RELL Financial Analysis

Analysis Date: 1/27/2025

Business Model

Richardson Electronics generates revenue through four main business segments: PMT (Power and Microwave Technologies), GES (Green Energy Solutions), Canvys, and Healthcare

Revenue Sources

• PMT: Largest segment at $34.4M in Q2 FY25 (69.5% of revenue)
• GES: $6.0M in Q2 FY25 (12.1% of revenue)
• Canvys: $6.9M in Q2 FY25 (13.8% of revenue)
• Healthcare: $2.3M in Q2 FY25 (4.6% of revenue)

Income Statement Analysis

• Net sales increased 12.1% YoY driven by GES (+129%) and PMT (+9.9%)
• Gross margin improved to 31.0% from 28.4% YoY
• Operating loss improved to $0.7M from $2.0M YoY

Balance Sheet Analysis

• Strong cash position with $26.6M and no debt
• Sequential improvement in cash from $23.0M in Q1 FY25

Cash Flow Analysis

• Strong operating cash flow of $5.5M in Q2 FY25 vs $0.8M in Q2 FY24
• Lower capital expenditures of $0.5M vs $1.5M YoY

Capital Allocation

The company maintains a quarterly dividend of $0.06 per share while focusing on maintaining a strong balance sheet with no debt. Capital expenditures are primarily directed toward facilities and IT systems.

Management Commentary

New program wins and continued improvement in demand across GES and PMT markets

Expect higher year-over-year sales and profitability for full fiscal year

Sequential backlog growth expected to continue

Overall Sentiment: Positive and confident about growth trajectory and operational execution

Recommendation

Rating: Buy

Reason for Rating: Strong revenue growth, improving margins, and solid balance sheet support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/27/2025, 2:13:14 PM