# Richardson Electronics, LTD.: Form 10-Q for the period ended Mar 1, 2025

- Company: [Richardson Electronics, LTD.](/companies/rell.md) (CIK 355948)
- Form: 10-Q
- Filed: 2025-04-10
- Accepted by EDGAR: Apr 10, 2025, 12:06 ET
- Period: 2025-03-01
- Accession: 0000950170-25-052737
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/355948/000095017025052737/rell-20250301.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/355948/000095017025052737/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-01.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-12-01 to 2025-03-01 | $53.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-06-02 to 2025-03-01 | $157.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-12-01 to 2025-03-01 | $37.1m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-06-02 to 2025-03-01 | $108.6m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-12-01 to 2025-03-01 | $16.7m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-06-02 to 2025-03-01 | $48.4m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-12-01 to 2025-03-01 | $14.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-06-02 to 2025-03-01 | $46.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-12-01 to 2025-03-01 | −$2.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-06-02 to 2025-03-01 | −$3.1m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-12-01 to 2025-03-01 | −$1.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-06-02 to 2025-03-01 | −$1.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-12-01 to 2025-03-01 | −$2.1m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-06-02 to 2025-03-01 | −$2.2m | us-gaap:NetIncomeLoss |
| Diluted shares (weighted) | 3 months, 2024-12-01 to 2025-03-01 | 12,333,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-06-02 to 2025-03-01 | 12,283,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-12-01 to 2025-03-01 | $4.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Operating cash flow | 9 months, 2024-06-02 to 2025-03-01 | $10.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-12-01 to 2025-03-01 | $549.0k | us-gaap:PaymentsToAcquireProductiveAssets |
| Capital expenditure | 9 months, 2024-06-02 to 2025-03-01 | $2.0m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 3 months, 2024-12-01 to 2025-03-01 | $852.0k | us-gaap:PaymentsOfDividendsCommonStock |
| Dividends paid | 9 months, 2024-06-02 to 2025-03-01 | $2.6m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2025-03-01 | $36.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-01 | $163.5m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-01 | $189.8m | us-gaap:Assets |
| Current liabilities | at 2025-03-01 | $34.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-01 | $36.9m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-01 | $152.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 35,491 characters.

*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 the Russian - Ukraine and Israel - Hamas wars; 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 5, 2024. 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**
- **Results of Operations –** an analysis and comparison of our consolidated results of operations for the three month and nine month periods ended March 1, 2025 and March 2, 2024, as reflected in our Unaudited Consolidated Statements of Comprehensive (Loss) Income.
- **Liquidity, Financial Position and Capital Resources –** a discussion of our primary sources and uses of cash for the nine month periods ended March 1, 2025 and March 2, 2024, and a discussion of changes in our financial position.

### 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. Approximately 50% 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 the 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 China and imported into the United States. The Office of the United States Trade Representative ("USTR") instituted tariffs on the importation of a number of products into the United States from China. These tariffs are a response to what the USTR considers to be certain unfair trade practices by China. A number of the Company's products manufactured in China are subject to duties when imported into the United States.

Management continues to work with its suppliers as well as its customers to mitigate the impact of the tariffs on our customers. 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.

We currently operate within the following major geographic regions: North America, Asia/Pacific, Europe and Latin America.

On January 24, 2025, the Company sold a substantial portion of its Healthcare assets to DirectMed Imaging, LLC (“DirectMed”) and entered into an exclusive 10-year global supply agreement in which Richardson will supply DirectMed with repaired Siemens CT X-ray tubes. Additionally, the Company will continue manufacturing ALTA CT X-ray tubes for DirectMed for approximately 12 to 18 months. This transaction resulted in loss of $4.9 million. Refer to Note 10*, Disposal of Healthcare Assets and Related Charges,* in Part I, Item 1 for transaction details.

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.

