: Looking ahead, we are excited about the strategic initiatives across PMT and GES, including our ESS program, global expansion of our key products, and new technology partnerships.

Gregory Peloquin: Looking ahead, we are excited about the strategic initiatives across PMT and GES, including our ESS program, global expansion of our key products, and new technology partnerships. While we are navigating a higher degree of uncertainty associated with the impact of tariffs and market conditions, we are pursuing opportunities that may come from these disruptions. We are investing in infrastructure, expanding our design and field engineering teams, and enhancing our in-house design and manufacturing capabilities. To support growing demand and innovation, our engineering teams continue to identify new customers and opportunities. Our global capabilities and global go-to-market strategy set us apart from our competition in power management, RF and microwave, and green energy markets. We have developed a business model that combines legacy products with new technology partners and solutions, allowing our growth strategy to deliver engineered solutions to a global customer base. This model differentiates us from our competition.

Looking ahead, we are excited about the strategic initiatives across PMT and GES, including our ESS program, global expansion of our key products, and new technology partnerships. While we are navigating a higher degree of uncertainty associated with the impact of tariffs and market conditions, we are pursuing opportunities that may come from these disruptions. We are investing in infrastructure, expanding our design and field engineering teams, and enhancing our in-house design and manufacturing capabilities. To support growing demand and innovation, our engineering teams continue to identify new customers and opportunities. Our global capabilities and global go-to-market strategy set us apart from our competition in power management, RF and microwave, and green energy markets. We have developed a business model that combines legacy products with new technology partners and solutions, allowing our growth strategy to deliver engineered solutions to a global customer base. This model differentiates us from our competition.

Speaker #2: While we are navigating a higher degree of uncertainty associated with the impact of tariffs and market conditions, we are pursuing opportunities that may come from these disruptions.

Speaker #2: We are investing in infrastructure, expanding our design and field engineering teams, and enhancing our in-house design and manufacturing capabilities. To support growing demand and innovation, our engineering teams continue to identify new customers and opportunities.

Speaker #2: Our global capabilities and global go-to-market strategy set us apart from our competition in power management, RF and microwave, and green energy markets. We have developed a business model that combines legacy products with new technology partners and solutions, aligning our growth strategy to deliver engineered solutions to a global customer base.

Speaker #2: This model differentiates us from our competition. We are working on these initiatives alongside marketing our manufacturing design services to companies who need partners in the US.

Gregory Peloquin: We are working on these initiatives alongside marketing our manufacturing design services to companies who need partners in the US to manufacture, test, and support products currently made in other countries. We acknowledge there are a lot of moving parts, but we have successfully used our global resources, infrastructure, and capabilities to mitigate the effect of these situations like this in the past. So, in summary, we remain optimistic about our growing project-based business, even though it remains hard to forecast. We continue to increase our technology partners, design opportunities, and engineering staff. We have new technology partnerships that fill technology gaps. We have proven strategy of identifying opportunities in the multi-billion-dollar markets we serve. As a result, we continue to feel FY26 will be another growth year for both PMT and GES. And with that, I'll turn it over to Jens to discuss Canvys.

We are working on these initiatives alongside marketing our manufacturing design services to companies who need partners in the US to manufacture, test, and support products currently made in other countries. We acknowledge there are a lot of moving parts, but we have successfully used our global resources, infrastructure, and capabilities to mitigate the effect of these situations like this in the past. So, in summary, we remain optimistic about our growing project-based business, even though it remains hard to forecast. We continue to increase our technology partners, design opportunities, and engineering staff. We have new technology partnerships that fill technology gaps. We have proven strategy of identifying opportunities in the multi-billion-dollar markets we serve. As a result, we continue to feel FY26 will be another growth year for both PMT and GES. And with that, I'll turn it over to Jens to discuss Canvys.

Speaker #2: To manufacture, test, and support products currently made in other countries. We acknowledge there are a lot of moving parts, but we have successfully used our global resources, infrastructure, and capabilities to mitigate the effect of situations like this in the past.

Speaker #2: So, in summary, we remain optimistic about our growing project-based business, even though it remains hard to forecast. We continue to increase our technology partners, design opportunities, and engineering staff.

Speaker #2: We have a new technology partnership that fills technology gaps. We have a proven strategy of identifying opportunities in the multi-billion dollar markets we serve. As a result, we continue to fill. FY26 will be another growth year for both PMT and GES.

Speaker #2: And with that, I'll turn it over to Jens to discuss.

Speaker #2: And with that, I'll turn it over to Jens to discuss Canvas. Thanks.

Jens Ruppert: Thank you, Greg, and good morning, everyone. Canvys engineers, manufactures, and sells custom displays to original equipment manufacturers across global industrial and medical markets. It is our mission to deliver high-quality display solutions tailored to our customers' needs. Canvys reported revenues of $8.8 million in the second quarter of fiscal year 2026, an increase of 28.1% from $6.8 million in the same quarter of the previous year. Our gross margin as a percentage of net sales increased to 32.6% from 31.7% in the second quarter of fiscal 2025, primarily due to product mix. The backlog at the end of the second quarter of fiscal 2026 remains strong at $38.0 million, providing a robust foundation for future business. During this most recent quarter, Canvys secured orders from both repeat and new medical OEM customers for a range of applications.

Speaker #1: Greg, and good morning, everyone. Canvas engineers, manufactures, and sells custom displays to original equipment manufacturers across global industrial and medical markets. It is our mission to deliver high-quality display solutions tailored to our customers' needs.

Speaker #1: Canvas reported revenues of $8.8 million in the second quarter of fiscal year 2026, an increase of 28.1% from $6.8 million in the same quarter of the previous year.

Speaker #1: Our gross margin as a percentage of net sales increased to 32.6% from 31.7% in the second quarter of fiscal '25, primarily due to product mix.

Speaker #1: The backlog at the end of the second quarter of fiscal 2026 remains strong, at $38.0 million, providing a robust foundation for future business. During this most recent quarter, Canvas secured orders from both repeat and new medical OEM customers for a range of applications.

Speaker #1: Our primary focus remains on robotic-assisted surgery, navigation, and oscopy, and human-machine interface (HMI) solutions for the control of medical devices. Furthermore, our solutions are widely utilized in various commercial and industrial applications. For instance, our products enhance passenger information systems in trains and buses, and improve HMI technologies used in printing, vending, milling, and packaging equipment.

Jens Ruppert: Our primary focus remains on robotic-assisted surgery, navigation, endoscopy, and human-machine interface (HMI) solutions for the control of medical devices. Furthermore, our solutions are widely utilized in various commercial and industrial applications. For instance, our products enhance passenger information systems in trains and buses and improve HMI technologies used in printing, vending, billing, and packaging equipment. Our initiatives focus on increasing Canvys's visibility and market leadership by seeking new opportunities, building customer relationships, and collaborating within the industry to drive growth. Looking ahead, while the business is still project-focused and can therefore vary quarter by quarter, we are cautiously optimistic about improving demand in our markets. Positive indicators such as increasing requests for quotes and encouraging customer feedback suggest steady growth. Our dedicated sales team continues to explore new opportunities, while I focus on implementing strategic plans to ensure sustainable growth and deliver long-term value for our shareholders.

Our primary focus remains on robotic-assisted surgery, navigation, endoscopy, and human-machine interface (HMI) solutions for the control of medical devices. Furthermore, our solutions are widely utilized in various commercial and industrial applications. For instance, our products enhance passenger information systems in trains and buses and improve HMI technologies used in printing, vending, billing, and packaging equipment. Our initiatives focus on increasing Canvys's visibility and market leadership by seeking new opportunities, building customer relationships, and collaborating within the industry to drive growth. Looking ahead, while the business is still project-focused and can therefore vary quarter by quarter, we are cautiously optimistic about improving demand in our markets. Positive indicators such as increasing requests for quotes and encouraging customer feedback suggest steady growth. Our dedicated sales team continues to explore new opportunities, while I focus on implementing strategic plans to ensure sustainable growth and deliver long-term value for our shareholders.

Speaker #1: Our initiatives focus on increasing Canvas' visibility and market leadership by seeking new opportunities, building customer relationships, and collaborating within the industry to drive growth.

Speaker #1: Looking ahead, while the business is still project-focused and can therefore vary quarter by quarter, we are cautiously optimistic about improving demand in our markets.

Speaker #1: Positive indicators, such as increasing requests for quotes and encouraging customer feedback, suggest steady growth. Our dedicated sales team continues to explore new opportunities, while I focus on implementing strategic plans to ensure sustainable growth and deliver long-term value for our shareholders.

Speaker #1: I will now turn the call over to

Jens Ruppert: I will now turn the call over to Wendy.

I will now turn the call over to Wendy.

Speaker #1: Wendy.

Wendy Diddell: Thank you, Jens, and good morning, everyone. While the remainder of our healthcare business, including the manufacture and repair of certain CT tubes, is included in PMT, I want to continue providing key highlights as we go through this transition period over the remaining quarters of FY26. As a reminder, we sell CT tubes exclusively to DirectMed as part of the January 2025 sale and distribution agreements. Over the last quarter, we continued to make excellent progress finishing production of our ALTA tubes. We should wrap this up by the end of Q3 of this fiscal year. We've also made good strides during the recent quarter repairing Siemens Stratton Z tubes. We are preparing to launch the repaired Siemens MX series as early as Q4 of this fiscal year.

Speaker #2: Jens, and good morning, everyone. While the remainder of our healthcare business, including the manufacturing and repair of certain CT tubes, is included in PMT, I want to continue providing key highlights as we go through this transition period over the remaining quarters of FY26.

