Richardson Electronics Ltd Midwest IDEAS Conference

Thank you. Hello. Well, in about another six months, this company will be 80 years old.

I joined the company out of school. My dad started the company in 1947, selling surplus electronics, believe it or not. I joined him out of college in 1961. I hate to admit how many years I have been there. We started out as a distributor and saw companies like RCA and GE and Westinghouse and divisions of Varian all wanting to exit the tube business. We worked with a company called Drexel Burnham and a guy named Michael Milken. We did a convertible debenture in 1981 for $25 million. We bought National Electronics, which is where our headquarters are today. Thereafter, we did an $86 million convertible debenture, and we have bought now 21 or 22 divisions of tube companies all over the world.

The company has grown from, when we started at that time, $10 million or $15 million to, what did we do this year?

220. $220-some-odd million this year.

I am CEO, and Wendy is Chief Operating Officer. I take credit for everything that goes on, and she does all the work. We will let her tell you about the company.

Thanks, Ed. Good afternoon. It's nice to see everybody. I see some familiar faces that I haven't seen in a while, so thank you guys for joining us. If I can figure out how to work the technology, we'll get started. All right. Just real quick, for those of you who don't know us, and Ed provided a good introduction, we are an international company. We have 24 legal entities throughout the world. Today, we have about 430 employees spread throughout that. The majority, or at least half of them, are here in La Fox, Illinois, so we're out west of the city. We serve a very wide customer base. We have more than 20,000 customers in our database. On any given year, we probably ship to 5,000 or 6,000 of those.

As I mentioned, we have not only 24 legal entities, but we have engineers and salespeople throughout the world in 60 different locations. So we're very global in scope, always have been, and our challenge has always been: how do we take advantage of the global infrastructure that we have by taking more products through to the market? Our focus has been on engineered solutions. If any of you know us from the past, you might say, "Well, aren't you a distributor? Aren't you like an Arrow or an Avnet or somebody like that type of business?" Over the years, we've been focused on controlling our own destiny by building and selling our own solutions. Today, more than 55% of our revenue comes from products that either we manufacture here in Illinois or products that are manufactured specifically for us at various factories throughout the world.

So done a really nice job of moving up the food chain, and you're going to continue to see our emphasis in that area. We have three business units, which would take me most of the afternoon to go through all the details, so let me just touch on the highlights. The largest business unit is what we call PMT, or the Power and Microwave Technologies Group. Within that, there are three subsets of the business. The first one is EDG, which is our legacy tube business that Ed was describing. So EDG is still one of our largest segments. It's about $80 million in revenue. It's very stable. The unit volume kind of goes down a little bit each year, but we more than make up for that in pricing power. Again, those are power grid tubes that we sell.

Not so much the television tubes anymore, but still used in a lot of industrial applications where semiconductor and whatnot doesn't support the application. Then we have what's called PMG, or the Power and Microwave Technologies Group. That's the second subset of PMT. That is our distribution business. So we still have some of that. We distribute for companies like Qorvo and MACOM, and that business is actually a growth part of our business. It grew nicely in FY 2026. We sell components into a number of applications, including military, including satellite communications, things like that. So that's been a nice growth engine, but it has a lower margin profile, more typical of what you would find in distribution. Then the third part of that, of the PMT business, is what everybody gets very excited about, and that's the semiconductor wafer fab market.

Our largest customers in that market include MKS, Lam Research, and that business, as all of you know, is again on fire. If you knew us in FY 2023, we are seeing a lot of the same dynamics that we saw back then with a complete ramp of our semiconductor products. In that market, we manufacture power subassemblies. It is very high mix, low volume, and our products are exclusively used by Lam Research. It is a very nice part of our business. As we exit FY 2026 and we go into, we are now finishing up our first quarter of FY 2027, we expect that that business will continue to grow nicely. We trend and kind of track along with the semiconductor wafer fab equipment manufacturers. You can look at their data, and that correlates with what you see in ours. Again, that is PMT. It is those three segments.

The second business unit, which is also a growth engine for the company, is green energy solutions. Green energy solutions we started in, I think, FY 2022. Again, we look at that. Really, there are two main sections of that business up until most recently. That is wind and EV rail. On the wind side, we have products that we manufactured and patented that are replacing lead-acid batteries in wind turbines. To date, the main product goes into GE turbines. In the U.S., there are more than 30,000, and we have probably replaced the lead-acid batteries in about 15% or so. Still lots of runway in terms of wind. There are other products that are offshoots of that, including modules that go into non-GE turbines, SSB, Alstom, Nordex, a lot of those are in Europe.

We are expanding geographically in the wind business as well as product line-wise and as well as market penetration. That kind of covers the wind segment of green energy. Then we have the EV rail segment, and our primary customers have been Progress Rail and Wabtec, Caterpillar and GE. In that part of the business, we have made superstructures, which are used in EV locomotives, and we also make starter modules, which are used in any kind of locomotive, whether it is hybrid, diesel, or electric. That part of the business grew rapidly back in FY 2023, and it has been a little bit more stable since then. The newest part of green energy, which is not on this chart, and I will be talking about it more in a couple slides, is battery energy storage. We will leave that as a teaser here in a couple minutes. All right. The third business unit is Canvys.

That is our display business unit. In that particular group, we make custom displays for primarily medical OEMs. Our customer list in this segment looks like the who's who of medical. We sell to just about everybody. Medtronic is a huge customer. Philips, Siemens, Varian used to it, Siemens now, KARL STORZ, Stryker, you name it, we primarily sell displays to them. It is a very stable business. We did about $38 million last year. We will see some growth again this year. It is one of our more profitable businesses and takes very little management time and very little capital. Kind of seems like which one of those does not fit here in this picture, but it is a good business, and that is why we have it. This just gives you an idea of the type of customers that we serve.