**Healthcare** manufactures, repairs, refurbishes and distributes high value replacement parts and equipment for the healthcare market including hospitals, medical centers, asset management companies, independent service organizations and multi-vendor service providers. Products include diagnostic imaging replacement parts for CT and MRI systems; replacement CT and MRI tubes; CT service training; MRI and RF amplifiers; hydrogen thyratrons, klystrons, magnetrons; flat panel detector upgrades; pre-owned CT systems; and additional replacement solutions currently under development for the diagnostic imaging service market. Through a combination of newly developed products and partnerships, service offerings and training programs, we believe we can help our customers improve efficiency while lowering the cost of healthcare delivery. After the January 2025 sale of assets to DirectMed, the Company only manufactures and repairs CT tubes and sells them to DirectMed under an exclusive supply agreement.

Refer to Note 11, *Segment and Geographic Information*, in Part I, Item 1 for a discussion of the operating results by segment and geographic area.

### RESULTS OF OPERATIONS

### Financial Summary – Three Months Ended March 1, 2025

- The third quarter of fiscal 2025 and fiscal 2024 both contained 13 weeks.
- Net sales during the third quarter of fiscal 2025 were $53.8 million, an increase of 2.7%, compared to net sales of $52.4 million during the third quarter of fiscal 2024.
- Gross margin increased to 31.0% during the third quarter of fiscal 2025 compared to 29.5% during the third quarter of fiscal 2024.
- Selling, general and administrative expenses were $14.5 million or 26.9% of net sales during the third quarter of fiscal 2025 compared to $14.4 million or 27.6% of net sales during the third quarter of fiscal 2024.
- The disposal of certain Healthcare assets generated a loss of $4.9 million for the third quarter of fiscal 2025.
- Operating loss during the third quarter of fiscal 2025 was $2.7 million compared to an operating income of $1.0 million during the third quarter of fiscal 2024.
- Net loss during the third quarter of fiscal 2025 was $2.1 million compared to a net income of $0.8 million during the third quarter of fiscal 2024.

### Financial Summary – Nine Months Ended March 1, 2025

- The first nine months of fiscal 2025 contained 39 weeks and the first nine months of fiscal 2024 contained 40 weeks.
- Net sales during the first nine months of fiscal 2025 were $157.0 million, an increase of 5.3%, compared to net sales of $149.1 million during the first nine months of fiscal 2024.
- Gross margin of 30.8% during the first nine months of fiscal 2025 increased compared to 30.3% during the first nine months of fiscal 2024.
- Selling, general and administrative expenses were $46.6 million or 29.7% of net sales during the first nine months of fiscal 2025 compared to $44.7 million or 30.0% of net sales during the first nine months of fiscal 2024.
- The disposal of certain Healthcare assets generated a loss of $4.9 million for the first nine months of fiscal 2025.
- Operating loss during the first nine months of fiscal 2025 was $3.1 million compared to an operating income of $0.5 million during the first nine months of fiscal 2024.
- Net loss during the first nine months of fiscal 2025 was $2.2 million compared to a net income of $0.2 million during the first nine months of fiscal 2024.

### Net Sales and Gross Profit Analysis

Net sales by segment and percentage change during the third quarter and first nine months of fiscal 2025 and fiscal 2024 were as follows (*in thousands):*

|  | Three Months Ended March 1, 2025 | March 2, 2024 | FY25 vs. FY24 % Change |
| --- | ---: | ---: | ---: |
| PMT | $33,216 | $31,163 | 6.6% |
| GES | 9,299 | 11,531 | -19.4% |
| Canvys | 9,195 | 6,590 | 39.5% |
| Healthcare | 2,094 | 3,091 | -32.3% |
| Total | $53,804 | $52,375 | 2.7% |

|  | Nine Months Ended March 1, 2025 | March 2, 2024 | FY25 vs. FY24 % Change |
| --- | ---: | ---: | ---: |
| PMT | $101,815 | $98,199 | 3.7% |
| GES | 23,359 | 18,534 | 26.0% |
| Canvys | 23,684 | 23,770 | -0.4% |
| Healthcare | 8,162 | 8,583 | -4.9% |
| Total | $157,020 | $149,086 | 5.3% |

20

During the third quarter of fiscal 2025, consolidated net sales increased 2.7% compared to the third quarter of fiscal 2024. Sales for PMT increased 6.6%, sales for GES decreased 19.4%, sales for Canvys increased 39.5% and sales for Healthcare decreased 32.3%. The increase in PMT was mainly due to increased sales of engineered solutions for the semiconductor wafer fabrication market. The decrease in GES was mainly due to a large order in fiscal 2024 that did not repeat in fiscal 2025's third quarter and a shipping delay on an EV locomotive order. The increase in Canvys was attributable to sales in the North American markets. The decrease in Healthcare reflected parts, service and equipment sales for two months due to the January 2025 sale of the majority of Healthcare assets to DirectMed.