Speaker #2: As a reminder, we sell CT tubes exclusively to Direct Med as part of the January 2025 sale and distribution agreements. Over the last quarter, we continued to make excellent progress, finishing production of our Ultra tubes.

Speaker #2: We should wrap this up by the end of the third quarter of this fiscal year. We've also made good strides during the recent quarter repairing Siemens Stratton Z tubes.

Speaker #2: We are preparing to launch the repaired Siemens MX series as early as the fourth quarter of this fiscal year. Given the healthcare transaction occurred in Q3 FY25, Q2, and Q3 of FY26, we'll continue to show unfavorable comparisons.

Wendy Diddell: Given the healthcare transaction occurred in Q3 FY25, Q2, and Q3 of FY26 will continue to show unfavorable comparisons. However, the combination of completing the production of the ALTA tubes and expanding our Siemens program for DirectMed will result in an improvement to our bottom line beginning in FY27. Switching to an overview of our multi-year strategy, we continue to focus on accelerating growth and improving efficiency. In the second quarter, we had significant growth in our green energy business unit, reflecting our ongoing investment in this sector and the benefit of new products generating revenue. Today, we are shipping our pitch energy modules for nearly all GE manufactured turbines to an expanded customer and geographic mix. There are several additional products in development and test that should start contributing to revenue growth in calendar year 2027.

Given the healthcare transaction occurred in Q3 FY25, Q2, and Q3 of FY26 will continue to show unfavorable comparisons. However, the combination of completing the production of the ALTA tubes and expanding our Siemens program for DirectMed will result in an improvement to our bottom line beginning in FY27. Switching to an overview of our multi-year strategy, we continue to focus on accelerating growth and improving efficiency. In the second quarter, we had significant growth in our green energy business unit, reflecting our ongoing investment in this sector and the benefit of new products generating revenue. Today, we are shipping our pitch energy modules for nearly all GE manufactured turbines to an expanded customer and geographic mix. There are several additional products in development and test that should start contributing to revenue growth in calendar year 2027.

Speaker #2: However, the combination of completing the production of the Ultra tubes and expanding our Siemens program for direct med will result in an improvement to our bottom line beginning in FY27.

Speaker #2: Switching to an overview of our multi-year strategy, we continue to focus on accelerating growth and improving efficiency. In the second quarter, we had significant growth in our Green Energy business unit, reflecting our ongoing investment in this sector and the benefit of new products generating revenue.

Speaker #2: Today, we are shipping our pitch energy modules for nearly all GE-manufactured turbines, to an expanded customer and geographic mix. There are several additional products in development and tests that should start contributing to revenue growth in calendar year 2027.

Speaker #2: We also continue to make progress, developing a world-class battery energy storage design center at our La Fox facility. As we've mentioned before, the demand for battery energy storage continues to accelerate, and our turnkey solutions and technology partners position us to capitalize on that growth.

Wendy Diddell: We also continue to make progress developing a world-class battery energy storage design center at our LaFox facility. As we've mentioned before, the demand for battery energy storage continues to accelerate, and our turnkey solutions and technology partners position us to capitalize on that growth. In the quarter, we added several projects to our pipeline, including one that closed end of December. Our made-in-America activities are also generating interest. We are utilizing existing customer and supplier relationships to promote our engineering and manufacturing capabilities here in the US. We've reached the quoting and prototype stage on several programs, primarily taking advantage of our PCB facility as well as our battery knowledge. This isn't a fast process, but the upside of new programs will play a key role in fully utilizing our factory and resources.

We also continue to make progress developing a world-class battery energy storage design center at our LaFox facility. As we've mentioned before, the demand for battery energy storage continues to accelerate, and our turnkey solutions and technology partners position us to capitalize on that growth. In the quarter, we added several projects to our pipeline, including one that closed end of December. Our made-in-America activities are also generating interest. We are utilizing existing customer and supplier relationships to promote our engineering and manufacturing capabilities here in the US. We've reached the quoting and prototype stage on several programs, primarily taking advantage of our PCB facility as well as our battery knowledge. This isn't a fast process, but the upside of new programs will play a key role in fully utilizing our factory and resources.

Speaker #2: In the quarter, we added several projects to our pipeline, including one that closed at the end of December. Our Made in America activities are also generating interest.

Speaker #2: We are utilizing existing customer and supplier relationships to promote our engineering and manufacturing capabilities here in the U.S. We've reached the quoting and prototype stage on several programs, primarily taking advantage of our PCB facility as well as our battery knowledge.

Speaker #2: This isn't a fast process, but the upside of new programs will play a key role in fully utilizing our factory and resources. Finally, we are expecting stronger demand for our engineered solutions within the semiconductor wafer fab equipment market, well into calendar year 2026 and beyond.

Wendy Diddell: Finally, we are expecting stronger demand for our engineered solutions within the semiconductor wafer fab equipment market well into calendar year 2026 and beyond. This growth is tied to the ongoing benefit of AI on equipment demand throughout the world. We are well positioned to benefit from growth in memory-related applications. This growth takes advantage of our existing resources and manufacturing facilities as well. We remain focused on efficiency and cash generation. The period of elevated inventory investment relating to a single critical supplier is nearing completion as that supplier prepares to exit production of power grid tubes. We expect final inventory receipts of approximately EUR 1.5 million in Q1 of calendar year 2026, after which inventory levels should normalize and cash conversion improve. This inventory provides product coverage through 2030. We have identified alternative supply sources with sufficient time to ensure continuity, quality, and fulfillment of customer demand.

Finally, we are expecting stronger demand for our engineered solutions within the semiconductor wafer fab equipment market well into calendar year 2026 and beyond. This growth is tied to the ongoing benefit of AI on equipment demand throughout the world. We are well positioned to benefit from growth in memory-related applications. This growth takes advantage of our existing resources and manufacturing facilities as well. We remain focused on efficiency and cash generation. The period of elevated inventory investment relating to a single critical supplier is nearing completion as that supplier prepares to exit production of power grid tubes. We expect final inventory receipts of approximately EUR 1.5 million in Q1 of calendar year 2026, after which inventory levels should normalize and cash conversion improve. This inventory provides product coverage through 2030. We have identified alternative supply sources with sufficient time to ensure continuity, quality, and fulfillment of customer demand.

Speaker #2: This growth is tied to the ongoing benefit of AI on equipment demand throughout the world. We are well positioned to benefit from growth in memory-related applications.

Speaker #2: This growth takes advantage of our existing resources and manufacturing facilities as well. We remain focused on efficiency and cash generation. The period of elevated inventory investment relating to a single critical supplier is nearing completion, as that supplier prepares to exit production of power grid tubes.

Speaker #2: We expect final inventory receipts of approximately €1.5 million in the first quarter of calendar year 2026, after which inventory levels should normalize and cash conversion improve.

Speaker #2: This inventory provides product coverage through 2030. We have identified alternative supply sources with sufficient time to ensure continuity, quality, and fulfillment of customer demand.

Speaker #2: Outside this area of growth, we continue to focus on controlling inventory and improving turns. We've also initiated a disciplined, cost-controlled effort to explore the benefits of AI by creating an enterprise-wide AI steering committee.

Wendy Diddell: Outside this area of growth, we continue to focus on controlling inventory and improving turns. We have also initiated a disciplined, cost-controlled effort to explore the benefits of AI by creating an enterprise-wide AI steering committee. This effort is expected to create a roadmap focused on practical, high ROI applications across our global operations. The goal is to drive efficiencies, improve decision-making, and reduce manual workload while maintaining strong governance around security, data privacy, and responsible AI use. Importantly, this initiative is designed to leverage our internal teams with clear milestones and tight scope controls, ensuring we capture meaningful benefits without significant incremental cost. Longer term, we remain focused on driving growth through a combination of organic initiatives and a disciplined approach to acquisitions. We continue to evaluate opportunities thoughtfully, with an emphasis on leveraging our existing capabilities and global infrastructure to support sustainable growth.

Outside this area of growth, we continue to focus on controlling inventory and improving turns. We have also initiated a disciplined, cost-controlled effort to explore the benefits of AI by creating an enterprise-wide AI steering committee. This effort is expected to create a roadmap focused on practical, high ROI applications across our global operations. The goal is to drive efficiencies, improve decision-making, and reduce manual workload while maintaining strong governance around security, data privacy, and responsible AI use. Importantly, this initiative is designed to leverage our internal teams with clear milestones and tight scope controls, ensuring we capture meaningful benefits without significant incremental cost. Longer term, we remain focused on driving growth through a combination of organic initiatives and a disciplined approach to acquisitions. We continue to evaluate opportunities thoughtfully, with an emphasis on leveraging our existing capabilities and global infrastructure to support sustainable growth.

Speaker #2: This effort is expected to create a roadmap focused on practical, high-ROI applications across our global operations. The goal is to drive efficiencies, improve decision-making, and reduce manual workload while maintaining strong governance around security, data privacy, and responsible AI use.

Speaker #2: Importantly, this initiative is designed to leverage our internal teams with clear milestones and tight scope controls, ensuring we capture meaningful benefits without significant incremental cost.

Speaker #2: Longer term, we remain focused on driving growth through a combination of organic initiatives and a disciplined approach to acquisitions. We continue to evaluate opportunities thoughtfully, with an emphasis on leveraging our existing capabilities and global infrastructure to support sustainable growth.

Speaker #2: We believe our current strategic initiatives position us well to drive revenue and profitability over time, while we remain patient and selective as we consider potential longer-term acquisition opportunities.

Wendy Diddell: We believe our current strategic initiatives position us well to drive revenue and profitability over time, while we remain patient and selective as we consider potential longer-term acquisition opportunities. I'll now turn the call back over to Ed.

