管理層發言
Good day, and welcome to the Richardson Electronics earnings call for the fourth quarter of fiscal year 2026. Operator instructions were provided. Please be advised that today's conference is being recorded. It is now my pleasure to introduce CEO and Chairman of the Board, Ed Richardson.
Good morning, and thank you all for joining Richardson Electronics' conference call for the fourth quarter and full fiscal year of 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 are making forward-looking statements, and 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. I'm pleased to report that Richardson Electronics delivered both a strong fourth quarter and finished the fiscal year 2026. While Bob will provide the detailed financial review shortly, I want to begin by highlighting the broader message from the year. We delivered significant year-over-year revenue growth, improved gross margin, and strengthened our operating performance. Those results reflect continued execution of the multi-year strategy we've discussed with you over the past few quarters. Our performance was not driven by a single product line, customer, or end market. We saw strength across all three of our business units from both new and existing customers. Power and Microwave Technologies continued to benefit from demand in semi-fab equipment, defense, healthcare, and other industrial applications. Green Energy Solutions continue to advance programs tied to wind, EV, power conversion, and other power management markets. Canvys remained an important and profitable part of the company with customized display solutions serving medical, industrial, and other specialized OEM customers. Importantly, we also made progress in improving the quality of our revenue. We continue to align our strategic focus on pursuing higher-value engineered solutions, repeatable sales opportunities, and customer programs where our technical knowledge, application engineering, global sourcing capabilities, and inventory position create real value. The more profitable mix of business together with operating disciplines supported the margin progress we achieved during the year. We've also continued to invest in our current and emerging opportunities with Green Energy Solutions, and we are now advancing our efforts around battery energy storage. We believe this is a natural extension of our capabilities in power conversion and energy-related applications. Customers are looking for ways to manage growing power demand, improve reliability, support renewable generation, and reduce exposure to grid constraints and energy cost volatility. We believe Richardson Electronics is well positioned to support those needs over time. The opportunity around battery energy storage is still developing and is strategically important. We're working to build the right supplier relationships, technical capabilities, and customer engagement model before scaling the business. We're taking a disciplined approach as we believe the market has attractive long-term potential, particularly as utilities, commercial operators, industrial customers, data centers, and renewable energy developers look for practical solutions to improve power availability and resilience. From an overall market perspective, the global environment remains mixed, and we're managing the business accordingly. Tariff uncertainty, geopolitical risks, inflation, and uneven industrial demand continue to create challenges for many companies. At the same time, we believe several long-term demand drivers are positive for Richardson Electronics. Electrification, grid reliability, renewable energy integration, AI and data center power requirements, semiconductor capacity investment, defense spending, and the need for customized medical and industrial display solutions all align well with the areas where we have deep technical capability. We remain disciplined in sourcing, pricing, inventory management, customer commitments, and operating expense control. We believe this discipline together with our strong balance sheet and technical sales organization positions us well to navigate uncertainty while continuing to pursue growth opportunities. Our growth in backlog and improved cash flow from operations highlights this disciplined approach, and we're taking time to manage the business. The fourth quarter, our results reflected continued positive momentum and a strong close to the year. For the full year, we made meaningful progress against our strategic priorities. We believe the company is entering fiscal 2027 with a stronger operating platform, broader customer engagements, and improved visibility in several attractive end markets. I'll now turn the call over to Bob Ben, our Chief Financial Officer, who will provide a detailed review of our fourth quarter and full fiscal year results and capital position. Following Bob's remarks, Greg and Jens will provide updates on our business units, and then Wendy will follow with the progress we're making executing against our multi-year strategies.
