Richardson Electronics Q1 sales rise 18.9% to $64.9M
Management believes existing liquidity sources will cover known capital requirements and working-capital needs through the next twelve months.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Richardson Electronics, Ltd. (RELL) reported net sales of $64.923 million for the three months ended August 29, 2026, up 18.9% from $54.607 million a year earlier. Net income was $4.059 million, compared with $1.909 million, and diluted earnings per common share were $0.27 versus $0.13. Gross margin was 34.6%, compared with 31.0%, while operating income was $5.115 million versus $0.968 million. Sales increased in each segment: PMT grew 19.7%, GES 27.1% and Canvys 7.9%.
Operating activities generated $5.873 million in cash, compared with $1.367 million a year earlier; capital expenditures used $1.697 million. Cash and equivalents were $36.915 million as of August 29, 2026. The $20 million revolving credit facility had no amount outstanding, and no drawings or repayments were reported through the report release date. Management said it believes existing liquidity sources, including cash, will provide sufficient resources for known capital requirements and working-capital needs through the next twelve months. The company attributed PMT sales gains to semiconductor wafer-fab customers and RF and wireless components, GES gains to wind-turbine power management products and initial BESS shipments, and Canvys growth to higher North American sales.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNet sales increased 18.9% to $64.923 million year over year.
- Moderate pointNet income was $4.059 million, compared with $1.909 million a year earlier.
- Moderate pointOperating cash flow was $5.873 million, compared with $1.367 million a year earlier.
Negative
- None.
Filing Explained
The quarter’s stock issuance included option exercises and restricted-stock issuance: common shares outstanding were 12,841 thousand at
Key Figures
Key Terms
weighted-average cost method financial
contract liabilities financial
two-class method financial
imputed interest financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were RELL's sales in the first quarter of fiscal 2027?
How much net income did RELL report?
How much did RELL spend on capital expenditures?
What is the status of RELL's revolving credit facility?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from To
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer |
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Non-Accelerated Filer |
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Smaller Reporting Company |
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Emerging Growth Company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of October 5, 2026, there were
TABLE OF CONTENTS
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Page |
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Part I. |
Financial Information |
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Item 1. |
Financial Statements |
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2 |
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Consolidated Balance Sheets |
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2 |
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Unaudited Consolidated Statements of Comprehensive Income |
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3 |
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Unaudited Consolidated Statements of Cash Flows |
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4 |
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Unaudited Consolidated Statements of Stockholders’ Equity |
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5 |
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Notes to Unaudited Consolidated Financial Statements |
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6 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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15 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
Controls and Procedures |
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21 |
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Part II. |
Other Information |
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Item 1. |
Legal Proceedings |
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Item 1A. |
Risk Factors |
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22 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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22 |
Item 3. |
Defaults Upon Senior Securities |
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22 |
Item 4. |
Mine Safety Disclosures |
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Item 5. |
Other Information |
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22 |
Item 6. |
Exhibits |
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24 |
Exhibit Index |
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24 |
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Signatures |
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25 |
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1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Richardson Electronics, Ltd.
Consolidated Balance Sheets
(in thousands, except per share amounts)
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Unaudited |
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Audited |
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August 29, 2026 |
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May 30, 2026 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, less allowance for credit losses of $ |
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Inventories, net |
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Prepaid expenses and other assets |
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Total current assets |
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Non-current assets: |
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Property, plant and equipment, net |
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Intangible assets, net |
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Right of use lease assets, net |
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Deferred income tax assets, net |
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Other non-current assets |
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Total non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Lease liabilities current |
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Total current liabilities |
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Non-current liabilities: |
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Deferred income tax liabilities |
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Lease liabilities non-current |
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Other non-current liabilities |
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Total non-current liabilities |
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Total liabilities |
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Stockholders’ Equity |
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Common stock, $ |
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Class B common stock, convertible, $ |
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Additional paid-in-capital |
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Retained earnings |
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Accumulated other comprehensive income |
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Total stockholders' equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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Refer to the accompanying Notes to Unaudited Consolidated Financial Statements.
2
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
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Three Months Ended |
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August 29, 2026 |
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August 30, 2025 |
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Net sales |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Operating income |
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Other (expense) income: |
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Interest income |
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Foreign exchange (loss) gain |
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( |
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Other, net |
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( |
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Total other (expense) income |
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( |
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Income before income taxes |
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Income tax provision |
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Net income |
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Foreign currency translation (loss) gain, net of tax |
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Comprehensive income |
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$ |
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$ |
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Net income per share: |
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Common stock - Basic |
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$ |
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$ |
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Class B common stock - Basic |
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Common stock - Diluted |
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Class B common stock - Diluted |
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Weighted average number of shares: |
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Common stock – Basic |
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Class B common stock – Basic |
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Common stock – Diluted |
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Class B common stock – Diluted |
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Refer to the accompanying Notes to Unaudited Consolidated Financial Statements.
3
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
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Three Months Ended |
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August 29, 2026 |
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August 30, 2025 |
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Operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to cash provided by operating activities: |
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Unrealized foreign currency gain |
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( |
) |
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( |
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Depreciation and amortization |
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Inventory provisions |
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Share-based compensation expense |
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Deferred income taxes |
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Change in assets and liabilities: |
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Accounts receivable |
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( |
) |
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( |
) |
Inventories |
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( |
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( |
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Prepaid expenses and other assets |
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Accounts payable |
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Accrued liabilities |
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( |
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( |
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Other |
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( |
) |
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Net cash provided by operating activities |
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Investing activities: |
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Capital expenditures |
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( |
) |
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( |
) |
Net cash used in investing activities |
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( |
) |
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( |
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Financing activities: |
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Proceeds from issuance of common stock |
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Cash dividends paid on common and Class B common stock |
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( |
) |
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( |
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Other |
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( |
) |
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( |
) |
Net cash provided by (used in) financing activities |
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( |
) |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
) |
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Increase (decrease) in cash and cash equivalents |
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( |
) |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental Disclosure of Cash Flow Information: |
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Non-cash activities: |
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Right of use assets obtained in exchange for lease liabilities |
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$ |
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$ |
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||
Refer to the accompanying Notes to Unaudited Consolidated Financial Statements.