We believe our current strategic initiatives position us well to drive revenue and profitability over time, while we remain patient and selective as we consider potential longer-term acquisition opportunities. I'll now turn the call back over to Ed.

Speaker #2: I'll now turn the call back over to

Speaker #2: Ed. Thanks,

Gregory Peloquin: Thanks, Wendy. In closing, our results this quarter demonstrate the strength of our strategy and the resilience of our business model. It also reflects the talent of this management team to adjust to constantly changing market conditions. By sharpening our focus on repeatable sales, driving strong cash flow, and building on our scale across power management and alternative energy solutions, we're positioning the company for long-term success. At the same time, we remain disciplined in our commitment to improving profitability. These priorities give us the confidence in our ability to deliver sustainable value for our shareholders, customers, and employees as we move forward. We'll now open the call for questions.

Edward J. Richardson: Thanks, Wendy. In closing, our results this quarter demonstrate the strength of our strategy and the resilience of our business model. It also reflects the talent of this management team to adjust to constantly changing market conditions. By sharpening our focus on repeatable sales, driving strong cash flow, and building on our scale across power management and alternative energy solutions, we're positioning the company for long-term success. At the same time, we remain disciplined in our commitment to improving profitability. These priorities give us the confidence in our ability to deliver sustainable value for our shareholders, customers, and employees as we move forward. We'll now open the call for questions.

Speaker #1: Wendy. In closing, our results this quarter demonstrate the strength of our strategy and the resilience of our business model. It also reflects the talent of this management team to adjust to constantly changing market conditions.

Speaker #1: By sharpening our focus on repeatable sales, driving strong cash flow, and building on our scale across power management and alternative energy solutions, we're positioning the company for long-term success.

Speaker #1: At the same time, we remain disciplined in our commitment to improving profitability. These priorities give us confidence in our ability to deliver sustainable value for our shareholders, customers, and employees as we move forward.

Speaker #1: We'll now open the call for questions.

Speaker #1: questions. Thank you.

Operator: Thank you. At this time, we'll conduct a question-and-answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for a name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question and one follow-up in the interest of time. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from the line of Bobby Brooks from Northland. Your line is open.

Speaker #2: At this time, we'll conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced to withdraw your question.

Speaker #2: Please press star 11 again. Please limit yourself to one question and one follow-up in the interest of time. Please stand by while we compile the Q&A roster.

Speaker #2: One moment for our first question. Our first question will come from the line of Bobby Brooks from Northland. Your line is open.

Speaker #2: open. Hey, good morning, team.

Bobby Brooks: Hey, good morning, team. Thank you for taking my question. You mentioned how overall.

Speaker #3: Thank you for taking my question. Good morning. You mentioned how overall GES backlog declined, but that core backlog grew. Could you just discuss what would be considered core backlog versus—

Gregory Peloquin: Morning.

Bobby Brooks: Good morning. You mentioned how overall GES backlog declined, but that core backlog grew. Could you just discuss what would be considered core backlog versus non-core?

Speaker #3: non-core? Sure,

Gregory Peloquin: Sure, Bobby. This is Greg. So the backlog, so sales were up 39% and backlog was down $57,000. That's not too bad. You go 39% and your backlog only decreases $57,000. So when I talk about core backlog, we have the products that you and I have talked about, the pitch energy modules, and everything else. We also have a group of customers that we're selling components into that are building green energy products. It's a much smaller portion of GES, but that's what we call the non-core, and that book-to-bill was down. But if you look at the core business, which is 95% of it, the book-to-bill was 1.10 on 39% growth and, of course, 15% above that. So we're very excited about the business, core business that we talked to you about, that you know about. Those are the products that are growing. Okay?

Speaker #4: Bobby, this is Greg. So, the backlog—so sales were up 39%, and backlog was down $57,000. That's not too bad. You grow 39% and your backlog only decreases $57,000.

Speaker #4: So, when I talk about core backlog, we have the products that you and I have talked about: the pitch energy modules and everything else.

Speaker #4: We also have a group of customers that we're selling components into that are building green energy products. It's a much smaller portion of GES, but that's what we call the non-core, and that book-to-bill was down.

Speaker #4: But if you look at the core business—which is 95% of it—the book-to-bill was 1.10 on 39% growth, and of course, 15% above that.

Speaker #4: So we're very excited about the business, the core business that we talked to you about, that you know about. Those are the products that are growing.

Speaker #4: Okay? Thank you.

Speaker #3: Got it. That's helpful and really...

Bobby Brooks: Got it. That's helpful and really good to hear.

Speaker #3: Good to hear. And then, maybe, what's the right way to think about cadence of orders, turning to backlog and then revenues within GES? Are there certain product lines that can be booked and shipped intra-quarter, and was that maybe a dynamic that spurred the strong GES sales in the—

Gregory Peloquin: Thanks.

Bobby Brooks: Then maybe what's the right way to think about cadence of orders turning to backlog and then revenues within GES? Are there certain product lines that can be booked and shipped interquarter? And that maybe was a dynamic that spurred the strong GES sales in the quarter?

Speaker #3: quarter? Exactly, Bobby.

Gregory Peloquin: Exactly, Bobby. So as these products come out, they go from alpha, beta to production. And then once that happens, you see we have new customers every quarter, new sales. And so that business is what led to the growth. And as you know, we're expanding that model, which is, geez, about 85% North America, expanding it into Europe. So we had wins in Europe that we booked and then wins in Asia that we booked. So that core business that we talk about, that's growing quite heavily, and we continue to get new customers and backlog. So we're starting to understand what the annual usage is. And so we're trying to get ahead of the game and build products for stock. It's a guessing game. They do give us a forecast, but they're a terrible forecast. So in Q2, we did ship a lot of product from stock.

Speaker #4: So as these products come out, they go from alpha, beta, to production, and then once that happens, you see we have new customers every quarter.

Speaker #4: New sales, and so that business is what led to the growth. And as you know, we're expanding that model—which is, geez, about 85% North America—expanding it into Europe.

Speaker #4: So, we had wins in Europe that we booked, and then wins in Asia that we booked. So, that core business that we talk about, that's growing quite heavily, and we continue to get new customers and backlog.

Speaker #4: So we're starting to understand what the annual usage is, and so we're trying to get ahead of the game and build products for stock.

Speaker #4: It's a guessing game. They do give us a forecast, but they're terrible forecasts. So, in Q2, we did ship a lot of product from stock.

Speaker #4: So that's a book to bill of one. That's flat bookings—or backlog—and that's where you saw it. So the team has done a great job working with these key customers.

Gregory Peloquin: So that's a book-to-bill of one. That's flat bookings or backlog. And that's where you saw it. So the team has done a great job working with these key customers, trying to develop their annual needs. And then when they come in for 1,000 units, just kind of out of the blue, Bobby, I know a couple of those we were able to ship from stock. So that's how it's working. And we're continuing to try to make sure we have inventory so we can ship from stock. But in a very positive way, we're seeing higher demand than what we're building.

So that's a book-to-bill of one. That's flat bookings or backlog. And that's where you saw it. So the team has done a great job working with these key customers, trying to develop their annual needs. And then when they come in for 1,000 units, just kind of out of the blue, Bobby, I know a couple of those we were able to ship from stock. So that's how it's working. And we're continuing to try to make sure we have inventory so we can ship from stock. But in a very positive way, we're seeing higher demand than what we're building.

Speaker #4: Trying to develop their annual needs, and then when they come in for 1,000 units, just kind of out of the blue. Bobby, I know a couple of those we were able to ship from stock, so.

Speaker #4: That's how it's working, and we're continuing to try to make sure we have inventory so we can ship from stock, but in a very positive way.

Speaker #4: We're seeing higher demand than what we're building.

Speaker #3: That's great to hear. I'll return to the Q and jump back in later.

Bobby Brooks: That's great to hear. I'll return to the Q and jump back in later. Thanks.

Speaker #3: Thanks. Thanks,

Gregory Peloquin: Thanks, Bobby.

Speaker #2: Thank you. One moment for our next question. Our next question will come from the line of Anja Soderstrom from Sidoti. Your line is open.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Anja Soderstrom from Sidoti. Your line is open.

Speaker #5: And thank

Anja Soderstrom: Hi, thank you for taking my question. So I'm just curious, with the GE approval list for the Ultra 1000, where do you see it? And what kind of opportunity could that present?

Speaker #5: Thank you for taking my question. So I'm just open, curious—with the GES approval list for the Ultra 1,000, where do you, and what kind of opportunity could that—

Speaker #5: Present? Say it again, Ana, for the—

Gregory Peloquin: Say it again, Anja, for the what product?

Speaker #4: what product?

Speaker #5: The Ultra 1,000 for the GES approval list.

Anja Soderstrom: The ULTRA3000 for the GE approval list.

Speaker #6: I think you said Anja's asking about the GE. Where do we stand with GE getting approval? For the Ultra 3,000?

Operator: I think Anja's asking about the GE. Where do we stand with GE getting approval for your Ultra 3000?

Wendy Diddell: I think Anja's asking about the GE. Where do we stand with GE getting approval for your Ultra 3000?

Speaker #4: Oh, okay. Yeah. So, I'm sorry. Yeah. So, Ana, we have GES approval. We're the featured product on their internet site or their marketplace product.

Gregory Peloquin: Oh, okay. Yeah. So.

Anja Soderstrom: Okay. I'm sorry. We talked about.

Gregory Peloquin: Yeah. So Anna, we have GE approval. We're the featured product on their internet site or their marketplace product. We're not driving this. This is being driven by their customers. So NextEra and Invenergy have been pushing GE because they have a handful of sites where they're using GE services to do maintenance and service. And so all we need to do is have GE. We're going to send them some product, and they're going to try to literally blow it up. I mean, it's all about what this product will do so they can approve it from a safety point of view. From a performance point of view and working in their turbines, that's already been approved. That's already done. So we've been going back and forth with an NDA. I've worked for a $30 billion company before, and it takes time. So we have an agreed NDA.