Thank you, Ed, and good morning. I will review our financial results for our fourth quarter in fiscal year 2026, followed by a review of our cash position. In addition, please note that I will be discussing non-GAAP financial measures. A reconciliation of non-GAAP items to the comparable GAAP measures is available in our fourth quarter fiscal year 2026 press release that was issued yesterday after the market closed. Consolidated net sales increased 27.6% to $66.2 million compared to net sales of $51.9 million in the prior year's fourth quarter. This was our eighth consecutive quarterly year-over-year increase in sales and the highest quarterly net sales since the third quarter of fiscal 2023. The fourth quarter was led by a 28.1% increase in PMT sales, driven by strong growth in semiconductor wafer fab and RF and microwave products. Sales for GES were $1.1 million or 20.4% above the fourth quarter of fiscal 2025 as a result of higher sales of wind products. Canvys sales increased $2.8 million or 29.5%, reflecting higher sales in North America. Consolidated gross margin for the fourth quarter was 31.2% of net sales compared to 31.6% during the fourth quarter of fiscal 2025. The 40 basis point decrease in consolidated gross margin was due to lower margin in PMT and GES as a result of product mix, partially offset by higher margin in Canvys due to improved freight costs as a percentage of net sales. Operating expenses were $17.6 million compared to $15.6 million in the fourth quarter of fiscal 2025. The increase in operating expenses resulted from higher salaries and incentives driven by the significant sales growth in both the fourth quarter and fiscal year 2026. Also included in operating expenses for the fourth quarter fiscal 2026 was a $0.4 million unclaimed property state audit settlement. As a percentage of net sales, operating expenses improved to 26.6% in the fourth quarter fiscal 2026 versus 30.0% in the prior year's fourth quarter. Operating income improved significantly and was $3.9 million and non-GAAP operating income was $3.5 million for the fourth quarter fiscal 2026 compared to an operating income of $0.6 million and non-GAAP operating income of $0.8 million in the prior year's fourth quarter. Net income was $3.7 million and non-GAAP net income was $3.0 million for the fourth quarter fiscal 2026 compared to net income of $1.1 million and non-GAAP net income of $1.8 million for the fourth quarter of fiscal 2025. Earnings per common share diluted were $0.25 and non-GAAP earnings per common share diluted were $0.21 in the fourth quarter of fiscal 2026 compared to earnings per common share diluted of $0.08 and non-GAAP earnings per common share diluted of $0.12 in the fourth quarter of fiscal 2025. EBITDA was $5.0 million in the fourth quarter of fiscal 2026 versus $2.9 million in the fourth quarter of fiscal 2025. Adjusted EBITDA was $4.2 million in the fourth quarter of fiscal 2026 versus $3.1 million in the fourth quarter of fiscal 2025. Turning to a review of the results for fiscal year 2026. Net sales were $228.6 million, an increase of 9.4% from $208.9 million in fiscal year 2025, which reflected higher sales across all three of our business segments. Gross margin was 31.2% of net sales, which was a 20 basis point increase from fiscal 2025. As a percentage of net sales, operating expenses for the fiscal year improved to 28.8% from 29.8% for the prior fiscal year. Operating income was $6.5 million and non-GAAP operating income was $6.1 million during fiscal 2026 compared to an operating loss of $2.5 million and non-GAAP operating income of $2.6 million during fiscal 2025. The company reported net income of $6.4 million and non-GAAP net income of $5.7 million for fiscal 2026 versus a net loss of $1.1 million and non-GAAP net income of $3.2 million during fiscal 2025. Earnings per common share diluted were $0.44 and non-GAAP earnings per common share diluted were $0.40 for fiscal 2026 compared to $0.08 net loss per common share diluted and non-GAAP earnings per common share diluted of $0.22 for fiscal 2025. EBITDA was $11.3 million and adjusted EBITDA was $10.4 million for fiscal 2026 versus EBITDA of $2.5 million and adjusted EBITDA of $7.5 million in the prior fiscal year. Turning to a review of our cash position. Cash and cash equivalents at the end of fiscal 2026 were $31.8 million compared to $29.5 million at the end of the third quarter of fiscal 2026 and $35.9 million at the end of fiscal 2025. The increase in cash and cash equivalents from the third quarter related to net income, adjusted for depreciation and amortization, and lower inventory, partially offset by higher accounts receivable. Capital expenditures of $1.0 million in the fourth quarter of fiscal 2026 were primarily related to our manufacturing business, facilities improvements, and IT systems versus $0.8 million in the fourth quarter of fiscal 2025. Total capital expenditures were $4.4 million in fiscal 2026 as compared to $2.8 million in fiscal 2025. We paid $0.9 million in the fourth quarter and $3.4 million in fiscal 2026 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 first quarter of fiscal 2027. As of the end 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.