During the first nine months of fiscal 2025, consolidated net sales increased 5.3% compared to the first nine months of fiscal 2024. Sales for PMT increased 3.7%, sales for GES increased 26.0%, sales for Canvys decreased 0.4% and sales for Healthcare decreased 4.9%. The increase in PMT was mainly due to increased sales of engineered solutions for the semiconductor wafer fabrication market. The increase in GES was mainly due to increased shipments of power management products focused on numerous green energy applications. The decrease in Canvys was attributable to lower sales in the European markets. The decrease in Healthcare reflected parts, service and equipment sales for eight months due to the January 2025 sale of the majority of Healthcare assets to DirectMed.

Gross profit by segment and percentage of net sales for the third quarter and first nine months of fiscal 2025 and fiscal 2024 were as follows (*in thousands):*

|  | Three Months Ended March 1, 2025 | % of Net Sales | March 2, 2024 | % of Net Sales |
| --- | ---: | ---: | ---: | ---: |
| PMT | $10,243 | 30.8% | $8,815 | 28.3% |
| GES | 3,049 | 32.8% | 3,070 | 26.6% |
| Canvys | 3,056 | 33.2% | 2,265 | 34.4% |
| Healthcare | 325 | 15.5% | 1,286 | 41.6% |
| Total | $16,673 | 31.0% | $15,436 | 29.5% |

|  | Nine Months Ended March 1, 2025 | % of Net Sales | March 2, 2024 | % of Net Sales |
| --- | ---: | ---: | ---: | ---: |
| PMT | $30,875 | 30.3% | $29,231 | 29.8% |
| GES | 7,337 | 31.4% | 5,411 | 29.2% |
| Canvys | 7,848 | 33.1% | 8,070 | 34.0% |
| Healthcare | 2,365 | 29.0% | 2,530 | 29.5% |
| Total | $48,425 | 30.8% | $45,242 | 30.3% |

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 $16.7 million during the third quarter of fiscal 2025 compared to $15.4 million during the third quarter of fiscal 2024. Consolidated gross margin as a percentage of net sales during the third quarter of fiscal 2025 increased to 31.0% when compared to 29.5% during the third quarter of fiscal 2024. This margin increase was mainly due to favorable product mix in PMT and GES with a partial offset from unfavorable product mix in Canvys and manufacturing under absorption and higher component scrap in Healthcare.

Consolidated gross profit increased to $48.4 million during the first nine months of fiscal 2025 compared to $45.2 million during the first nine months of fiscal 2024. Consolidated gross margin as a percentage of net sales during the first nine months of fiscal 2025 was 30.8% compared to 30.3% for the first nine months of fiscal 2024. The improved margin was mainly due to favorable product mix in PMT partially offset by manufacturing under absorption, favorable product mix in GES, unfavorable product mix and increased freight costs in Canvys and higher component scrap in Healthcare.

### Power and Microwave Technologies

PMT net sales increased 6.6% to $33.2 million during the third quarter of fiscal 2025 from $31.2 million during the third quarter of fiscal 2024. The increase was due primarily to increased sales of engineered solutions for the semiconductor wafer fabrication market. Gross margin as a percentage of net sales increased to 30.8% during the third quarter of fiscal 2025 as compared to 28.3% during the third quarter of fiscal 2024 due to product mix.

PMT net sales increased 3.7% to $101.8 million during the first nine months of fiscal 2025 from $98.2 million during the first nine months of fiscal 2024. The increase was due primarily to increased sales of engineered solutions for the semiconductor wafer fabrication market. Gross margin as a percentage of net sales increased to 30.3% during the first nine months of fiscal 2025 as compared to 29.8% during the first nine months of fiscal 2024 due to favorable product mix partially offset by manufacturing under absorption.