4
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Stockholders’ Equity
(in thousands, except per share amounts)
A summary of the stockholders' equity for the three months ended August 29, 2026, follows:
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Common |
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Class B |
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Par |
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Additional |
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Retained |
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Accumulated |
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Total |
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Balance May 30, 2026 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Comprehensive income: |
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|||||||
Net income |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Share-based compensation: |
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Restricted stock |
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— |
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— |
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— |
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— |
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— |
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Stock options |
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— |
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— |
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— |
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— |
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— |
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Common stock: |
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Options exercised |
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— |
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— |
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— |
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||||
Restricted stock issuance |
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— |
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( |
) |
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— |
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— |
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( |
) |
||
Dividends paid to: |
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|||||||
Common ($ |
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— |
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— |
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— |
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— |
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( |
) |
|
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— |
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( |
) |
Class B common ($ |
|
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance August 29, 2026 |
|
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$ |
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$ |
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$ |
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$ |
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$ |
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|||||||
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|||||||
Refer to the accompanying Notes to Unaudited Consolidated Financial Statements.
A summary of the stockholders' equity for the three months ended August 30, 2025, follows:
|
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Common |
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Class B |
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Par |
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Additional |
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Retained |
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Accumulated |
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Total |
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|||||||
Balance May 31, 2025 |
|
|
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$ |
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$ |
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$ |
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$ |
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$ |
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|||||||
Comprehensive income: |
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|||||||
Net income |
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— |
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— |
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— |
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— |
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— |
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||
Foreign currency translation, net of tax |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation: |
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|||||||
Restricted stock |
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— |
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— |
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— |
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— |
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— |
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Stock options |
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— |
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— |
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— |
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— |
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— |
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||
Common stock: |
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|||||||
Options exercised |
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— |
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— |
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— |
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||||
Restricted stock issuance |
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— |
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( |
) |
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— |
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— |
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( |
) |
||
Dividends paid to: |
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|||||||
Common ($ |
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— |
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— |
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— |
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|
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— |
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( |
) |
|
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— |
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( |
) |
Class B common ($ |
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— |
|
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— |
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— |
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— |
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( |
) |
|
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— |
|
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|
( |
) |
Balance August 30, 2025 |
|
|
|
|
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|
$ |
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$ |
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|
$ |
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$ |
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$ |
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|||||||
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|||||||
Refer to the accompanying Notes to Unaudited Consolidated Financial Statements.
5
RICHARDSON ELECTRONICS, LTD.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE COMPANY
Richardson Electronics, Ltd. (the "Company," "we," "our") is a global manufacturer of engineered solutions, green energy products, power grid and microwave tubes, and related consumables; power conversion and RF and microwave components including green energy solutions; tubes for diagnostic imaging equipment; and customized display solutions. We have manufacturing at our facilities located in LaFox, Illinois, Marlborough, Massachusetts, and Donaueschingen, Germany.
We serve customers in alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. The Company’s strategy is to provide specialized technical expertise and “engineered solutions” based on our core engineering and manufacturing capabilities. The Company products and services include design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair. Our products include electron tubes and related components, microwave generators, subsystems used in semiconductor manufacturing and visual technology solutions. These products are used to control, switch or amplify electrical power signals, or are used as display devices in a variety of industrial, commercial, medical and communication applications.
We currently operate within the following major geographic regions: North America, Asia/Pacific, Europe and Latin America.
2. BASIS OF PRESENTATION
The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements.
Our fiscal quarter ends on the Saturday nearest the end of the quarter-ending month. The first quarter of fiscal 2027 and fiscal 2026 both contained 13 weeks. In the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results of interim periods have been made. All inter-company transactions and balances have been eliminated. The Unaudited Consolidated Financial Statements presented herein include the accounts of our wholly owned subsidiaries. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations. The results of our operations for the three months ended August 29, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending May 29, 2027.
The financial information contained in this report should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended May 30, 2026, which was filed with the SEC on August 3, 2026.
3. SUMMARY OF ACCOUNTING POLICIES
Inventories, net: Our consolidated inventories were stated at the lower of cost and net realizable value, using a weighted-average cost method. Our net inventories include approximately $
Provisions for obsolete or slow-moving inventories were recorded based upon regular analysis of stock rotation privileges, obsolescence, the exiting of certain markets and assumptions about future demand and market conditions. If future demand changes in the industry or market conditions differ from management’s estimates, additional provisions may be necessary. Inventory reserves were $
6
Intangible Assets:
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August 29, 2026 |
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May 30, 2026 |
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Gross Amounts: |
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Customer Relationships |
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$ |
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$ |
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Technology |
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Total Gross Amounts |
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$ |
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$ |
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Accumulated Amortization: |
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Customer Relationships |
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$ |
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$ |
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Technology |
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Total Accumulated Amortization |
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$ |
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$ |
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Intangible Assets, Net |
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$ |
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$ |
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The amortization expense associated with intangible assets subject to amortization for the next five years is presented in the following table (in thousands):
Fiscal Year |
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Amortization |
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Remaining 2027 |
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$ |
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2028 |
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2029 |
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2030 |
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2031 |
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Thereafter |
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Total amortization expense |
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$ |
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Accrued Liabilities:
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August 29, 2026 |
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May 30, 2026 |
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Compensation and payroll taxes |
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$ |
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$ |
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Accrued severance |
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Professional fees |
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Contract liabilities |
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Other accrued expenses |
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Accrued Liabilities |
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$ |
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$ |
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Warranties: We offer assurance-type warranties for specific products we manufacture. We estimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expenses related to our warranty obligations as cost of sales in our Consolidated Statements of Comprehensive Income. Each quarter, we assess the actual warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products and warranty experience.
Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty reserves are included in accrued liabilities on our Consolidated Balance Sheets. The warranty reserves are determined based on known product failures, historical experience and other available evidence. Warranty reserves were approximately $
Common and Class B Common Stock: We have authorized
Revenue Recognition: We sell our products to customers in diversified industries and perform periodic credit evaluations of our customers’ financial condition. Terms are generally open account, payable net 30 days in North America, and vary throughout
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Asia/Pacific, Europe and Latin America. Estimates of credit losses are recorded in the financial statements based on monthly reviews of outstanding accounts.
Our customers are generally not resellers, but rather businesses that incorporate our products into their processes from which they generate an economic benefit. The goods are also distinct in that each item sold to the customer is clearly identified on both the purchase order and resulting invoice. Each product we sell benefits the customer independently of the other products. Each item on each purchase order from the customer can be used by the customer unrelated to any other products we provide to the customer. We derive most revenue from the sale of products. Generally, the performance obligation under contracts are satisfied when there is a transfer of control of the products to our customer, which is primarily upon shipment or, in certain instances, upon the delivery of the products to the named customer location.
We also generate revenue from repair, installation or training activities. The services we provide are relatively short in duration and are typically completed in one or two weeks. Therefore, at each reporting date, the amount of unbilled work is insignificant. The services revenue has consistently accounted for less than
We record discounts taken based on historical experience. The Company allows returns with prior written authorization. We estimate returns based on historical experience. The policy varies by business unit. The Company maintains a reserve for returns based on historical trends that cover all contracts and revenue streams using the expected value method because we have a large number of contracts with similar characteristics, which is considered variable consideration. The reserve for returns creates a refund liability on our balance sheet as a contra trade accounts receivable as well as an asset in inventory. We value the inventory at cost due to there being minimal or no costs to the Company as we generally require the customer to pay freight and we typically do not have costs associated with activities such as relabeling or repackaging. The reserve is considered immaterial at each balance sheet date. Returns for defective product are typically covered by our suppliers’ warranty, thus, returns for defective product are not factored into our reserve.
Principal versus agent guidance was considered for products that are provided by our suppliers versus manufactured by the Company. The Company acts as the principal as we are responsible for satisfying the performance obligation. We have primary responsibility for fulfilling the contract, we have inventory risk prior to delivery to our customer, we establish prices, our consideration is not in the form of a commission and we bear the credit risk. The Company recognizes revenue in the gross amount of consideration.
Contracts with customers: A revenue contract exists once a customer purchase order is received, reviewed and accepted. Each accepted purchase order identifies a distinct good or service as a performance obligation. The goods include standard products purchased from a supplier and stocked on our shelves, customized products purchased from a supplier, products that are customized or have value added to them in house prior to shipping to the customer and manufactured products. Prior to accepting a customer purchase order, we review the credit worthiness of the customer. Purchase orders are deemed to meet the collectability criterion once the customer’s credit is approved. The Company receives advance payments or deposits from our customers before revenue is recognized resulting in contract liabilities. Contract liabilities are included in accrued liabilities in the Consolidated Balance Sheets.
On occasion, the Company enters bill-and-hold arrangements. Each bill-and-hold arrangement is reviewed and revenue is recognized only when the control has transferred to our customer and certain criteria have been met: (i) the reason for the bill-and-hold arrangement is substantive; (ii) the product is segregated from the Company’s other inventory items held for sale; (iii) the product is ready for shipment to the customer; and (iv) the Company does not have the ability to use the product or direct it to another customer.
Contract Balances: Contract balances were as follows (in thousands):
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August 29, 2026 |
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May 30, 2026 |
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May 31, 2025 |
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Accounts receivable |
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$ |
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$ |
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$ |
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Contract liabilities |
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During the three months ended August 29, 2026 the Company recognized $
Loss Contingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range
8
is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will include a disclosure describing the contingency.
New Accounting Pronouncements - Not Yet Adopted: In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires an entity to disclose on an annual and interim basis, disaggregated information about specific income statement expense categories. The guidance should be applied prospectively with the option to apply the standard retrospectively. This ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (“ASU 2025-11”) which is intended to improve the navigability of the guidance in Accounting Standards Codification ("ASC") 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2025-11 may have on the Company’s consolidated financial statements and disclosures.
4. REVOLVING CREDIT FACILITY
On October 7, 2025, the Company executed a
The Credit Agreement provides that the Company must maintain compliance with a maximum consolidated leverage ratio covenant and a minimum consolidated fixed charge coverage ratio, each as determined in accordance with the Credit Agreement. The Credit Agreement also contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, and transactions with affiliates, as well as customary events of default for financings of this type. The Company was in compliance with financial covenants under the Credit Agreement as of August 29, 2026.
Borrowings under the Revolving Credit Facility will bear interest at a rate per annum selected by the Company from the following options: (a) Term secured overnight financing rate ("SOFR") for the applicable Interest Period, plus the SOFR Adjustment for the applicable Interest Period, plus
5. LEASE OBLIGATIONS
The Company leases real and personal property in the normal course of business under various operating leases. The Company uses operating leases for facility space and automobiles. Most of the leased facility space is for sales and general office use. Automobile leases are used throughout the Company. Several leases include renewal clauses which vary in length and may not include specific rent renewal amounts. The Company will revise the value of the right of use assets and associated lease liabilities upon a remeasurement event.