Thank you, Bob, and good morning, everyone. GES and PMT are key components of the corporation's multi-year growth plan, and we are encouraged by the continued progress we are making. Moving into FY '26, we had a number of strategic imperatives, including developing a strong backlog, launching several new products, expanding our customer base, and advancing multiple development programs from beta testing to pre-production. I am pleased to report that we made excellent progress towards our goals throughout all FY '26, and we are accelerating momentum as we experienced in the fourth quarter. Starting with GES, I'm pleased with both the year-over-year and sequential trends we are seeing as we continue to grow the pipeline of opportunities through both current and new technology partners, products developed by our field sales engineers and design team. GES sales in the quarter grew 20.4% year-over-year, as more companies adopted our key products across a broader set of applications. The strong fourth quarter helped us grow FY '26 sales by 7.3% versus FY '25. Continued sales growth, coupled with a growing backlog, positions us well going into FY '27. Within GES, we saw continued progress across key growth opportunities. First, we're experiencing growth adoption of our PEM modules across multiple wind turbine platforms. We serve dozens of wind turbine owners and operators, including exclusive partnerships with the top four owner-operators of GE wind turbines. 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. We have now received orders outside of North America from customers in Brazil, Australia, India, France, and Italy, adding to our strong rollout in North America. Second, we shipped our first BES program in Q4. This milestone highlights the accelerating momentum of our BES strategy, supported by a growing pipeline of nearly 50 active opportunities as of today. We believe we are attracting interest in our BES capabilities as a result of our engineering and manufacturing experience within niche power management markets, our unique technology partners, our U.S.-based footprint, and nearly 80-year corporate history. Today, our pipeline includes data centers and industrial applications throughout North America, and we believe there are many opportunities to increase our pipeline throughout FY '27 and beyond. We are also focused on converting this growing pipeline into sales, with several exciting opportunities expected to close shortly. In fact, we expect to announce a multimillion-dollar order for our BES systems in Q1. Our overall GES growth strategy remains centered on power management applications. We rapidly designed multiple products, secured patents, and built a strong global base of customers and technology partners. Our success is evident in our growing sales pipeline as we capitalize on numerous growth opportunities tied to evolving power management requirements and significant energy transformation initiatives. With these programs, testing and deployment continue to progress well with our key customers, and we feel that this will help us achieve stronger growth in FY '27. Turning to PMT, excluding the legacy healthcare business, sales were $47.1 million in the quarter, a 31.1% increase over the prior year's fourth quarter. This reflects strong growth in the RF and wireless components product line, specifically in SATCOM, radar, and communication markets, and we again saw very strong growth in the semiconductor wafer fab market. This continued quarter-over-quarter growth trend in Q4 allowed us to expand sales at a double-digit rate in FY '26, finishing the fiscal year with 14.2% growth versus FY '25. We are excited about the positive feedback from our semi-fab customers who are expressing ongoing optimism and continued growth into calendar year 2027. Across both GES and PMT, one of the most important priorities is accelerating the design-to-production cycles. We're expanding our design capabilities to move products more quickly from concept into manufacturing and test in Lafox. Our Sweetwater, Texas location is one of the investments we expect will accelerate product development opportunities. We're also adding experienced industry talent to help expedite growth. More broadly, 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 field engineering team continues to identify new customers and opportunities across our end markets. We continue to gain market share by developing new products and solutions that are accepted by our customer. Looking ahead, we are encouraged by the strategic initiatives underway across PMT and GES, including our new BES program, global expansion of our key engineered solutions products, and new technology partnerships. Our global capabilities and global go-to-market strategy continue to differentiate us from our competition in the power management, RF and microwave, and green energy markets. By combining legacy products and new technology partners and engineered solutions, we believe we are well positioned to deliver continued growth. So in summary, we remain optimistic about the growing project-based business. We continue to expand our technology partners, design opportunities, and engineering resources while addressing technology gaps with our new partners and solutions. Coming out of a year with increased sales, new products, increased customer base, and new technology partners, and a 24.8% increase in the combined backlog of the two SBUs, we believe FY '27 will be another year of growth for both PMT and GES.