Speaker #4: We're not driving this. This is being driven by their customers. So Nexterra and Inver Energy have been pushing GE because they have a handful of sites where they're using GE services to do maintenance, and so all we need to do is service.

Speaker #4: And have GE—we're going to send them some product—and they're going to try to literally blow it up. I mean, it's all about what this product will do so they can approve it from a safety point of view.

Speaker #4: From a performance point of view and working in their turbines, that's already been approved. That's already done. So we've been going back and forth with an NDA.

Speaker #4: I've worked for a $30 billion company for the $30 billion company before. And it takes time. So we have an agreed NDA. We signed it.

Gregory Peloquin: We signed it. We sent it back to them. We're expecting it back. But I will tell you, Anja, these people aren't waiting. In fact, we booked a large number of business that they said, "You know what? We'll outsource this ourselves. We won't use GE services to install these ULTRA3000s, which we've been buying for other sites for three or four years." So really, right now, I don't see it being a slowdown of any sort. We have more than enough business right now. It'll be an upside. But I wouldn't doubt if they just say, "You know what? We're not going to use your services to do our Pitch Energy Modules," because these things are such a cost savings to these owner-operators, and they eliminate a huge problem that they have. I don't think they're going to wait for this.

We signed it. We sent it back to them. We're expecting it back. But I will tell you, Anja, these people aren't waiting. In fact, we booked a large number of business that they said, "You know what? We'll outsource this ourselves. We won't use GE services to install these ULTRA3000s, which we've been buying for other sites for three or four years." So really, right now, I don't see it being a slowdown of any sort. We have more than enough business right now. It'll be an upside. But I wouldn't doubt if they just say, "You know what? We're not going to use your services to do our Pitch Energy Modules," because these things are such a cost savings to these owner-operators, and they eliminate a huge problem that they have. I don't think they're going to wait for this.

Speaker #4: We sent it back to them. We're expecting it back. But I will tell you, Ana, these people aren't waiting. In fact, we booked a large number of business that they said, 'You know what?'

Speaker #4: We'll outsource this ourselves. We won't use GE services to install these Ultra 3,000s, which we've been buying for other sites for three or four years. So really, right now, I don't see it being a slowdown of any sort.

Speaker #4: We have more than enough business right now. It'll be an upside, but I wouldn't doubt if they just say, 'You know what? We're not going to use your services to do our pitch energy modules because these things are such a cost savings to these owner-operators and they eliminate a huge problem that they have. I don't think they're going to wait for this.' So this is being driven by GE's customers.

Gregory Peloquin: So this is being driven by GE's customers. We're just supporting it. But again, we finally have an agreed NDA because I'm not sending them any product without an NDA. We're going to send them product here this quarter. They'll test them, and then they'll say, "Okay, their service group can install these into the turbines." But it's interesting, some of these owner-operators aren't waiting for them. They're just doing it themselves and installing it themselves or outsourcing it.

So this is being driven by GE's customers. We're just supporting it. But again, we finally have an agreed NDA because I'm not sending them any product without an NDA. We're going to send them product here this quarter. They'll test them, and then they'll say, "Okay, their service group can install these into the turbines." But it's interesting, some of these owner-operators aren't waiting for them. They're just doing it themselves and installing it themselves or outsourcing it.

Speaker #4: Supporting it. But we're just—again, we finally have an agreed NDA, because I'm not sending them any product without an NDA. We're going to send them product here this quarter.

Speaker #4: They'll test them, and then they'll say, "Okay, their service group can install these into the turbines." But it's interesting—some of these owner-operators aren't waiting for them.

Speaker #4: They're just doing it themselves and installing it themselves, or outsourcing.

Speaker #4: it. Okay.

Anja Soderstrom: Okay. Thank you. That was helpful. And then what's kind of margin impact does the medical have, and what kind of opportunity do you see there as you conclude that supply agreement?

Speaker #5: Thank you. That was helpful. And then, what kind of margin impact does the medical have, and what kind of opportunity do you see there as you conclude that supply agreement?

Speaker #6: Okay, so this is Wendy. Hi, Anja. Good morning. At the end of the day, the overall hit to the gross margin in PMT has been almost negligible.

Operator: Okay. So this is Wendy. Hi, Anja. Good morning. The overall hit to the gross margin in PMT has been almost negligible. It's about a 0% gross margin. So we're not experiencing a huge hit there. It's the addition of the SG&A. And on a year-to-date basis, while we're doing better than we anticipated with that, we still are losing money. As we mentioned in the call, we anticipate finishing up the ALTA tube production in the third quarter. And when we conclude that and we're focusing then strictly on the repair of the Siemens tubes, we expect that to turn to a profitable bottom-line contribution. So we're estimating at this point that that will begin in Q1 of FY27, but we're going to do everything we can to pull that into Q4.

Wendy Diddell: Okay. So this is Wendy. Hi, Anja. Good morning. The overall hit to the gross margin in PMT has been almost negligible. It's about a 0% gross margin. So we're not experiencing a huge hit there. It's the addition of the SG&A. And on a year-to-date basis, while we're doing better than we anticipated with that, we still are losing money. As we mentioned in the call, we anticipate finishing up the ALTA tube production in the third quarter. And when we conclude that and we're focusing then strictly on the repair of the Siemens tubes, we expect that to turn to a profitable bottom-line contribution. So we're estimating at this point that that will begin in Q1 of FY27, but we're going to do everything we can to pull that into Q4.

Speaker #6: It's about a 0% gross margin, so we're not experiencing a huge hit there. It's the addition of the SG&A. And on a year-to-date basis, while we're doing better than we anticipated with that, we still are losing money.

Speaker #6: As we mentioned in the call, we anticipate finishing up the Ultra Tube production in the third quarter. And when we conclude that and we're focusing then strictly on the repair of the Siemens tubes, we expect that to turn to a profitable bottom-line contribution.

Speaker #6: So I'm estimating—we're estimating at this point—that that will begin in Q1 of FY27, but we're going to do everything we can to pull that into Q4.

Speaker #5: Okay. Thank you. And then you're sitting on some cash, and you expect cash flow to improve as you're finishing building up the inventory for the power grid tubes.

Anja Soderstrom: Okay. Thank you. And then you're sitting on some cash, and you expect cash flow to improve as you're finishing building up the inventory for the power grid tubes. What's your plan to do with all the cash?

Speaker #5: What do you plan to do with all the

Speaker #5: cash? Well,

Operator: Well, I'll jump in first, and then Ed and Bob can also contribute. The first thing we always remind everybody, Anja, is that cash is spread out throughout the world. And I believe today about 70% of it sits outside the United States in various legal entities. And that cash has to stay there. So while it looks like, I mean, $33 million is a great number, and we're going to continue to focus on growing that, please do remember that some of that is not in the United States. So we're going to continue investing in the growth initiatives, primarily in the alternative or green energy solutions part of the business. Greg mentioned the Sweetwater, Texas facility and improving our new product development cycle. We're looking at some additional both sales and engineering resources that support that business.

Wendy Diddell: Well, I'll jump in first, and then Ed and Bob can also contribute. The first thing we always remind everybody, Anja, is that cash is spread out throughout the world. And I believe today about 70% of it sits outside the United States in various legal entities. And that cash has to stay there. So while it looks like, I mean, $33 million is a great number, and we're going to continue to focus on growing that, please do remember that some of that is not in the United States. So we're going to continue investing in the growth initiatives, primarily in the alternative or green energy solutions part of the business. Greg mentioned the Sweetwater, Texas facility and improving our new product development cycle. We're looking at some additional both sales and engineering resources that support that business.

Speaker #6: I'll jump in first, and then Ed and Bob can also contribute. The first thing we always remind everybody, Anja, is that cash is spread out throughout the world.

Speaker #6: And I believe today about 70% of it sits outside the United States in various legal entities. And that cash has to stay there. So while it looks like, I mean, $33 million is a great number and we're going to continue to focus on growing that, please do remember that some of that is not in the United States.

Speaker #6: So we're going to continue investing in the growth initiatives, primarily in the alternative or green energy solutions part of the business. Greg mentioned the Sweetwater, Texas facility and improving our new product development cycle.

Speaker #6: We're looking at some additional both sales and engineering resources that support that business. So we really want to hold that money that we have in the United States for those types of investments.

Operator: So we really want to hold that money that we have in the United States for those types of investments. We are continuing to be very opportunistic and open-minded about small acquisitions. Those would be ones that would be easily bolted on. Again, focused primarily in alternative or power management and focused in areas where they bring in engineering or some type of product that is unique or exclusive to the market. So those are the areas where we're really holding our cash. Ed and Bob may want to add to that.

So we really want to hold that money that we have in the United States for those types of investments. We are continuing to be very opportunistic and open-minded about small acquisitions. Those would be ones that would be easily bolted on. Again, focused primarily in alternative or power management and focused in areas where they bring in engineering or some type of product that is unique or exclusive to the market. So those are the areas where we're really holding our cash. Ed and Bob may want to add to that.

Speaker #6: Very opportunistic, and we are continuing to be open-minded. About small acquisitions, those would be ones that would be easily bolted on. Again, focused primarily in alternative or power management, and focused in areas where they bring an engineering or some type of product that is unique or exclusive to the market.

Speaker #6: So those are the areas where we're really holding our cash. Ed and Bob.