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The gross amounts of assets and liabilities related to operating leases on August 29, 2026 and May 30, 2026 were as follows (in thousands):
Lease Type |
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August 29, 2026 |
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May 30, 2026 |
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$ |
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$ |
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The components of lease costs were as follows (in thousands):
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Three Months Ended |
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August 29, 2026 |
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August 30, 2025 |
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Consolidated operating lease expense |
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Selling, general and administrative expenses |
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$ |
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$ |
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The approximate future minimum lease payments under operating leases at August 29, 2026 were as follows (in thousands):
Fiscal Year |
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Operating Leases |
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Remaining 2027 |
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$ |
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2028 |
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2029 |
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2030 |
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2031 |
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Thereafter |
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Total lease payments |
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Less imputed interest |
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Net minimum lease payments |
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$ |
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The weighted average remaining lease terms and interest rates of leases held by the Company as of August 29, 2026 and August 30, 2025 were as follows:
Operating Lease as of: |
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Weighted Average Remaining |
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Weighted Average Interest Rate |
August 29, 2026 |
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August 30, 2025 |
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The cash activities associated with our leases for the three month periods ended August 29, 2026 and August 30, 2025 were as follows (in thousands):
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Three Months Ended |
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Cash Flow Source |
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Classification |
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August 29, 2026 |
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August 30, 2025 |
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Operating cash flows from operating leases |
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Operating activities |
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$ |
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$ |
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10
6. INCOME TAXES
We recorded an income tax provision of $
In the normal course of business, we are subject to examination by taxing authorities throughout the world. Years prior to fiscal 2016 are closed for examination under the statute of limitation for U.S. federal and U.S. state. During the third quarter of fiscal 2025, we received a notice from the State of Illinois for an income tax audit covering the period from June 2021 to May 2023. The Company has filed for an extension until March 2027 and is waiting to hear from the State of Illinois office for further action. We have no other current open audits in the U.S.
In The Netherlands, years prior to fiscal 2021 are closed for examination. We were under examination in Germany for fiscal years 2019 to 2022. The audit concluded in the first quarter of fiscal 2027 with no material impact on the Company’s consolidated financial statements and disclosures.
We have historically determined that undistributed earnings of our foreign subsidiaries, to the extent of cash available, will be repatriated to the U.S. The deferred tax liability on the outside basis difference is now primarily withholding tax on future dividend distributions. There was
The Company recorded a $
The Company maintains a valuation allowance representing the portion of the deferred tax asset that management does not believe is more likely than not to be realized. The valuation allowance was $
We have considered the impact of the One Big Beautiful Bill Act on the Company’s annual effective tax rate for fiscal year 2027. This includes Net Controlled Foreign Corporation Tested Income ("NCTI") (formerly Global Intangible Low-Taxed Income), eliminates the Qualified Business Asset Investment ("QBAI") exclusion, and sets the Section 250 deduction at
11
7. EARNINGS PER SHARE
Our Class B common stock is considered a participating security requiring the use of the two-class method for the computation of basic and diluted earnings per share. The two-class computation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Basic and diluted earnings per share were computed using the two-class method. The shares of Class B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible on a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined formula which is
The allocation of undistributed earnings (loss) between common stock and Class B common stock is based on the relationship of the weighted shares outstanding for the respective stock class (common or Class B) to the total of the weighted shares outstanding for common stock and
The earnings per share (“EPS”) presented in our Unaudited Consolidated Statements of Comprehensive Income for the first quarter of fiscal 2027 and fiscal 2026 was based on the following amounts (in thousands, except per share amounts):
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Three Months Ended |
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August 29, 2026 |
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August 30, 2025 |
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Basic |
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Diluted |
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Basic |
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Diluted |
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Numerator for Basic and Diluted EPS: |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Less dividends: |
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Common stock |
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Class B common stock |
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Undistributed earnings |
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$ |
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$ |
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$ |
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$ |
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Common stock undistributed earnings |
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$ |
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$ |
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$ |
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$ |
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Class B common stock undistributed earnings |
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Total undistributed earnings |
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$ |
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$ |
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$ |
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$ |
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Denominator for Basic and Diluted EPS: |
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Common stock weighted average shares |
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Effect of dilutive securities |
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Dilutive stock options |
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Denominator for diluted EPS adjusted for weighted average shares and assumed conversion |
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Class B common stock weighted average shares and shares under if-converted method for diluted EPS |
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Net income per share: |
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Common stock |
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$ |
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$ |
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$ |
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$ |
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Class B common stock |
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$ |
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$ |
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$ |
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$ |
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Note: There were
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8. SEGMENT INFORMATION
The Company reports its financial performance to its chief operating decision maker ("CODM") based on the
Power and Microwave Technologies ("PMT") includes the power grid and microwave tube business and RF, Wireless and Power technologies. PMT provides design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair. PMT also offers its customers technical services for both microwave and industrial equipment and continued sale of CT tubes pursuant to an exclusive supply agreement.
Green Energy Solutions ("GES") designs and manufactures products for the energy storage market and power management applications. We provide design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair.
Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original equipment manufacturers markets. Display solutions include touch screens, protective panels, custom enclosures, All-In-One computers, specialized cabinet finishes and application specific software packages and certification services.
The CODM is Edward J. Richardson ().