Thanks, Greg, and good morning, everyone. Canvys designs, engineers, manufactures, and sells custom displays to original equipment manufacturers across global industrial and medical markets. It's our mission to deliver high-quality display solutions tailored to our customers' needs. Canvys reported revenues of $12.3 million in the fourth quarter of fiscal year 2026, up 29.5% from $9.5 million in the same quarter of the previous year, setting a new quarterly revenue record for the business. Our business remains project-focused and can vary from quarter to quarter based on customer program timing. For the full fiscal year, revenues were $37.3 million, up 12.4% from $33.1 million in the comparable period last year. The gross margin was 32.3% of net sales in the fourth quarter compared with 32.1% in the same quarter last year. For the full fiscal year, gross margin was 32.0%, down from 32.9% in fiscal 2025. The product mix continued to create pressure, but margins remain solid. The backlog at the end of the fourth quarter of fiscal 2026 increased to $40.8 million, up from $38.2 million at the end of the third quarter. With a Q4 book-to-bill ratio of 1.3, we entered the new fiscal year with a solid order book and improved visibility. The quarter unfolded in a resilient but uneven global economy, with tariffs, trade policy changes, and logistics conditions creating continued uncertainty. We focus on disciplined execution, customer collaboration, and flexibility to support customer schedules. During the most recent quarter, Canvys secured orders from both repeat and new medical OEM customers for a range of applications. Our primary focus remains on robotic-assisted surgery, navigation, endoscopy, and human-machine interface solutions for the control of medical devices. At the same time, our solutions continue to support a broad set of commercial and industrial applications, including passenger information systems in trains and buses, as well as HMI technologies used in printing, vending, milling, and packaging equipment. Our initiatives remain centered on increasing Canvys' visibility and market leadership by developing new opportunities, deepening customer relationships, and converting our pipeline into additional design wins and production programs. We continue to strengthen our supply chain flexibility and execution capabilities so we can respond effectively as customer demand patterns and trade conditions evolve. If we look to the new fiscal year, we expect custom investment decisions to continue, varying by the market, and be subject to program timing. Even so, we are encouraged by the strength of our customer engagement, the level of requests for productivity, and our opportunity pipeline. Our record fourth quarter revenue, $40.8 million backlog, and Q4 book-to-bill of 1.3 provide a solid foundation for continued momentum. Our sales team remains focused on developing new opportunities while I remain committed to executing our strategic plans, sustainable growth, and creating long-term shareholder value.
Thanks, Jens, and good morning, everyone. Let's begin with a quick CT tube update. As I mentioned last quarter, we're now focused entirely on repairing Siemens tubes. We continued to ship a limited number of repaired Straton Z tubes during the quarter. We also completed life testing on the MX series. At the end of the quarter, we repaired several Siemens MX beta tubes, have recently shipped, and will be deployed for final review prior to full release. During the fourth quarter of fiscal 2026, we sold most of our assets dedicated to the ALTA75 program and completed production on this program in March of 2026. We also downsized our CT healthcare team. We remain optimistic that bottom-line results from this program will be significantly improved in FY '27. Stepping back to our multi-year strategy, we remain focused on two primary operating priorities: accelerating growth and improving efficiency. Accelerating growth is evident by our revenue trends and growing backlog. Even though a portion of our revenue is booked and shipped during the quarter, we view backlog as an important indicator of demand and future revenue visibility. A growing backlog is directionally positive because it reflects customer orders that are already committed or scheduled, and it gives us greater confidence in the pipeline. At the same time, backlog does not convert to revenue on a perfectly linear quarterly basis. The timing of conversion depends on product mix, customer delivery schedules, supply availability, and program schedules. So, while we view backlog as an indicator of underlying demand and future revenue, we do not use backlog in isolation as a precise quarterly sales forecast. Turning to efficiency and cash generation, in addition to downsizing our CT healthcare team at the end of the quarter, we also closed our Powerlink Dubai operations, with all work being transferred to our Powerlink UK location. Our fourth quarter performance also reflects the culmination of the Thales inventory build and an ability to generate cash from on-hand inventory. It also reflects our ongoing efforts to take a conservative approach to new inventory. The entire management team continues to look for ways to free up cash for our critical growth initiatives by becoming more efficient in our core operations. During the quarter, we completed the 90-day AI Advisory Engagement focused on AI readiness, building internal capabilities, and identifying practical use cases across the company. The engagement included four working groups: supply chain, manufacturing and engineering, sales, and finance, and resulted in 47 AI opportunities being identified and triaged. Of those, 32 were classified as ready to execute using our existing AI tools, with no additional technology investment required. Eleven were identified as potential future agent build opportunities. We also saw meaningful AI adoption across the company during the engagement period. Users increased by 46%, message volume increased by 60%, and the use of projects expanded significantly. It is clear employees are beginning to incorporate AI into their daily work. Six initial pilot programs have been validated and are ready for execution, including use cases in at-risk account analysis, RMA tracking, supplier compliance, performance review support, and change log analysis. We believe this work establishes a practical foundation for using AI to improve productivity, strengthen workflow consistency, and support process improvement over time. We continue to advance our Made in America strategy with a focus on opportunities where U.S.