### Green Energy Solutions

GES net sales decreased 19.4% to $9.3 million during the third quarter of fiscal 2025 from $11.5 million during the third quarter of fiscal 2024. The decrease reflected the project-based nature of this segment and was mainly due to a large order in the third quarter of fiscal 2024 that did not repeat in fiscal 2025 and a shipping delay on an EV Locomotive order. Gross margin as a percentage of net sales increased to 32.8% during the third quarter of fiscal 2025 as compared to 26.6% during the third quarter of fiscal 2024 due to product mix.

GES net sales increased 26.0% to $23.3 million during the first nine months of fiscal 2025 from $18.5 million during the first nine months of fiscal 2024. The increase was mainly due to increased shipments of power management products focused on numerous green energy applications. Gross margin as a percentage of net sales increased to 31.4 % during the first nine months of fiscal 2025 as compared to 29.2% during the first nine months of fiscal 2024 due to product mix.

### Canvys

Canvys net sales increased 39.5% to $9.2 million during the third quarter of fiscal 2025 from $6.6 million during the third quarter of fiscal 2024, due to higher sales in the North American markets. Gross margin as a percentage of net sales decreased to 33.2% during the third quarter of fiscal 2025 from 34.4% during the third quarter of fiscal 2024 primarily due to product mix.

Canvys net sales decreased 0.4% to $23.7 million during the first nine months of fiscal 2025 from $23.8 million during the first nine months of fiscal 2024, due to lower sales in the European markets. Gross margin as a percentage of net sales decreased to 33.1% during the first nine months of fiscal 2025 from 34.0% during the first nine months of fiscal 2024 due to product mix and higher freight costs.

### Healthcare

Healthcare net sales decreased 32.3% to $2.1 million during the third quarter of fiscal 2025 from $3.1 million during the third quarter of fiscal 2024. With the sale to DirectMed on January 24, 2025, the third quarter sales for fiscal 2025 only reflected parts, service and equipment sales for two months. Gross margin as a percentage of net sales decreased to 15.5% during the third quarter of fiscal 2025 as compared to 41.6% during the third quarter of fiscal 2024 primarily due to manufacturing under absorption resulting from equipment downtime and higher component scrap expense.

Healthcare net sales decreased 4.9% to $8.2 million during the first nine months of fiscal 2025 from $8.6 million during the first nine months of fiscal 2024. With the sale to DirectMed on January 24, 2025, sales for first nine months of fiscal 2025 only reflected parts, service and equipment sales for eight months. Gross margin as a percentage of net sales decreased to 29.0% during the first nine months of fiscal 2025 as compared to 29.5% during the first nine months of fiscal 2024 primarily due to higher component scrap expense.

### Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) increased to $14.5 million for the third quarter of fiscal 2025 when compared to $14.4 million for the year ago quarter. This increase of $0.1 million or less than 1% from the third quarter of fiscal 2024 mainly reflected higher incentives due to sales growth, partially offset by lower R&D and professional service expenses. Expressed as a percentage of net sales, SG&A was 26.9% for the third quarter of fiscal 2025 compared to 27.6% in the third quarter of fiscal 2024.

SG&A increased to $46.6 million for the first nine months of fiscal 2025 when compared to $44.7 million for the first nine months of fiscal 2024. This increase of $1.9 million or 4.2% from the first nine months of fiscal 2024 mainly reflected higher incentives due to sales growth, partially offset by lower R&D expenses. Expressed as a percentage of net sales, SG&A was 29.7% for the first nine months of fiscal 2025 compared to 30.0% for the first nine months of fiscal 2024.

### Disposal of Healthcare Assets

A substantial portion of Healthcare assets were sold to DirectMed on January 24, 2025 that resulted in a total loss of $4.9 million for the third quarter and first nine months of fiscal 2025. The loss on assets sold to DirectMed totaled $3.0 million and the Company recorded an impairment charge of $1.9 million for inventory and fixed assets. Refer to Note 10, D*isposal of Healthcare Asset*s *and Related Charges*, in Part I, Item 1 for more details.

### Other Income/Expense

Other income and expense 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 third quarter of fiscal 2025 totaled $0.3 million compared to less than a $0.1 million expense for the third quarter of fiscal 2024. This increase was due to a $0.3 million increase in foreign exchange losses.