Operating results by segment for the three months ended August 29, 2026 and August 30, 2025 are summarized in the following table (in thousands):
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Three Months Ended August 29, 2026 |
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PMT |
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GES |
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Canvys |
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Total |
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Net Sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Operating income |
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Interest income |
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Foreign exchange loss |
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( |
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Other, net |
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( |
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Income before income taxes |
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$ |
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Three Months Ended August 30, 2025 |
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PMT |
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GES |
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Canvys |
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Total |
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Net Sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Operating income |
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Interest income |
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Foreign exchange gain |
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Other, net |
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Income before income taxes |
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$ |
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13
The segment assets, which consists of inventories, net are summarized in the following table (in thousands):
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August 29, 2026 |
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May 30, 2026 |
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PMT |
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$ |
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$ |
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GES |
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Canvys |
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Total |
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$ |
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$ |
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The reconciliations of segment assets to the Consolidated Balance Sheets are summarized in the following table (in thousands):
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August 29, 2026 |
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May 30, 2026 |
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Total segment assets |
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$ |
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$ |
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Cash and cash equivalents |
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Accounts receivable |
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Prepaid expenses and other assets |
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Property, plant and equipment, net |
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Intangible assets, net |
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Right of use lease assets, net |
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Deferred income tax assets |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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9. RISKS AND UNCERTAINTIES
Our business and the companies with which we do business are subject to risks and uncertainties caused by factors beyond our control. Such factors include economic pressures related to inflation, rising interest rates, economic weakness or recession, as well as geopolitical conflict and public health, rising costs of raw materials, tightening labor markets, and pandemics. These and other similar conditions and events have in the past and could in the future disrupt our operations and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
14
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements in this report may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. The terms “may,” “should,” “could,” “anticipate," “believe,” “continue,” “estimate,” “expect,” “intend,” “objective,” “plan,” “potential," “project” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions or beliefs and are subject to a number of factors, assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include; economic, labor and political conditions; global business disruption caused by armed conflicts in Europe and the Middle East; currency exchange fluctuations; and the ability of the Company to manage its growth and the risk factors set forth in our Annual Report on Form 10-K filed with the SEC on August 3, 2026. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise.
In addition, while we do, from time to time, communicate with securities analysts, it is against our policy to disclose to them or any outside third party, any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that we agree with any statement or report issued by any securities analyst or outside third party, irrespective of the content of the statement or report. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.
INTRODUCTION
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to assist the reader in better understanding our business, results of operations, financial condition, changes in financial condition and significant developments. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes appearing elsewhere in this filing. This section is organized as follows:
Business Overview
Richardson Electronics, Ltd. (the "Company," "we," "our") is a leading global manufacturer of engineered solutions, green energy products, power grid and microwave tubes, and related consumables; power conversion and RF and microwave components including green energy solutions; tubes for diagnostic imaging equipment; and customized display solutions. More than 55% of our products are manufactured in LaFox, Illinois, Marlborough, Massachusetts, or Donaueschingen, Germany, or by one of our manufacturing partners throughout the world. All our partners manufacture to our strict specifications and per our supplier code of conduct. We serve customers in alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. The Company’s strategy is to provide specialized technical expertise and “engineered solutions” based on our core engineering and manufacturing capabilities. The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair through its global infrastructure.
Some of the Company's products are manufactured in foreign countries and imported into the United States. Accordingly, the Company’s operations are subject to tariffs and other trade protection measures. The current U.S. administration has instituted certain changes, and may make additional changes, in trade policies that include the negotiation or termination of trade agreements, higher tariffs on imports into the U.S., and other measures affecting trade between the U.S. and other countries from which the Company imports. Due in part to these measures, some countries are changing their trade policies relating to goods imported from the U.S. These global trade disruptions and geopolitical tensions, together with any related downturns in the global economy, could dampen customer demand, increase market volatility, and impact currency exchange rates, all which could materially and adversely affect the Company’s financial performance.
15
The extent to which these changes in trade policies may impact our business will depend on various factors, including (i) when trade measures are implemented, (ii) the ultimate amount, scope, nature, and duration of tariffs and other trade measures, and (iii) the extent to which the Company can mitigate impacts and pass on any increased costs associated with these changes. In addition, the impact of trade disruptions on general economic conditions and demand for electronic components is difficult to predict.
Our results for the first three months of fiscal 2027 were not materially impacted by the changes in trade policies implemented by the U.S. However, it is possible that further tariffs may be imposed on imports of our products, including by other countries, or that our business will be impacted by changing trade relations among countries. Management continues to work with its suppliers as well as its customers to mitigate the impact of the tariffs on our customers’ markets, including with respect to tariff refund claims. However, if the Company is unable to successfully pass through the additional cost of these tariffs, or if the higher prices reduce demand for the Company's products, it will have a negative effect on the Company's sales and gross margins.
The Company reports its financial performance based on the operating and reportable segments defined as follows:
Power and Microwave Technologies ("PMT") combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies. As a designer, manufacturer, technology partner and authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based on our core engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair - all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in 5G, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar and radiation oncology. PMT also offers its customers technical services for both microwave and industrial equipment.
Green Energy Solutions ("GES") combines our key technology partners and engineered solutions capabilities to design and manufacture innovative products for the fast-growing energy storage market and power management applications. As a designer, manufacturer, technology partner and authorized distributor, GES’s strategy is to provide specialized technical expertise and engineered solutions using our core design engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair - all through our existing global infrastructure. GES’s focus is on products for numerous green energy applications such as wind, solar, hydrogen and Electric Vehicles, and other power management applications that support green solutions such as synthetic diamond manufacturing.
Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original equipment manufacturers markets. Our engineers design, manufacture, source and support a full spectrum of solutions to match the needs of our customers. We offer long-term availability and proven custom display solutions that include touch screens, protective panels, custom enclosures, All-In-One computers, specialized cabinet finishes and application specific software packages and certification services. Our volume commitments are lower than the large display manufacturers, making us the ideal choice for companies with very specific design requirements. We partner with both private label manufacturing companies and leading branded hardware vendors to offer the highest quality display and touch solutions and customized computing platforms.
We currently operate within the following major geographic regions: North America, Asia/Pacific, Europe and Latin America.