-based manufacturing, engineered solutions, and power management capabilities create a competitive advantage. This position is increasingly relevant to customers seeking a more reliable supply chain, reduced tariff exposure, faster response times, and stronger quality control. During the quarter, we converted several customer discussions into commercial activities across aerospace, unmanned defense systems, defense electronics, and U.S.-based industrial manufacturing. The broader pipeline remains active. Key opportunities include a U.S.-made self-checkout kiosk program for a major national restaurant chain that is currently under final consideration. Also, we have confirmed competitive pricing and received initial approval to begin work tied to a major U.S. defense program. These opportunities are expected to convert to revenue beginning later in the fiscal year. The key takeaway is that our Made in America initiative is moving from prospecting into execution. We are converting customer interest into sample builds, purchase orders, and supplier onboarding activity. Our near-term focus is to stabilize early production, close open approvals, and continue building momentum in aerospace, defense, industrial, and power management applications while maintaining the financial flexibility and operating capacity needed to support project-specific purchases, technology partner requirements, and potential facility expansion. Looking further out, we remain focused on driving growth through organic initiatives while maintaining a disciplined and selective approach to capital allocation. While acquisitions are not a near-term priority, should the right opportunity arise, particularly one that supports growth in power management or expands our engineered solutions capabilities, we would evaluate it thoughtfully. At this stage, our priority is to maintain a strong cash position to support growth in battery energy storage, including key purchases tied to projects and potential facility expansion to accommodate increased demand with our technology partners. We are encouraged by the direction we are headed and believe initiatives underway position us well to continue revenue growth and improve profitability over time.
Thanks, Wendy. In closing, fiscal 2026 was an important year for Richardson Electronics. We delivered significant year-over-year revenue growth, improved gross margin, and strengthened operating performance, as well as continuing to invest in areas that we believe can support sustainable long-term growth. We're encouraged by the strength across all three business units and by the market trends supporting demand for power management, electrification, energy storage, data center infrastructure, semiconductor manufacturing, defense, and customized solutions. We also recognize that the macro environment remains uncertain. We'll continue to manage the business with discipline. With a strong balance sheet, a growing base of higher-value engineered solutions, a continued focus on repeatable sales, and a team that's executing well, we believe Richardson Electronics is well positioned to build on the progress we made in fiscal 2026. We remain committed to improving profitability and creating sustainable value for our shareholders, customers and employees, as we move forward. We'll now open the call for questions.
分析師問答
Hi, good morning. Congratulations on the strong quarter. And thank you for taking my questions. I'm just curious for the semi-fab demand. What kind of visibility do you have there? And what do you see now into the first quarter?
Yes, we still have limited visibility. People have a hard time forecasting, but the feedback we're getting from our customers in that space and then their customers' customers is very, very positive. We saw excellent growth in Q3 and Q4, and that, according to the customer and their end customers, should continue throughout FY '27.
And sort of what lead time do you have there if something comes up in quarter?
Lead time in terms of building the product for a new order? Yes. The team is very aggressive on inventory. We try to make sure we have weekly and monthly calls with the customer. So we have the piece parts in stock and are just waiting for releases from the customer.
Okay, thank you. And then at Canvys was quite the surprise with a record quarter. What's the driver there and do you see that continuing into the first quarter?
I'm really pleased with that record quarter. We had a book-to-bill of 1.3. When you have a record quarter and the book-to-bill is up, it's really great momentum. Obviously, our business is project-driven, with sometimes larger call-offs based on project timing. It's really hard to say definitively for any quarter, but we do foresee continued strength into the next year.
Okay, thank you. I'll get back into queue.
Hey, can you guys hear me now? Sorry about that.
You must be sleep-deprived, Bobby. That happens.
Yes, I appreciate it. So, Ed, you talked about pursuing higher-value engineered solutions in your prepared remarks, and maybe I'm wrong here, but I feel like that's been a focus for the business for several years. If that is the case and it seems like this is kind of turning the corner, could you expand on what changed — it seems like something clicked in the quarter or over the last several months that's helped unlock growth with that. I'd just like a more expanded view.