Speaker #6: may want to add to that. I

Gregory Peloquin: I can add to that. Hi, Anja. It's Bob Ben. Just to let you know, the cash that we have on hand that we're not necessarily using on a daily basis, we have invested in various money markets, and we're getting an average yield of about 4% right now. Just under $10 million of our total cash is invested in that. And so we are doing that, and that's what you see on the income statement as investment income, which is located in the other income section of our income statement.

Robert Ben: I can add to that. Hi, Anja. It's Bob Ben. Just to let you know, the cash that we have on hand that we're not necessarily using on a daily basis, we have invested in various money markets, and we're getting an average yield of about 4% right now. Just under $10 million of our total cash is invested in that. And so we are doing that, and that's what you see on the income statement as investment income, which is located in the other income section of our income statement.

Speaker #3: can add to that. Hi, Anja. It's Bob Ben. Just to let you know, we do the cash that we have on hand that we're not necessarily using on a daily basis.

Speaker #3: We have invested in various money markets, and we're getting an average yield of about 4% right now. Just under $10 million of our total cash is invested in that.

Speaker #3: And so we are doing that, and that's what you see on the income statement as investment income, which is located in the other income section of our income statement.

Speaker #5: Okay, thank you. And then a last question: in terms of the semiconductor, what do you see there, and do you still expect that to pick up in the second half of the year?

Anja Soderstrom: Okay. Thank you. Then a last question in terms of the semiconductor. What do you see there, and do you still expect that to pick up in H2 2026?

Gregory Peloquin: Right there.

Speaker #6: Oh, in the—my fav, semi? Fab equipment market? Is that your question, Anja? Yeah. Absolutely. From all of our customers in that market segment, they are anticipating solid growth through the rest of calendar year 2026 and beyond.

Operator: Oh, in the semi-fab equipment market? Is that your question, Anja?

Wendy Diddell: Oh, in the semi-fab equipment market? Is that your question, Anja?

Anja Soderstrom: Yeah.

Operator: Yeah. Absolutely. From all of our customers in that market segment, they are anticipating solid growth through the rest of calendar year 2026 and beyond. And we're starting to see some of that in our more near-term forecast.

Wendy Diddell: Yeah. Absolutely. From all of our customers in that market segment, they are anticipating solid growth through the rest of calendar year 2026 and beyond. And we're starting to see some of that in our more near-term forecast.

Speaker #6: And we're starting to see some of that in our more near-term.

Speaker #6: forecast.

Speaker #5: Okay.

Anja Soderstrom: Okay. Thank you. That was all for me.

Speaker #5: you. That was all for

Speaker #6: Thanks, Anja. me.

Operator: Thanks, Anja.

Wendy Diddell: Thanks, Anja.

Speaker #3: Thank you.

Gregory Peloquin: Thank you.

Speaker #1: Thank you. One moment for our next question. Our next question will come from the line of Chip Ruhi from Ruhi Asset Management. Your line is open.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Chip Rewey from Rewey Asset Management. Your line is open.

Speaker #7: Good morning, everyone. I want to follow up on

Chip Rewey: Good morning, everyone. I want to follow up on the semi question that was just asked. I mean, it seems memory has gone from dead-on-arrival to the hottest thing out there. I know you're not exclusively memory, but you're both sides. But has there been a cadence shift with what your customers have talked about? I know last quarter, Ed said you would finally kind of work through kind of end customer inventory. Can you just give us a little bit more visibility on perhaps a cyclical recovery there? It seems you're still a little low from a revenue and earnings point of view, but historically a large contributor for the company. So kind of when you say there's a better outlook, has it inflected positively, or are you still hoping it'll reflect positively? A little more color on that would be great.

Speaker #7: The semi question open—that was just asked—I mean, it seems memory has gone from dead-on-arrival to the hottest thing out there. I know you're not exclusively memory, but you're both sides.

Speaker #7: Has there been a shift with what your customers have talked about? I know last quarter Ed said you had finally kind of worked through end customer inventory. Can you just give us a little bit more visibility on perhaps a cyclical recovery there?

Speaker #7: It seems you're still a little low from a revenue and earnings point of view, but historically a large contributor for the company. There's a better outlook—has it, so kind of when you say inflected positively, or are you still hoping it'll inflect positively?

Speaker #7: A little more color on that would be

Speaker #7: Great, so I'll start on that.

Operator: So I'll start on that, Chip. Good morning. So as I mentioned, we're starting to see stronger forecasts for our Q3 and Q4. Bear in mind that the forecasting is not always the best, and it tends to bounce around a lot as we've been discussing really for the last couple of years. But we do see, again, across multiple customers within that channel, their input to us is, "Get ready. We are ready. We have the resources. We have the space. It's not going to cost us a lot of money in terms of realizing upside." I also want to point out that on a year-to-date basis, so Q1, Q2, we're still up considerably over prior year's first two quarters. So we are cautiously to more than cautiously optimistic about Q3 and Q4, and we're ready. So I don't know if that answers your question.

Wendy Diddell: So I'll start on that, Chip. Good morning. So as I mentioned, we're starting to see stronger forecasts for our Q3 and Q4. Bear in mind that the forecasting is not always the best, and it tends to bounce around a lot as we've been discussing really for the last couple of years. But we do see, again, across multiple customers within that channel, their input to us is, "Get ready. We are ready. We have the resources. We have the space. It's not going to cost us a lot of money in terms of realizing upside." I also want to point out that on a year-to-date basis, so Q1, Q2, we're still up considerably over prior year's first two quarters. So we are cautiously to more than cautiously optimistic about Q3 and Q4, and we're ready. So I don't know if that answers your question.

Speaker #6: Chip, good morning. So, as I mentioned, we're starting to see stronger forecasts for our Q3 and Q4. Bear in mind that the forecasting is not always the best, and it tends to bounce around a lot, as we've been discussing really for the last couple of years.

Speaker #6: But we do see, again, that channel, across multiple customers within their input to us, is, 'Get ready. We are ready. We have the resources.'

Speaker #6: We have the space. It's not going to cost us a lot of money in terms of realizing upside. I also want to point out that on a year-to-date basis—so Q1, Q2—we're still up considerably over prior years' first two quarters.

Speaker #6: So we are cautiously to more than cautiously optimistic about Q3 and Q4. And we're ready. So I don't know if that answers your question.

Speaker #6: Maybe you could follow up if you have anything more you want to.

Operator: Maybe you could follow up if you have anything more you want to know.

Maybe you could follow up if you have anything more you want to know.

Speaker #6: know. No, that's helpful.

Chip Rewey: No, that's helpful. I know it's up a little bit, but it seems like the industry is gearing for a pretty big upcycle, and even though you're up, you're still nowhere near where you were a couple of years ago. So hopefully, it's some upside. And then I'll just make a comment on the buyback. I've never pushed you guys for buyback. I understand where your cash is globally, but everybody on the call was bullish across the board this morning from pitch energy, not only with GE to global. It seems semi is getting better. You've got new product development. It seems to me the enterprise is inflecting positively on multiple levels. Yet your stock is once again down, and the analysts are focused on backlog and sequential margin.

Speaker #7: It's just, I know it's up a little bit, but still, it seems like the industry is gearing for a pretty big upcycle. Even though you're up, you're still nowhere near where you were a couple of years ago.

Speaker #7: So hopefully, there's some upside. And then I'll just make a comment on the buyback. I've never pushed you guys for a buyback. I understand where your cash is globally, but everybody on the call was bullish across the board this morning.

Speaker #7: From Pitch Energy, not only with GE to Global, it seems semi is getting better. You've got new product development. It seems to me the enterprise is inflecting positively.

Speaker #7: I'm multiple levels. Yet your stock is once again down, and the analysts are focused on backlog and sequential margin. I know you don't have a lot of cash, but three or four million bucks of that cash could be a couple of percent of your market cap.

Chip Rewey: I know you don't have a lot of cash, but $3 or 4 million of that cash could be a couple percent of your market cap. You also have an undrawn revolver, which would be in the US. My recommendation is Carpe diem. I mean, if there's a time to buy stock, it's when it's down, and when people don't see the vision that you guys see. It seems to me if what you're saying comes to fruition, this is just an incredible opportunity. So I'll leave that as a comment, and thanks for taking my call.

I know you don't have a lot of cash, but $3 or 4 million of that cash could be a couple percent of your market cap. You also have an undrawn revolver, which would be in the US. My recommendation is Carpe diem. I mean, if there's a time to buy stock, it's when it's down, and when people don't see the vision that you guys see. It seems to me if what you're saying comes to fruition, this is just an incredible opportunity. So I'll leave that as a comment, and thanks for taking my call.

Speaker #7: You also have an undrawn revolver, which would be in the US. My recommendation is carpe diem. I mean, if there’s a time to buy stock, it’s when it’s down and when people don’t see the vision that you guys see.

Speaker #7: It seems to me if what you're saying comes to fruition, this is just an incredible opportunity. So I'll leave that as a—

Speaker #7: call. Thanks, Chip.

Operator: Thanks, Chip. We appreciate the input.

Wendy Diddell: Thanks, Chip. We appreciate the input.

Speaker #6: We appreciate the

Speaker #6: input.

Speaker #1: Thank you. And as a

Operator: Thank you. And as a reminder, that's star 11 for questions, star 11. One moment for our next question. Our next question will come as a follow-up from Bobby Brooks from Northland Capital Markets. Your line is open.

Speaker #1: Reminder, that's STAR 101 for questions, STAR 101. One moment for our next question. Our next question will come as a follow-up from Bobby Brooks from Northland Capital.

Speaker #1: Your line is

Speaker #1: Open. Hey, thanks for taking my—

Bobby Brooks: Hey, thanks for taking my follow-up. Could we maybe just discuss the growth initiatives that you guys launched a couple of quarters ago and kind of how those are progressing in a little bit more detail? Just curious to hear more on that.