16
RESULTS OF OPERATIONS
Financial Summary – Three Months Ended August 29, 2026
Net Sales and Gross Profit Analysis
Net sales by segment and percentage change during the first quarter of fiscal 2027 and fiscal 2026 were as follows (in thousands):
|
|
Three Months Ended |
|
|
FY27 vs. FY26 |
|
||||||
|
|
August 29, 2026 |
|
|
August 30, 2025 |
|
|
% Change |
|
|||
PMT |
|
$ |
46,765 |
|
|
$ |
39,069 |
|
|
|
19.7 |
% |
GES |
|
|
9,231 |
|
|
|
7,263 |
|
|
|
27.1 |
% |
Canvys |
|
|
8,927 |
|
|
|
8,275 |
|
|
|
7.9 |
% |
Total |
|
$ |
64,923 |
|
|
$ |
54,607 |
|
|
|
18.9 |
% |
During the first quarter of fiscal 2027, consolidated net sales increased 18.9% compared to the first quarter of fiscal 2026. Sales for PMT increased 19.7%, sales for GES increased 27.1% and sales for Canvys increased 7.9%. The increase in PMT was due to strong growth from our customers in the semiconductor wafer fab industry and continued growth in our RF & Wireless components business. The increase in GES was due to our growing portfolio of wind turbine power management products, initial BESS shipments, and products used in the making of synthetic diamonds. The increase in Canvys was attributable to higher sales in the North American markets.
Gross profit by segment and percentage of net sales for the first quarter of fiscal 2027 and fiscal 2026 were as follows (in thousands):
|
|
Three Months Ended |
|
|||||||||||||
|
|
August 29, 2026 |
|
|
% of Net Sales |
|
|
August 30, 2025 |
|
|
% of Net Sales |
|
||||
PMT |
|
$ |
16,538 |
|
|
|
35.4 |
% |
|
$ |
12,226 |
|
|
|
31.3 |
% |
GES |
|
|
3,010 |
|
|
|
32.6 |
% |
|
|
2,150 |
|
|
|
29.6 |
% |
Canvys |
|
|
2,944 |
|
|
|
33.0 |
% |
|
|
2,553 |
|
|
|
30.9 |
% |
Total |
|
$ |
22,492 |
|
|
|
34.6 |
% |
|
$ |
16,929 |
|
|
|
31.0 |
% |
Gross profit reflects the distribution and manufacturing product margin less manufacturing variances, inventory obsolescence charges, customer returns, scrap and cycle count adjustments, engineering costs and other provisions.
Consolidated gross profit increased to $22.5 million during the first quarter of fiscal 2027 compared to $16.9 million during the first quarter of fiscal 2026. Consolidated gross margin as a percentage of net sales during the first quarter of fiscal 2027 increased to 34.6% when compared to 31.0% during the first quarter of fiscal 2026. In the first quarter of fiscal 2027, gross margin was impacted 1.7% due to an IEEPA Tariff Refund. Additionally, the margin increase was due to favorable product mix in PMT and GES.
17
Power and Microwave Technologies
PMT net sales increased 19.7% to $46.8 million during the first quarter of fiscal 2027 from $39.1 million during the first quarter of fiscal 2026. The increase was due to strong growth from our customers in the semiconductor wafer fab industry and continued growth in our RF & Wireless components business mainly in the SATCOM and defense market. Gross margin as a percentage of net sales increased to 35.4% during the first quarter of fiscal 2027 as compared to 31.3% during the first quarter of fiscal 2026 due to product mix and the IEEPA Tariff Refund.
Green Energy Solutions
GES net sales increased 27.1% to $9.2 million during the first quarter of fiscal 2027 from $7.2 million during the first quarter of fiscal 2026. The increase was due to our growing portfolio of wind turbine power management products, initial BESS shipments, and products used in the making of synthetic diamonds. Gross margin as a percentage of net sales increased to 32.6% during the first quarter of fiscal 2027 as compared to 29.6% during the first quarter of fiscal 2026 due to product mix.
Canvys
Canvys net sales increased 7.9% to $8.9 million during the first quarter of fiscal 2027 from $8.3 million during the first quarter of fiscal 2026, primarily due to higher sales in the North American markets. Gross margin as a percentage of net sales increased to 33.0% during the first quarter of fiscal 2027 from 30.9% during the first quarter of fiscal 2026 primarily due to the IEEPA Tariff Refund.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A”) increased to $17.4 million for the first quarter of fiscal 2027 when compared to $16.0 million for the first quarter of fiscal 2026, mainly due to increased salaries, medical benefits, travel, and higher incentives due to sales growth. Expressed as a percentage of net sales, SG&A was 26.8% for the first quarter of fiscal 2027 compared to 29.2% in the first quarter of fiscal 2026.
Other Income/Expense
Other income and expense primarily includes interest income, foreign exchange gains and foreign exchange losses. Our foreign exchange gains and losses are primarily due to the translation of U.S. dollars held in non-U.S. entities. We currently do not utilize derivative instruments to manage our exposure to foreign currency.
Other expense during the first quarter of fiscal 2027 totaled $0.1 million compared to other income of $1.4 million for first quarter of fiscal 2026. The income in fiscal 2026 was mainly due to a non-recurring gain of $0.9 million.
Income Tax Provision
We recorded an income tax provision of $1.0 million and $0.4 million for the first three months of fiscal 2027 and the first three months of fiscal 2026, respectively. The effective income tax rate during the first three months of fiscal 2027 was a tax provision of 19.6% as compared to a tax provision of 18.1% during the first three months of fiscal 2026. The difference in rate during the first three months of fiscal 2027 as compared to the first three months of fiscal 2026 reflects changes in our geographical distribution of income (loss). The 19.6% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss) and the impact of permanent items.
The Company recorded a $0.4 million uncertain tax position as of August 29, 2026 and as of May 30, 2026. We record interest related to uncertain tax positions in the income tax expense line item within the Consolidated Statements of Comprehensive Income. Accrued interest was included within the related tax liability line in the Consolidated Balance Sheets. We have recorded a liability of less than $0.1 million for interest as of August 29, 2026 and May 30, 2026.