Well, I think the thing that we're seeing is lots of new opportunities in new areas. Let Greg tell you about some of the new products that we're working on.
Yes, I think Ed's comment was based on that, from an investment point of view going forward, it will be focused on these higher engineered-solution type products. We continue to get traction. First, the existing products that we've introduced over the years are gaining market share globally. In addition, we're getting more opportunities from customers we've done work for. For example, on the electric locomotive, we now have a number of opportunities for other products for Progress Rail and Caterpillar. Some of these are different than what we've currently done and might require different types of engineers — software, mechanical, electrical. So I think that's what we're talking about here in terms of long-term three- to five-year growth: where do we invest, and that investment would be in these higher-technology and more highly integrated products.
Got it. That makes a lot of sense. Then I know last quarter your ultracapacitor replacements for GE turbines became an approved product for GE service turbines. I was curious to hear how that opportunity developed during the quarter.
Yes, Bobby, we worked with them and they wanted to do some testing. GE site installers could use these products. Our product passed with flying colors. Based on the data, it was proven safer than dealing with the discharge of the current lead-acid batteries in the turbine. That was very positive. What GE decided to do — and we have no control over that — is site-specific approvals. We've done our job, created a product that works, is safe, and is in high demand by owner-operators. They've approved a site in Canada for this because it's up to the owner-operators to go back to GE and request installation, but it is site-specific. They released an order for a site in Canada to one of our large owner-operators. We did ship that in Q1. It was a nice start to Q1, so it's not even in the fourth quarter numbers.
That's great to hear. I just wanted a little more context around the battery energy storage solutions and their relation to the data center opportunity. It seems like you spoke to that a bit more today than in past quarters. Are you focusing on mega projects or more the smaller installations? For context, are your battery energy solutions single-digit megawatt or kilowatt scale?
Yes, Bobby, you're correct. The mega data centers are not our focus today. It's more commercial and industrial niche applications. Our first offerings as we develop relationships with technology partners such as Gotion will be one product at 760 kilowatts and another at 5 megawatts. Somebody wanting 10 megawatts can stack containers. The opportunities we have in our pipeline and the one we booked are mainly smaller niche applications. For example, the booked project is for 17 container units for a federal reservation in Alaska; they'll put one or two in each town to balance the grid and provide backup. We've also had opportunities for municipal buildings and commercial applications. The demo center we're putting in Lafox is a working unit to provide backup power, store energy, balance the grid, and potentially sell back to the grid. The state of Illinois offers attractive subsidies and grants for this. There are many smaller niche opportunities where we fit well given our history and capabilities. Many competitors in this segment are small entities; in 2023 over 100 LLCs went bankrupt. Customers appreciate a company that's been around for decades, with no debt, that will service these niche applications.
That's very helpful, Greg. I think that's a great point on the niche. The competition seems weaker than you. I'll jump back in queue and congratulations on a really strong quarter.
Thanks, Bobby.
Hey, good morning. Congrats on the excellent quarter and really a long-term positive trajectory. I am a long-term retail shareholder. My question is about capital deployment. Has there been consideration to returning additional capital to shareholders? I know the company has historically had a conservative approach. Could you speak to that strategic purpose and whether any indicators would give you confidence to deploy additional capital into buybacks or dividends?
That's a question that we hear every quarter, and every quarter when the board gets together, we talk about it. We've always come to the same conclusion that we're better off to employ our capital in new opportunities such as those Greg was talking about rather than buying our own stock back.
Is there anything in the business or particular hallmarks that would lead you to reevaluate that?
Not that we presently have visibility to.
Okay. Thank you very much. Again, congrats on the great quarter and the long-term run.
Hi, team. Solid work on this quarter. I had a few questions. First, could you provide the manufactured versus distribution split within PMT? I'm hoping to gauge durability of the mix shift.
No, we don't provide that at that level.
Okay, no problem. My next question is on backlog. How much of it would you say is expected to fill within the next four quarters, ballpark?
I'll speak to PMT. Most of our backlog, because of the project-based nature and the contracts we sign, are scheduled for a year. So it depends on when we signed it whether it will ship in this fiscal year or not. There are no three-, four-, five-year type contracts. Most of the backlog should ship within the fiscal year or within five quarters for PMT.