Speaker #8: Follow-up. Could we maybe just discuss the growth initiatives that you guys launched a couple of quarters ago, and kind of how those are progressing, in a little bit more detail?

Speaker #8: Just curious to hear more on

Speaker #8: that.

Speaker #6: Are you

Operator: Are you referring specifically to the Made in America program or specific products under green energy?

Wendy Diddell: Are you referring specifically to the Made in America program or specific products under green energy?

Speaker #6: Are you referring specifically to the Made in America program, or to specific products under green energy?

Speaker #8: Just kind of broadly, any growth initiatives that kind of stem from the cash that you got from some of the healthcare?

Bobby Brooks: Just kind of broadly, any growth initiatives that kind of stem from the cash that you've got from selling the healthcare business?

Speaker #8: Business. I can talk a little bit.

Gregory Peloquin: I can talk a little bit about the PMT and the GES business. So as you know, Bobby, the growth initiatives were one, to expand internationally the product, two, implement our energy storage system program, and continue to add new products. And all of those were successful the past two quarters. So on the global expansion, as I think we've talked about, we now have orders and have shipped orders into Asia and Europe. We are coming out three new—I'm sorry, two new products in Q2 from our new Sweetwater Design Center that are already in beta testing with a couple of very large owner-operators. So we'll introduce those, and we fully expect to start receiving bookings for that. And on the ESS side, we rolled it out.

Speaker #7: About the PMG, PMT, and GES business. So, as you know, Bobby, the growth initiatives were: one, to expand the product internationally; two, implement our energy storage system program; and three, continue to add new products.

Speaker #7: And all of those were successful the past two quarters. So, on the global expansion, as I think we've talked about, we now have orders and have shipped orders into Asia and Europe.

Speaker #7: We are coming out with two new products in Q2 from our new Sweetwater Design Center that are already in beta testing with a couple of very large owner-operators.

Speaker #7: So we'll introduce those, and we'll fully expect to start receiving bookings for that. And on the ESS side, we rolled it out. We have technology partners, and in December, we booked our first order for an energy storage system with the town or the city.

Gregory Peloquin: We have technology partners, and in December, we booked our first order for an energy storage system with the town of the city or city of Goleta, California, for their water waste treatment facility. We'll also be supplying the solar panels for that and the energy storage system. Through that process, it kind of confirmed that our niche approach, going after utility and small, comparatively small, very large to us, 2-megawatt type systems, that was booked in December. We have a list of other ones that we're pursuing and quoting. These quotes are 10 to 15 pages apiece. But we're still very excited about our strategy in terms of technology partners, that component business grew, our engineered solutions business grew, and we've added new products.

We have technology partners, and in December, we booked our first order for an energy storage system with the town of the city or city of Goleta, California, for their water waste treatment facility. We'll also be supplying the solar panels for that and the energy storage system. Through that process, it kind of confirmed that our niche approach, going after utility and small, comparatively small, very large to us, 2-megawatt type systems, that was booked in December. We have a list of other ones that we're pursuing and quoting. These quotes are 10 to 15 pages apiece. But we're still very excited about our strategy in terms of technology partners, that component business grew, our engineered solutions business grew, and we've added new products.

Speaker #1: We will supplying also be the solar panels for that , and the energy storage system . Through that process . It kind of confirmed that our niche approach , you know , going after utility and small , not comparatively small , very large to us to to megawatt type systems that was booked in December .

Speaker #1: And we have a list of other ones that we're pursuing and quoting. You know, these quotes are 10 to 15 pages apiece.

Speaker #1: But still, we're very excited about our strategy in terms of technology partners. That component business grew. Our Engineered Solutions business grew.

Speaker #1: We've added new products. And then the biz thing, as we grow it, we really feel strongly, especially for the state of Illinois.

Speaker #1: Once that demo center is in place and people can see how it works, we would train them and educate them on how to get all these rebates that the state of Illinois gives to the nation.

Gregory Peloquin: Then the BES thing, as we grow it, we really feel strongly, especially for the state of Illinois, once that demo center is in place and people can see it and see how it works and see, we would train them and educate them on how to get all these rebates that the state of Illinois gives, the best in the nation, even better than California. So those are our main initiatives, and we have traction. I'm not a patient person. It's never been one of my attributes, the few I have. But we continue to push, and we continue to, every month, get some sort of success and a handful of indications that we have the right strategy, the right technology partners, and a real niche that we found in these multi-billion-dollar markets.

Then the BES thing, as we grow it, we really feel strongly, especially for the state of Illinois, once that demo center is in place and people can see it and see how it works and see, we would train them and educate them on how to get all these rebates that the state of Illinois gives, the best in the nation, even better than California. So those are our main initiatives, and we have traction. I'm not a patient person. It's never been one of my attributes, the few I have. But we continue to push, and we continue to, every month, get some sort of success and a handful of indications that we have the right strategy, the right technology partners, and a real niche that we found in these multi-billion-dollar markets.

Speaker #1: best in Even better than California . So those are our main initiatives . And we have traction . You know , I'm not a patient person .

Speaker #1: It's never been one of my the few I attributes to have . But we , you know , continue to push and we continue to every month get some sort of success and a handful of indications that we have the strategy , right the right technology partners , and a real niche that we found in these multibillion dollar markets .

Speaker #2: And I would just add to that, okay.

Speaker #3: ahead Go .

Speaker #4: No, you go. You go.

Operator: Bobby, I would just add that. Okay. Go ahead.

Wendy Diddell: Bobby, I would just add that. Okay. Go ahead.

Speaker #2: was just

Speaker #2: going to . I add in terms of other investment know , when you look at areas , you our you're going to see that's relatively flat .

Bobby Brooks: No, you go. You go.

Operator: I was just going to add, in terms of other investment areas, when you look at our SG&A, you're going to see that's relatively flat. Our headcount is flat. What we're doing there is, as we have normal turnover, we are reallocating those resources to the high growth areas that Greg just went through. So no one should expect a huge pop in the SG&A as a result of these investments. We've talked about the spend on the Talus inventory, and that should be wrapping up. So that's one area where we've continued to spend some money on CapEx. Bob mentioned in his script that we've made some necessary facility and IT improvements. We also added a second PC board layout facility here, which is playing in nicely with the Made in America initiative that we launched a couple of quarters ago.

Wendy Diddell: I was just going to add, in terms of other investment areas, when you look at our SG&A, you're going to see that's relatively flat. Our headcount is flat. What we're doing there is, as we have normal turnover, we are reallocating those resources to the high growth areas that Greg just went through. So no one should expect a huge pop in the SG&A as a result of these investments. We've talked about the spend on the Talus inventory, and that should be wrapping up. So that's one area where we've continued to spend some money on CapEx. Bob mentioned in his script that we've made some necessary facility and IT improvements. We also added a second PC board layout facility here, which is playing in nicely with the Made in America initiative that we launched a couple of quarters ago.

Speaker #2: Our headcount is flat . What we're doing there is as we have you know , normal turnover . reallocating those resources to the high growth areas that Greg just went through .

Speaker #2: You're not seeing a huge pop in the SG&A as a result of these investments. We've talked about spend on the Talus inventory, and that should be up.

Speaker #2: wrapping that's So one area where we've continued to spend some money on CapEx . Bob mentioned in his script that , you know , we've made some necessary facility , and it also We added a improvements .

Speaker #2: Second PC board layout facility here, which is playing in nicely with the Made in America initiative that we launched a couple quarters ago.

Speaker #2: So, in general, I think what you're going to see is us moving some things around again, rationalizing, and gaining from a lot of the efficiency people and the resources that we already have.

Operator: So in general, I think what you're going to see is us moving some things around, again, rationalizing and gaining efficiency from a lot of the people and the resources that we already have.

So in general, I think what you're going to see is us moving some things around, again, rationalizing and gaining efficiency from a lot of the people and the resources that we already have.

Speaker #4: That's great to hear . then just And one clarification , Greg , in your opening remarks , you kind of mentioned some tailwinds in the PMT business .

Bobby Brooks: That's great to hear. And then just one clarification, Greg, in your opening remarks, you kind of mentioned some tailwinds in the PMT business and what seemed to be some headwinds in the business as well that occurred interquarter. Could you just talk about that again and maybe expand on it a little bit more? And maybe I was missing the ball too.

Speaker #4: You saw some, and what seemed to be some headwinds in the business as well, like as that occurred in the quarter. Could you just expand or talk about that again and maybe expand on it a little bit more?

Speaker #4: And maybe, or missing the ball, I was too.

Speaker #1: Yeah, I mean, I don't know of any substantial tailwinds in good PMT. Obviously, we have a weak grasp on the semiconductor.

Gregory Peloquin: Yeah. I mean, I don't know of any substantial tailwinds in PMT. We obviously have a good grasp on the semiconductor market. We have seen some strong revenue and bookings on the RF and wireless side. We're seeing, and just a reminder, Bobby, that at one time before we sold it, that group was up to $0.5 billion. So we know that market very well, and we have a lot of relationships, and we have probably some of the best RF and wireless suppliers in the world. And we're really seeing some traction again in the quarter from a tailwind point of view in the SATCOM and the actual drone markets. And so that was a nice pickup for PMT anyway in terms of sales. It's lower margin business. It's demand creation, but it's components made by our technology partners.

Speaker #1: seen We have strong revenue and bookings RF and on the wireless side . We're seeing just and a reminder , Bobby , that at one time before we sold it , that group was up to a half , you know , half $1 billion .

Speaker #1: So, we market know that very well. And we have a lot of relationships, and we have probably some of the best RF and wireless suppliers in the world.