Other expense during the first nine months of fiscal 2025 totaled $0.4 million, compared to $0.2 million for the first nine months of fiscal 2024. This increase was primarily due to a $0.3 million increase in foreign exchange losses.

### Income Tax Provision

We recorded an income tax benefit of $1.0 million and an income tax provision of $0.2 million for the third quarter of fiscal 2025 and the third quarter of fiscal 2024, respectively. The effective income tax rate during the third quarter of fiscal 2025 was 33.4% as compared to 23.3% during the third quarter of fiscal 2024. The difference in rate during the third quarter of fiscal 2025 as compared to the third quarter of fiscal 2024 reflects changes in our geographical distribution of income (loss) and the discrete item related to the sale of healthcare assets resulting in a loss in the third quarter of fiscal 2025. The 33.4% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss), as well as the book loss on the sale of healthcare assets and the utilization of the U.S. research and development credit.

We recorded an income tax benefit of $1.3 million and an income tax provision of $0.1 million for the first nine months of fiscal 2025 and for the first nine months of fiscal 2024, respectively. The effective income tax rate during the first nine months of fiscal 2025 was a tax benefit of 36.5% as compared to a tax provision of 39.2% during the first nine months of fiscal 2024. The difference in rate during the first nine months of fiscal 2025 as compared to the first nine months of fiscal 2024 reflects changes in our geographical distribution of income (loss) and the discrete item related to the sale of healthcare assets resulting in a loss in the third quarter of fiscal 2025. The 36.5% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss), as well as the book loss on the sale of healthcare assets and the utilization of the U.S. research and development credit.

In the normal course of business, we are subject to examination by taxing authorities throughout the world. Years prior to fiscal 2015 are closed for examination under the statute of limitation for U.S. federal, and U.S. state. In Netherlands, years prior to fiscal 2020 are closed for examination. We are under examination in Germany for fiscal years 2019 to 2022. 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. We have no other current open audits in the U.S.

The Company recorded $0.3 million for uncertain tax positions as of March 1, 2025 as compared to $0.1 million as of June 1, 2024. We record interest related to uncertain tax positions in the income tax expense line item within the Unaudited Consolidated Statements of Comprehensive (Loss) 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 and penalties as it relates to the reserve of the research and development credit as of March 1, 2025 and June 1, 2024, respectively.

### Net (Loss) Income and Per Share Data

Net loss during the third quarter of fiscal 2025 was $2.1 million, or $0.15 per diluted common share and $0.13 per Class B diluted common share as compared to a net income of $0.8 million during the third quarter of fiscal 2024 or $0.05 per diluted common share and $0.05 per Class B diluted common share.

Net loss during the first nine months of fiscal 2025 was $2.2 million, or $0.16 per diluted common share and $0.14 per Class B diluted common share as compared to a net income of $0.2 million during the first nine months of fiscal 2024 or $0.01 per diluted common share and $0.01 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 $36.7 million at March 1, 2025. Cash and cash equivalents by geographic area on March 1, 2025 consisted of $20.3 million in North America, $8.3 million in Europe, $1.0 million in Latin America and $7.1 million in Asia/Pacific. No cash was repatriated to the United States in the first nine months of fiscal 2025. 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. The January 24, 2025 sale of certain Healthcare assets to DirectMed generated $8.2 million of cash which will be utilized to support opportunities in our Green Energy Solutions business. See Note 8, *Income Taxes*, of the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for the fiscal year ended June 1, 2024, filed with the SEC on August 5, 2024, for further information.

Cash and cash equivalents were $24.3 million at June 1, 2024. Cash and cash equivalents by geographic area at June 1, 2024 consisted of $7.1 million in North America, $7.3 million in Europe, $1.1 million in Latin America and $8.8 million in Asia/Pacific. We repatriated $0.3 million to the United States in the second quarter of fiscal 2024 from our entity in Mexico.

