Richardson Electronics (NASDAQ:RELL) reported second-quarter fiscal 2026 results that marked its sixth consecutive quarter of year-over-year sales growth, driven primarily by strength in its Green Energy Solutions (GES) and Canvys businesses, management said on the company’s earnings call.
Quarterly results show higher sales and improved operating income
For the second quarter of fiscal 2026, Richardson Electronics posted total sales of $52.3 million, up from $49.5 million in the same period last year. CEO Ed Richardson said the company’s sales growth was driven by GES and Canvys, while comparisons continued to be affected by changes related to the healthcare business sold in January 2025.
Gross margin was 30.8% of net sales, compared with 31.0% a year ago. Ben attributed the slight decline primarily to lower margin in PMT and GES, partially offset by higher margin in Canvys. Operating expenses improved to 30.5% of net sales from 32.3% in the year-ago quarter.
Segment performance: GES and Canvys growth offset softer PMT results
Ben said consolidated net sales rose 5.7% year over year. Excluding healthcare, net sales increased 9.0%. Beginning in fiscal 2026, healthcare results (including prior periods) are consolidated into the Power and Microwave Technologies (PMT) segment.
- Green Energy Solutions (GES): Sales increased 39.0%, led by power management products. Greg Peloquin, general manager of PMT and GES, said GES revenue reached $8.3 million, up 39% year over year and 14% sequentially.
- Canvys: Sales increased 28.1% to $8.8 million from $6.8 million, reflecting higher demand from medical OEM customers and higher sales in North America. Canvys’ gross margin increased to 32.6% from 31.7% on product mix. General manager Jens Ruppert said Canvys ended the quarter with a $38.0 million backlog.
- PMT: PMT sales were 4.0% below the prior-year quarter. Excluding healthcare, Ben said PMT was approximately flat. Peloquin cited a slight slowdown in the electron device MRO business, offset by growth in RF and wireless components.
Six-month results and capital position
For the first six months of fiscal 2026, net sales were $106.9 million, up from $103.2 million a year earlier. Excluding healthcare, consolidated net sales increased 7.8%, and PMT net sales increased 5.2%, Ben said. Operating income for the first half was $1.1 million, compared with an operating loss of $0.4 million in the prior-year period. Net income was $1.8 million, or $0.12 per diluted share, versus a net loss of $0.2 million, or $0.01 per share, a year earlier. EBITDA for the first half was $4.0 million compared with $1.7 million in the prior-year period.
Richardson ended the quarter with $33.1 million in cash and cash equivalents, down from $35.7 million at the end of the first quarter. The company had no outstanding borrowings on its revolving line of credit with PNC Bank. Capital expenditures were $1.6 million in the quarter, primarily tied to manufacturing, facilities improvements, and IT systems, and the company paid $0.9 million in cash dividends. Ben said the board declared a regular quarterly cash dividend of $0.06 per share to be paid in the third quarter of fiscal 2026. He also said the company invested a portion of its cash in money markets, generating an average yield of about 4%, with under $10 million invested.
Strategy updates: wind, energy storage, and international expansion
Peloquin emphasized that GES growth has been supported by adoption of the company’s Pitch Energy Modules and related wind products. He said Richardson serves dozens of wind turbine owner-operators and has exclusive partnerships with the top four owner-operators of GE wind turbines—RWE, Invenergy, Enel, and NextEra. Peloquin also highlighted international expansion, including orders from customers in Brazil, Australia, India, France, and Italy, and work to broaden product support for additional turbine platforms such as Suzlon, Senvion, Nordex, and SSB.
Management discussed operational initiatives tied to its growth plan, including a new design center in Sweetwater, Texas, intended to accelerate design-to-production cycles. Peloquin said the Sweetwater Design Center is expected to be fully operational in the third quarter of fiscal 2026. He also said the company is on schedule to complete an Illinois-based demo center in the fourth quarter of fiscal 2026 to showcase battery energy storage (BES) solutions.
In the Q&A, management said it booked its first energy storage system order at the end of December, later identifying it as a project with the city of Goleta, California, for a water waste treatment facility, with Richardson also supplying solar panels. Management described its BES pipeline as project-based, with opportunities ranging from about $500,000 to $2 million or more, and said it is focusing on states offering incentives, including Illinois, Massachusetts, and California.
Healthcare transition, inventory, and outlook themes from Q&A
COO Wendy Diddell provided an update on the remaining healthcare activities included in PMT. She said the company continued progress finishing production of Alta tubes and expects to wrap that up by the end of the third quarter of fiscal 2026. The company also made progress repairing Siemens Stratton Z tubes and is preparing to launch repaired Siemens MX series tubes as early as the fourth quarter of fiscal 2026. Diddell said the healthcare comparisons would remain unfavorable in the second and third quarters of fiscal 2026, but she expects profitability to improve beginning in fiscal 2027 as Alta production concludes and the Siemens repair program expands, with efforts to pull improvement into the fourth quarter of fiscal 2026.
On GES backlog, Peloquin told analysts the company’s “core” backlog—primarily Pitch Energy Modules and related products—represented about 95% of the business and had a book-to-bill ratio of 1.10. He noted that some sales in the quarter were shipped from stock as the company works to anticipate customer needs amid what he described as poor forecasting. He also said demand has been higher than what the company has been building.
Separately, Diddell said elevated inventory investment tied to a single critical supplier exiting production of power grid tubes is nearing completion. She said the company expects final inventory receipts of approximately EUR 1.5 million in the first quarter of calendar 2026, after which inventory levels should normalize and cash conversion improve, and that the inventory provides product coverage through 2030. She added the company has identified alternative supply sources to maintain continuity and quality.
Management also discussed expectations for stronger demand in semiconductor wafer fab equipment, citing customer forecasts indicating growth through calendar 2026 and beyond and tying demand to AI-driven equipment needs, particularly in memory-related applications. Investors also raised the topic of share repurchases during the Q&A, but management did not announce a buyback; Diddell reiterated that a substantial portion of cash is held outside the U.S. and said the company is prioritizing investments in growth initiatives and remaining opportunistic about small, bolt-on acquisitions focused on power management and alternative energy.
About Richardson Electronics (NASDAQ:RELL)
Richardson Electronics, Ltd. (NASDAQ:RELL) is a global manufacturer, distributor and servicer of engineered components and subsystems for a diverse range of industrial, medical and scientific applications. The company specializes in vacuum electron devices, high-voltage power supplies and related electronic components, offering klystrons, traveling wave tubes, magnetrons, X-ray tubes, microwave amplifiers and power conversion products. Its solutions support customers in power grid management, semiconductor processing, medical imaging, scientific instrumentation and telecommunications.
In addition to its manufacturing capabilities, Richardson Electronics maintains a broad distribution network comprising thousands of standard and custom parts.