For Canvys, our backlog is project-specific, and because we sell to large medical OEMs it can be different. Sometimes contracts will deplete backlog over two or three years. However, we expect new orders every quarter that should exceed the current backlog, so backlog is increasing for a while and we are very positive on that.
Okay, awesome. Thank you so much and congratulations again.
Hey, just a quick one. I think it's in the release that GES backlog was up 5% year-over-year. Greg, could you speak to what the PMT-specific backlog was? Canvys had great growth; I'm trying to square where PMT landed.
The backlog increase and the backlog itself are not one-hit wonders. We're adamant about consistent growth. The backlog today is a combination of technology partners on the power management side within GES. We saw a large increase in our pitch energy modules with a very large international order. That was part of the growth, along with niche products like the temperature monitoring device and shunts. The backlog growth was across the board in both components and engineered solutions. If you look at the overall percent, it's the pitch energy module business that continues to gain market share. It's a very large market that we're in.
Was PMT backlog up double digits in the fourth quarter, fair to say?
Our PMT backlog was up double digits in the quarter.
Yes, great. Maybe one last one: It seems like if we rewind to 2024, a lot of the focus was on the pitch energy modules and the wind turbine solution opportunity. Now today, especially over the last two prints, that remains a great growth opportunity, but it seems like there are more shots on goal. Is that fair, or did I miss something?
You broke up a bit, but I think I understood: our focus has been on power management applications broadly. As we add new technology partners, we're finding other niche power management applications. The press release on C-Motive shows we'll be building power supplies and motor drives for them. We also have starter modules in development and another large locomotive manufacturer asking us to design one. The pitch energy module was one part and one customer, but the goal is to expand globally. Our model for 80 years has been to sell new products to an existing customer base because that's most cost-effective. We're identifying what I call niche applications that are actually very large markets. For example, the 20-newton meter product for smaller wind turbines will be out in Q1, allowing us to sell pitch energy modules in that application. We have agreements like UPS with KK Wind Solutions. These developments are power management-focused; the initial growth happened in wind turbines but going forward the percent will be across other products.
Super helpful context. Great. Thank you guys.
Hey, let me jump in and correct something. The earlier question was about the percentage of our manufactured product versus distribution product. We do report that and it is in the range of 55% to 60% of the products that we sell are products that we either manufacture directly or are manufactured exclusively for us to our specifications. We wanted to follow up with that. Thanks.
First, let me congratulate you on a great quarter and the prospects you outlined. My question is about Gotion. In the last conference call you discussed Gotion and the battery energy storage initiatives. Were you utilizing Gotion batteries prior to the press release about the partnership?
Yes, we were working with Gotion and that's how we got to know them. Once we shared capabilities, and since they're located near us, we talked to them about batteries as we evaluated opportunities. Initially the relationship was to buy batteries from them and build a product. It has evolved: they will be a technology partner. They will supply batteries and we will build containers and integrate them here. We'll design or build our own PCS, transformer, and other components and use Gotion as our battery technology partner. With their batteries being built in North America, we meet Build America/Buy America and other requirements. We recently signed an MOU and will help them bring batteries to market while they help us bring BES products to market.
Gotion has a sales force. Are they pursuing sales independently and then referring projects to you, or how will that work?
They have people who talk to larger projects. We'll be exclusive for certain size containers, and referrals will come to us. We'll work together, and we have a larger, more knowledgeable North American sales force for these opportunities. They have the technology and a large manufacturing footprint. That's our relationship with Gotion, and the opportunities we booked will use Gotion batteries.
Subsequent to your announcement, Gotion announced development of a sodium-ion solid-state battery being introduced in China. Do you know if there's any possibility that such batteries would be manufactured in Illinois in the next year or so?
We have had conversations with them about that. Right now, the product they have fits the technical needs and cost needs of our current opportunities. They showed us the roadmap with the goal of eventually bringing that technology to North America. They intend to introduce it in their large facility in China first and then transfer production to North America over time. Their intent is to eventually bring production here, which aligns with the Build America and related incentives.
All right. Again, congratulations. Terrific quarter, and I look forward to seeing what happens this fiscal year. Thank you for the opportunity.
Well, thanks again for joining us today and for your questions during the Q&A portion of the call. We look forward to talking to you again next quarter, but if you have any questions at any time, you're welcome to call us directly. Thank you.
Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.