Speaker #1: And we're really seeing some traction again in the quarter from a view tailwind point of in the , you know , Satcom . And actually drone markets .

Speaker #1: And so that that was a nice pickup for , for for PMT . in terms Anyway , of sales , it's lower margin business .

Speaker #1: know , it's You it's demand creation , it's but it's components made by our technology So partners . that that maybe is , you know , somewhat of a tailwind in terms of where we saw some upside in PMT and where we'll see some upside going forward .

Gregory Peloquin: So that maybe is somewhat of a tailwind in terms of where we saw some upside in PMT and then where we'll see some upside going forward.

So that maybe is somewhat of a tailwind in terms of where we saw some upside in PMT and then where we'll see some upside going forward.

Speaker #4: Appreciate the color. Thank you. I'll return to the Q.

Speaker #1: . Hey You bet , Wendy . Hey I'm at at Mayo Clinic . Everybody I'm I got I to have to go meet with a my surgeon .

Bobby Brooks: Thank you. Appreciate the color. I'll return to the queue.

Gregory Peloquin: Thank you. Hey, Wendy. Hey. I'm at Mayo Clinic, everybody. I have to go to meet with my surgeon. However, the last time I was here was three and a half years ago with a hip replacement. And a half hour after that surgery, I got a call from NextEra with a $10 million order. So I might stay here the weekend and see if I can pick something else up. All right, Wendy.

Speaker #1: However, the last time I was here was three and a half years ago with a hip, a half hour after replacement, and that surgery, I got a call from NextEra with a $10 million order, so I might stay here the weekend and see if I can pick something else up.

Speaker #1: All right. Wendy, you bet. Bye.

Speaker #5: Thank you. One moment for our next question. Our next question will come from Lana Ross Taylor from Ars Investor Partners. Your line is now open.

Operator: Thanks, Greg.

Wendy Diddell: Thanks, Greg.

Gregory Peloquin: You bet. Bye.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Ross Taylor from ARS Investment Partners. Your line is now open.

Speaker #6: you Thank . A couple quick questions . One , with regard to the semi cap equipment space , have you guys built prebuilt product for that as something on your work in progress or your finished goods inventory line ?

Chip Rewey: Thank you. A couple of quick questions. One, with regard to the semi-cap equipment space, have you guys built pre-built product for that? It's something on your work in progress or your finished goods inventory line there that you've been, because you've been preparing for this for some time, it seems that they have been a little slow getting the pull-through.

Ross Taylor: Thank you. A couple of quick questions. One, with regard to the semi-cap equipment space, have you guys built pre-built product for that? It's something on your work in progress or your finished goods inventory line there that you've been, because you've been preparing for this for some time, it seems that they have been a little slow getting the pull-through.

Speaker #6: Is it that you've been, because you've been preparing for this for some time? It seems that they have been a little slow getting the pull-through.

Speaker #2: Hi , Ross . Yeah , we do that where we can . I think we've described the business before being very as high mix , low volume .

Operator: Hi, Ross. Yeah, we do that where we can. I think we've described the business before as being very high mix, low volume. So it's not the type, it's not like the Ultra PEMs or the Ultra 3000s where we can build them. It's all the same product. So we don't have the kind of inventory that maybe you envision of having thousands on the shelf ready to go. But we have good exposure and good track record in terms of what the demand is. And we are certainly doing everything we can to make sure that when those orders come in, they go out almost instantaneously. So a little bit of a mixed answer there for you.

Wendy Diddell: Hi, Ross. Yeah, we do that where we can. I think we've described the business before as being very high mix, low volume. So it's not the type, it's not like the Ultra PEMs or the Ultra 3000s where we can build them. It's all the same product. So we don't have the kind of inventory that maybe you envision of having thousands on the shelf ready to go. But we have good exposure and good track record in terms of what the demand is. And we are certainly doing everything we can to make sure that when those orders come in, they go out almost instantaneously. So a little bit of a mixed answer there for you.

Speaker #2: So it's not—it's the type, not like the ultra ultra or the 3000 where we can build all the same of them. So we don't have the kind of inventory that maybe you envision of having shelf ready in the thousands to go.

Speaker #2: But we have good exposure and a good track record in terms of what the demand is. And we are certainly doing everything we can to make sure that when those orders come in, they go out almost instantaneously.

Speaker #2: So, a little bit of a mixed answer there for you, okay.

Speaker #6: And that still should be, historically—it's been. Think about your highest margin, I would assume that, should you get back to more aggressive run rates, that would return.

Chip Rewey: Okay. And that still should be, historically, it's been, I think about your highest margin business. And I would assume that should you get back to more aggressive run rates, that would return.

Ross Taylor: Okay. And that still should be, historically, it's been, I think about your highest margin business. And I would assume that should you get back to more aggressive run rates, that would return.

Speaker #2: Good. It's a for us business.

Speaker #6: Yeah . Okay . Another quick question . Can you talk about give more color in the battery storage opportunities and you know , what kind of magnitude what kind of timeline are we looking at in that space ?

Operator: It's a good business for us.

Wendy Diddell: It's a good business for us.

Chip Rewey: Okay. Another quick question. Can you talk about, give more color in the battery storage opportunities and what kind of magnitude, what kind of timeline are we looking at in that space? Because it's a fairly, I mean, it seems to be a very important area we're seeing, whether it's AI data centers or, quite honestly, just even factors or others given the nature of the grid.

Ross Taylor: Okay. Another quick question. Can you talk about, give more color in the battery storage opportunities and what kind of magnitude, what kind of timeline are we looking at in that space? Because it's a fairly, I mean, it seems to be a very important area we're seeing, whether it's AI data centers or, quite honestly, just even factors or others given the nature of the grid.

Speaker #6: Because it's a fairly I mean , it seems to be a very important area . We're seeing whether it's AI , data centers or quite honestly , just even factories that others , given the nature of the grid .

Speaker #3: Greg So, just dropped off.

Speaker #2: That would him to address . But what Ross . we can tell you is that his list of opportunities continues to grow . They range , you know , right now size in , magnitude , anywhere between maybe a half a million on the end to small a couple million or more on the large .

Speaker #2: be an area for

Operator: So Greg just dropped off, Ross. That would be an area for him to address. But what we can tell you is that his list of opportunities continues to grow. They range right now in size, magnitude anywhere between maybe $0.5 million on the small end to a couple million or more on the large end. He is focused, and the team is focused heavily in the industrial and commercial market. More of the, let's look at it as kind of tier two, not the data AI centers per se. Those might be a little bit bigger than what we're planning to build. But it's an area where we've seen a lot of strong interest, particularly in the states that Greg mentioned, where the states are still providing a lot of incentive.

Wendy Diddell: So Greg just dropped off, Ross. That would be an area for him to address. But what we can tell you is that his list of opportunities continues to grow. They range right now in size, magnitude anywhere between maybe $0.5 million on the small end to a couple million or more on the large end. He is focused, and the team is focused heavily in the industrial and commercial market. More of the, let's look at it as kind of tier two, not the data AI centers per se. Those might be a little bit bigger than what we're planning to build. But it's an area where we've seen a lot of strong interest, particularly in the states that Greg mentioned, where the states are still providing a lot of incentive.

Speaker #2: He is focused in the team.

Speaker #2: Heavily Focused . in the industrial and commercial market . More of the , you know , let's look at kind of it as tier two , not the data AI centers per se .

Speaker #2: Those might be a little bit bigger than what we're planning to build , but it's an where we've seen area a lot of strong interest , particularly in the states , that Greg mentioned , where the states are still providing a lot of incentive .

Speaker #2: I don't think anybody can pick up anything and read anything without seeing the growth in energy storage requirements. So we fully plan to take advantage of that.

Operator: But I don't think anybody can pick up anything and read anything without seeing the growth in energy storage requirements. So we fully plan to take advantage of that. And we'll try to bring some more color to that in the next call.

But I don't think anybody can pick up anything and read anything without seeing the growth in energy storage requirements. So we fully plan to take advantage of that. And we'll try to bring some more color to that in the next call.

Speaker #2: And, you know, we'll try to bring some more color to that in the next call.

Speaker #6: do you Okay . And think one of the philosophical you and I have had this question , one of the things that this company has struggled with is it's historically been more a , a of project based business .

Chip Rewey: Okay. And do you think one of the philosophical (you and I have had this question) one of the things that this company has struggled with is it's historically been more of a project-based business. Do you see some of these things we're talking about here becoming basically run rate businesses where we can kind of see a more steady annual flow-through in top and bottom line?

Ross Taylor: Okay. And do you think one of the philosophical (you and I have had this question) one of the things that this company has struggled with is it's historically been more of a project-based business. Do you see some of these things we're talking about here becoming basically run rate businesses where we can kind of see a more steady annual flow-through in top and bottom line?

Speaker #6: Do you see some of these things we're talking about here becoming basically businesses where we can kind of see a more steady annual flow-through in top and bottom line?

Speaker #3: Thank you, I already see that.

Speaker #2: Certainly, you see that in EDG. We've about talked—I think you're seeing the green in it, in the energy piece, with wind.

Operator: I think you see that already. Certainly, you see that in EDG. We've talked about that. I think you're seeing it in the green energy piece with the wind. And I would expect that not only to continue but to grow as we expand both the customer base and the geographic area that we cover. I think those, I call those bread and butter items. I love them because, to your point, they're going out on a regular cadence. Some of the train, the EV rail, for example, the starter modules, those will be more steady run rate. But we always are focusing on and trying to focus on products that will apply to a much broader market, not simply one customer or one program.