The Company maintains a valuation allowance representing the portion of the deferred tax asset that management does not believe is more likely than not to be realized. The valuation allowance was $2.7 million as of August 29, 2026 and $2.8 million as of May 30, 2026. The valuation allowance relates to state Net Operating Losses ($1.2 million) and deferred tax assets in foreign jurisdictions where historical taxable losses have been incurred ($1.5 million). The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.
We have considered the impact of the One Big Beautiful Bill Act on the Company’s annual effective tax rate for fiscal year 2027. This includes Net Controlled Foreign Corporation Tested Income ("NCTI") (formerly Global Intangible Low-Taxed Income),
18
eliminates the Qualified Business Asset Investment ("QBAI") exclusion, and sets the Section 250 deduction at 40%, broadening the U.S. tax base. Foreign-Derived Intangible Income becomes Foreign Derived Deduction Eligible Income, with a 33.34% deduction and narrower eligibility but no QBAI reduction. The NCTI foreign tax credit haircut decreases from 20% to 10%, allowing for a 90% credit and improving utilization. These changes did not have a significant impact to the annual effective tax rate.
Net Income and Per Share Data
Net income during the first quarter of fiscal 2027 was $4.1 million, or $0.27 per diluted common share and $0.25 per Class B diluted common share as compared to $1.9 million during the first quarter of fiscal 2026 or $0.13 per diluted common share and $0.12 per Class B diluted common share.
LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES
Our operations and cash needs have been primarily financed through operations and cash on hand.
Cash and cash equivalents were $36.9 million at August 29, 2026. Cash and cash equivalents by geographic area on August 29, 2026 consisted of $18.2 million in North America, $10.4 million in Europe, $1.2 million in Latin America and $7.1 million in Asia/Pacific. We repatriated $1.0 million to the United States in the first three months of fiscal 2027 from our entity in China. Although the Tax Cuts and Jobs Act generally eliminated federal income tax on future cash repatriation to the United States, cash repatriation may be subject to state and local taxes, withholding or similar taxes.
Cash and cash equivalents were $31.8 million at May 30, 2026. Cash and cash equivalents by geographic area at May 30, 2026 consisted of $11.7 million in North America, $11.4 million in Europe, $1.0 million in Latin America and $7.7 million in Asia/Pacific. No cash was repatriated to the United States in fiscal 2026.
Our short-term and long-term liquidity requirements primarily arise from: (i) working capital requirements, (ii) capital expenditure needs and (iii) cash dividend payments (if and when declared by our Board of Directors). Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control.
Based on past performance and current expectations, we believe that the existing sources of liquidity, including current cash, will provide sufficient resources to meet known capital requirements and working capital needs through the next twelve months. Additionally, while our future capital requirements will depend on many factors, including, but not limited to, the economy and the outlook for growth in our markets, we believe our existing sources of liquidity as well as our ability to generate operating cash flows will satisfy our future obligations and cash requirements.
On October 7, 2025, the Company executed a three-year extension to the PNC Credit Agreement through the Second Amendment to the Credit Agreement with a maximum borrowing limit of $20 million. The terms of the new agreement are similar to the previous Credit Agreement. See Note 4, Revolving Credit Facility, included in Part I, Item 1 for further information. The Revolving Credit Facility is guaranteed by the Company's domestic subsidiaries. Proceeds of the borrowings under the Revolving Credit Facility, if any, are expected to be used for working capital and general corporate purposes of the Company and its subsidiaries. There were no drawings or repayments under the Revolving Credit Facility as of August 29, 2026 and through the report release date. No amounts were outstanding under the Revolving Credit Facility as of August 29, 2026, and through the report release date.
Cash Flows from Operating Activities
Cash flows from operating activities are primarily a result of our net income adjusted for non-cash items and changes in our operating assets and liabilities.
Operating activities generated $5.9 million of cash during the first three months of fiscal 2027. We had a net income of $4.1 million during the first three months of fiscal 2027, which included non-cash share-based compensation expense of $0.7 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.1 million, unrealized foreign exchange gain of $0.1 million, and depreciation and amortization expense of $0.9 million associated with our property, plant and equipment and intangible assets. Changes in our operating assets and liabilities generated $0.2 million in cash during the first three months of fiscal 2027, net of foreign currency exchange gains and losses, included an increase in accounts receivable of $1.7 million, an increase in inventories of $0.6 million, a decrease in prepaid expenses and other assets of $0.4 million and an increase in accounts payable and accrued liabilities of $2.0 million. The increase in accounts receivable was primarily due to the higher level of sales. The change in accounts payable and accrued liabilities was timing related.
19
Operating activities generated $1.4 million of cash during the first three months of fiscal 2026. We had a net income of $1.9 million during the first three months of fiscal 2026, which included non-cash share-based compensation expense of $0.6 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.1 million, unrealized foreign exchange gain of $0.5 million, depreciation and amortization expense of $1.0 million associated with our property, plant and equipment and intangible assets. Changes in our operating assets and liabilities utilized $1.8 million in cash during the first three months of fiscal 2026, net of foreign currency exchange gains and losses, included an increase in accounts receivable of $2.7 million, an increase in inventories of $0.6 million and an increase in accounts payable and accrued liabilities of $1.5 million. The increase in accounts receivable was primarily due to the higher level of sales. The change in accounts payable and accrued liabilities was timing related.
Cash Flows from Investing Activities
Cash used in investing activities of $1.7 million during the first three months of fiscal 2027 was due to capital expenditures. Capital expenditures were primarily related to our IT system and LaFox manufacturing and facilities. LaFox manufacturing primarily supports the PMT and GES segments.
Cash used in investing activities of $1.0 million during the first three months of fiscal 2026 was due to capital expenditures. Capital expenditures were primarily related to our IT system and LaFox manufacturing and facilities.