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 March 20, 2023, the Company established a senior, secured revolving credit facility agreement with a three-year term in an aggregate principal amount not to exceed $30 million, including a swingline loan and a letter of credit sub-facility (collectively, the "Revolving Credit Facility") with PNC Bank. The Revolving Credit Facility is guaranteed by the Company's domestic subsidiaries. Proceeds of the borrowings under the Revolving Credit Facility are expected to be used for working capital and general corporate purposes of the Company and its subsidiaries. The Company utilized $1.0 million of the credit line and repaid that $1.0 million during the first quarter of fiscal 2025. There was no utilization of the credit line during the second and third quarters of fiscal 2025. As of the end of the third quarter for fiscal 2025 and the date of this report, no amounts were outstanding under the Revolving Credit Facility.

### Cash Flows from Operating Activities

Cash flows from operating activities are primarily a result of our net income (loss) adjusted for non-cash items and changes in our operating assets and liabilities.

Operating activities generated $10.5 million of cash during the first nine months of fiscal 2025. We had a net loss of $2.2 million during the first nine months of fiscal 2025, which included non-cash stock-based compensation expense of $1.2 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.3 million, unrealized foreign exchange loss of $0.4 million, depreciation and amortization expense of $3.0 million associated with our property, plant and equipment and intangible assets and the disposal loss on Healthcare assets of $4.9 million. Changes in our operating assets and liabilities generated $2.8 million in cash during the first nine months of fiscal 2025, net of foreign currency exchange gains and losses, included an increase in accounts payable and accrued liabilities of $3.1 million, an increase in accounts receivable of $1.5 million and a decrease in inventories of $1.1 million. The increase in accounts receivable was primarily due to the higher level of sales. The changes in accounts payable and accrued liabilities were timing related.

Operating activities used $0.7 million of cash during the first nine months of fiscal 2024. We had a net income of $0.2 million during the first nine months of fiscal 2024, which included non-cash stock-based compensation expense of $1.0 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.5 million and depreciation and amortization expense of $3.2 million associated with our property and equipment as well as amortization of our intangible assets. Changes in our operating assets and liabilities used $5.7 million in cash during the first nine months of fiscal 2024, net of foreign currency exchange gains and losses included an increase in inventory of $2.2 million, a decrease in accounts payable of $5.2 million and an increase in prepayments of $0.1 million. Partially offsetting the cash utilization was a decrease in receivables of $1.0 million and an increase in accrued liabilities of $0.6 million. The decrease in accounts receivable was primarily due to the lower level of sales across our operating segments in the current quarter. Most of the inventory increase supported the products for electron tubes and Healthcare. The changes in accounts payable and accrued liabilities were timing related.

### Cash Flows from Investing Activities

Cash provided by investing activities of $5.0 million during the first nine months of fiscal 2025 was due to the $7.0 million of proceeds from the disposal of Healthcare assets and $2.0 million offset for capital expenditures. Capital expenditures were primarily related to our IT system and LaFox manufacturing and facilities. LaFox manufacturing primarily supports the Electron Device Group and Green Energy Solutions.

Cash used in investing activities of $3.1 million during the first nine months of fiscal 2024 was due to capital expenditures. Capital expenditures were primarily related to our IT system and the LaFox manufacturing and facilities renovation. LaFox manufacturing primarily supports the Electron Device Group and Green Energy Solutions.

### 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 used by financing activities of $2.4 million during the first nine months of fiscal 2025 primarily resulted from $2.6 million of dividend payments to stockholders partially offset by $0.3 million of proceeds from the issuance of stock.

Cash used by financing activities of $2.3 million during the first nine months of fiscal 2024 primarily resulted from $2.5 million of dividend payments to stockholders partially offset by $0.3 million of proceeds from the issuance of stock.

### Critical Accounting Estimates

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 June 1, 2024, filed with the SEC on August 5, 2024. 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

For information about recently issued accounting pronouncements, see Note 4, *New Accounting Pronouncements - Not Yet Adopted*, included in Part 1, Item 1.

## Market risk

As filed, 866 characters.

### 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 June 1, 2024 filed with the SEC on August 5, 2024.

## Controls and procedures

As filed, 1,607 characters.

(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 March 1, 2025.

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 the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the third quarter of fiscal 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 188 characters.

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 June 1, 2024, filed with the SEC on August 5, 2024.

Filed Apr 10, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-052737. Last ingested by Listed: Nov 2, 2026, 11:55 ET. No prices; not investment advice.