Wendy Diddell: I think you see that already. Certainly, you see that in EDG. We've talked about that. I think you're seeing it in the green energy piece with the wind. And I would expect that not only to continue but to grow as we expand both the customer base and the geographic area that we cover. I think those, I call those bread and butter items. I love them because, to your point, they're going out on a regular cadence. Some of the train, the EV rail, for example, the starter modules, those will be more steady run rate. But we always are focusing on and trying to focus on products that will apply to a much broader market, not simply one customer or one program.

Speaker #2: I would expect that not only to continue, but to grow as we expand both the customer base and the geographic area that we cover.

Speaker #2: I think those I call those bread and butter items , them I love because to your you know , point , they , they're going out on a regular cadence .

Speaker #2: Some of the train , the EV rail , the for example , the starter modules , those will be more steady run rate .

Speaker #2: But we always are focusing on, and trying to focus on, products that will apply to a much broader market, not simply one customer or one program.

Speaker #6: Well , and obviously success there would would be , I think , important . It would take of the away a lot volatility in earnings .

Speaker #6: And I will offer my comment on buyback. I think my position on it is well known. It's been voiced many times on these calls in the past.

Chip Rewey: Obviously, success there would be, I think, important. It would take away a lot of the volatility in earnings. I will offer my comment on buyback. I think my position on it is well known. It's been voiced many times on these calls in the past. What I would say is I can't believe that your board doesn't think this company is worth substantially more than book value, and you're currently trading at or under book with a substantial 20% of that being cash here or overseas. So I know what I'd be saying if I sat on your board. I'd be arguing that this company is worth a lot more than book, and you should be quite comfortable buying it back at or at under and even around book.

Ross Taylor: Obviously, success there would be, I think, important. It would take away a lot of the volatility in earnings. I will offer my comment on buyback. I think my position on it is well known. It's been voiced many times on these calls in the past. What I would say is I can't believe that your board doesn't think this company is worth substantially more than book value, and you're currently trading at or under book with a substantial 20% of that being cash here or overseas. So I know what I'd be saying if I sat on your board. I'd be arguing that this company is worth a lot more than book, and you should be quite comfortable buying it back at or at under and even around book.

Speaker #6: What I would say is I can't believe that your board doesn't think this company is worth substantially more than book value, and you're currently trading at or under book, with a substantial 20% of that being cash here or overseas.

Speaker #6: so And I know what I'd be saying if I sat on your board , I'd be arguing company is worth a than lot more you should book , and be quite comfortable buying it back at or , you know , , under and even at book around that's coming from , I think some a long term shareholder .

Speaker #6: But someone who really would love to guys start see you to actually become a little more proactive . Don't be so afraid of of a tiny little level of debt .

Chip Rewey: That's coming from, I think, a long-term shareholder, but someone who really would love to see you guys start to actually become a little more proactive. Don't be so afraid of a tiny little level of debt. So I support the earlier comment that even going into your revolver to buy back $4 or $5 million worth of stock would be, I think, greatly appreciated by the market and would be reflected in the share price. Thank you.

That's coming from, I think, a long-term shareholder, but someone who really would love to see you guys start to actually become a little more proactive. Don't be so afraid of a tiny little level of debt. So I support the earlier comment that even going into your revolver to buy back $4 or $5 million worth of stock would be, I think, greatly appreciated by the market and would be reflected in the share price. Thank you.

Speaker #6: I So support the earlier that , you know , comment even going into your revolver to buyback 4 or $5 million worth of stock would be , I think , greatly appreciated by the market and would be reflected in the share price .

Speaker #6: Thank you .

Speaker #2: Thanks , Ross .

Operator: Thanks, Ross.

Wendy Diddell: Thanks, Ross.

Speaker #5: One moment for our next question. And our last question for today will come from the line of Brett Davidson. As a private investor, you may now ask your question. Your line is now open.

Operator: One moment for our next question. Our last question for today will come from the line of Brett Davidson as a private investor. Your line is now open.

Speaker #7: Good morning. I realized Greg has dropped off the line, but I'm hoping somebody can provide some of the update on electric locomotive product lines and the manufactured diamond product lines.

Edward J. Richardson: Good morning. I realize Greg has dropped off the line, but I'm hoping somebody can provide some level of update on the electric locomotive product lines and the manufactured diamond product lines.

[Analyst]: Good morning. I realize Greg has dropped off the line, but I'm hoping somebody can provide some level of update on the electric locomotive product lines and the manufactured diamond product lines.

Speaker #8: All right, I'll start with that. So, let's take the—

Speaker #2: first on the Latter one diamond . What we've seen there in that market . And I think again , everybody has read about it is that that market became very quickly saturated oversaturated .

Operator: All right. I'll start with that. Let's take the latter one first on the diamond. What we've seen there in that market, and I think, again, everybody has read about, is that that market became very quickly saturated, oversaturated, the synthetic diamond market. As a result of that, we've seen a slowdown in the demand for those magnetrons that are used in the equipment that manufactures the diamonds. When Greg referred earlier to some of the other elements of green energy solution being down, that's one of them. In that area, it's still out there. We're still selling them. It's just, again, an overcapacity of equipment already on the market, and certainly an overcapacity of the synthetic diamonds. All right.

Wendy Diddell: All right. I'll start with that. Let's take the latter one first on the diamond. What we've seen there in that market, and I think, again, everybody has read about, is that that market became very quickly saturated, oversaturated, the synthetic diamond market. As a result of that, we've seen a slowdown in the demand for those magnetrons that are used in the equipment that manufactures the diamonds. When Greg referred earlier to some of the other elements of green energy solution being down, that's one of them. In that area, it's still out there. We're still selling them. It's just, again, an overcapacity of equipment already on the market, and certainly an overcapacity of the synthetic diamonds. All right.

Speaker #2: The synthetic diamond market. And as a result of that, we've seen a slowdown in the demand for those magnetrons that are used in the equipment that manufactures the diamonds.

Speaker #2: When Greg referred earlier to some of the other elements of green energy solution being down , that's one of them . So in that it's area , still still out there .

Speaker #2: We're still selling them. It's just, again, an overcapacity already on the market, and certainly an overcapacity of the synthetic diamonds.

Speaker #2: All right. In terms of the EV rail market, I think Rail Progress recently put out some of its own press that they have recently shipped two of the large trains to Australia.

Operator: In terms of the EV rail market, I think Progress Rail recently put out some of its own press that they have recently shipped two of the large trains to Australia. So we're pleased to see that. You may recall in FY23, we shipped them a significant amount of batteries that are used in those trains. So we're going to sit back on the sidelines and see how those two trains perform in Australia and what that means for the future. On a more steady cadence basis, as I just referred to in my answer to Ross Taylor, is that we are now shipping on a regular run rate, the starter modules, and we expect to see some upside there. So in general, I would say that the EV rail market certainly is favoring more of a hybrid approach. This is outside of Richardson. This is the general market.

In terms of the EV rail market, I think Progress Rail recently put out some of its own press that they have recently shipped two of the large trains to Australia. So we're pleased to see that. You may recall in FY23, we shipped them a significant amount of batteries that are used in those trains. So we're going to sit back on the sidelines and see how those two trains perform in Australia and what that means for the future. On a more steady cadence basis, as I just referred to in my answer to Ross Taylor, is that we are now shipping on a regular run rate, the starter modules, and we expect to see some upside there. So in general, I would say that the EV rail market certainly is favoring more of a hybrid approach. This is outside of Richardson. This is the general market.

Speaker #2: So we're pleased to see May recall in FY23. We shipped them a significant amount of batteries that are used in those trains.

Speaker #2: So we're going to sit back on the sidelines and see how those two trains perform in Australia and what that means for the future.

Speaker #2: On a more steady cadence basis, as I just referred to in my answer to Ross Taylor, is that we are now shipping on a regular run rate.

Speaker #2: The starter modules and we expect to see upside there . general , in So I would say that the EV rail market certainly is is favoring more of a hybrid approach .

Speaker #2: This is outside of Richardson . This is the general market , more of a hybrid approach . But our starter modules , they are used in any train , whether it's diesel , electric or hybrid .

Operator: More of a hybrid approach, but our starter modules, they are used in any train, whether it's diesel, electric, or hybrid. So we remain optimistic about growth in that segment of the business as well.

More of a hybrid approach, but our starter modules, they are used in any train, whether it's diesel, electric, or hybrid. So we remain optimistic about growth in that segment of the business as well.

Speaker #2: So we remain optimistic about growth in that segment of the business as well.

Speaker #7: you Thank .

Speaker #5: Thank you. And I'm not showing any further questions in the queue. I would like to turn the call back to Ed Richardson for closing remarks.

Edward J. Richardson: Thank you.

[Analyst]: Thank you.

Operator: Thank you. I'm not showing any further questions in the queue. I would now like to turn the call back over to Ed Richardson for closing remarks.

Speaker #9: Thanks , Victor . Well , thanks again for joining us today and for your questions during Q&A . We look forward to discussing our performance with you in April .

Jens Ruppert: Thanks, Victor. Well, thanks again for joining us today and for your questions during Q&A. We look forward to discussing our performance with you in April. Until then, please don't hesitate to call us at any time. Thank you very much.

Edward J. Richardson: Thanks, Victor. Well, thanks again for joining us today and for your questions during Q&A. We look forward to discussing our performance with you in April. Until then, please don't hesitate to call us at any time. Thank you very much.

Speaker #9: Until then, please don't hesitate to call us at any time. Thank you very much.

Speaker #5: Thank you for your participation in today's conference . This does conclude the program . You may now disconnect . Everyone , have a great day .

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Q2 2026 Richardson Electronics Ltd Earnings Call

Request a DemoDemo

RELL

Richardson Electronics

Earnings