Cash Flows from Financing Activities
Cash flows used in financing activities consist primarily of cash dividends and cash flows provided by financing activities consist primarily of the proceeds from the issuance of stock. All future dividend payments are at the discretion of the Board of Directors. Dividend payments depend on earnings, capital requirements, operating conditions and such other factors that the Board may deem relevant.
Cash provided by financing activities of $1.0 million during the first three months of fiscal 2027 primarily resulted from $2.1 million proceeds from the issuance of stock minus the $0.9 million of dividend payments to stockholders.
Cash used in financing activities of $0.9 million during the first three months of fiscal 2026 primarily resulted from $0.9 million of dividend payments to stockholders partially offset by $0.1 million of proceeds from the issuance of stock.
Critical Accounting Estimates
The preparation of financial statements in conformity with United States Generally Accepted Accounting Principles ("GAAP”) and pursuant to the rules and regulations of the SEC, we make assumptions, judgments and estimates that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures of contingent assets and liabilities. Our assumptions, judgments and estimates are based on historical experience and various other factors deemed relevant. Actual results could be materially different from those estimates under different assumptions or conditions. We evaluate our assumptions, judgments and estimates on a regular basis. We also discuss our critical accounting estimates with the Audit Committee of the Board of Directors.
There have been no material changes in our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended May 30, 2026, filed with the SEC on August 3, 2026. We are not aware of any specific events or circumstances that would require us to update our estimates, assumptions and judgments.
Impact of New Accounting Standards
Information about recently issued accounting pronouncements is provided in Note 3, Summary of Accounting Policies, included in Part I, Item 1.
20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk Management and Market Sensitive Financial Instruments
We are exposed to many different market risks with the various industries we serve. The primary financial risk we are exposed to is foreign currency exchange, as certain of our operations, assets and liabilities are denominated in foreign currencies. We manage these risks through normal operating and financing activities.
The interpretation and analysis of these disclosures should not be considered in isolation since such variances in exchange rates would likely influence other economic factors. Such factors, which are not readily quantifiable, would likely also affect our operations. Additional disclosure regarding various market risks is set forth in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended May 30, 2026 filed with the SEC on August 3, 2026.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Management of the Company, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of August 29, 2026.
Disclosure controls and procedures are intended to provide reasonable assurance that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.
(b) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended August 29, 2026 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended May 30, 2026, filed with the SEC on August 3, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
a) Form 8-K disclosures for the quarter covered by this Form 10-Q:
Submission of Matters to Vote of Security Holders
We held our annual meeting of stockholders on October 6, 2026. At the annual meeting, our stockholders (i) elected each of the nominees listed below to the Company’s Board of Directors to serve for a term expiring at the 2027 Annual Meeting; (ii) ratified the selection of BDO USA, P.C. as our independent registered public accounting firm for fiscal 2027; and (iii) approved, on an advisory basis, the compensation of the Company’s named executive officers.
The results for the votes regarding each proposal are set forth below:
1. The voting results with respect to the election of each director were as follows
Nominee |
|
For |
|
|
Against/Withhold |
|
|
Broker Non-Votes |
|
|||
Edward J. Richardson |
|
|
25,312,752 |
|
|
|
3,179,793 |
|
|
|
1,376,226 |
|
Wendy S. Diddell |
|
|
28,205,838 |
|
|
|
286,707 |
|
|
|
1,376,226 |
|
Jacques Belin |
|
|
25,209,383 |
|
|
|
3,283,162 |
|
|
|
1,376,226 |
|
James Benham |
|
|
25,160,605 |
|
|
|
3,331,940 |
|
|
|
1,376,226 |
|
Kenneth Halverson |
|
|
25,177,923 |
|
|
|
3,314,622 |
|
|
|
1,376,226 |
|
Robert H. Kluge |
|
|
26,208,736 |
|
|
|
2,283,809 |
|
|
|
1,376,226 |
|
Paul J. Plante |
|
|
23,868,965 |
|
|
|
4,623,580 |
|
|
|
1,376,226 |
|
22
2. The voting results with respect to the ratification of the selection of BDO USA, P.C. as our independent registered public accounting firm for fiscal 2027 was approved with 29,839,871 votes “FOR”, 27,868 votes “AGAINST/WITHHOLD” and 1,032 votes “ABSTAIN”.
3. The voting results with respect to the approval, on an advisory basis, the compensation of our Named Executive Officers was approved with 28,074,571 votes “FOR”, 362,317 votes “AGAINST/WITHHOLD” and 55,657 votes “ABSTAIN" and 1,376,226 broker non-votes.
b) Not applicable.
c) 10b5-1 trading arrangements:
23
ITEM 6. EXHIBITS
Exhibit Index
Exhibit Number |
|
Description |
|
|
|
3.1 |
|
Second Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Annex III of the Definitive Proxy Statement on Schedule 14A dated August 25, 2025). |
|
|
|
10.1 |
|
Second Amendment to the Credit Agreement, dated as of October 7, 2025, among the Company, the Guarantors party thereto, the Lenders party thereto and PNC Bank NA, as Administrative Agent, Swingline Lender and Issuing Lender thereunder (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on October 9, 2025). |
31.1 |
|
Certification of Edward J. Richardson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2 |
|
Certification of Robert J. Ben pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32 |
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
101 |
|
The following financial information from our Quarterly Report on Form 10-Q for the first quarter of fiscal 2027, filed with the SEC on October 8, 2026, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Comprehensive Income, (iii) the Unaudited Consolidated Statements of Cash Flows, (iv) the Unaudited Consolidated Statements of Stockholders’ Equity and (v) Notes to Unaudited Consolidated Financial Statements. |
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
RICHARDSON ELECTRONICS, LTD. |
|
|
|
|
Date: October 8, 2026 |
By: |
/s/ Robert J. Ben |
|
|
Robert J. Ben Chief Financial Officer and Chief Accounting Officer (on behalf of the Registrant and as Principal Financial Officer) |
25