Hello everyone, and thank you all for joining us during the Lytham Partners Fall 2026 Investor Conference. My name is Adam Lowensteiner. I am Vice President at Lytham Partners, and today we have Wendy Diddell, EVP and Chief Operating Officer of Richardson Electronics, and she will be taking us through a brief slide presentation. Richardson Electronics trades under the ticker symbol of RELL on the Nasdaq Stock Market. Let us get started. Wendy, welcome. I will turn the floor over to you for your presentation.
Thanks, Adam. Okay, so let us take a look at Richardson Electronics. So for those of you who do not know the company, we will be turning 80 years old next year, so we have a very rich history. We are located in La Fox, Illinois, which is about 45 miles or so west of Chicago. We are very proud of the company that has been built over the last 80 years. We currently have a very strong balance sheet.
We have cash and no debt. We have over 430 employees. About half of those are in sales, with the majority of the salespeople and the product managers having degrees in engineering. Through our history, we started out selling Power Grid Tubes, and as a result of that, we have a very large customer base. Today, our customer base is more than 20,000 OEM and end user customers, and again, we are global.
Those customers are located throughout the world. We have 60 locations and three strategic warehouses. One is in the picture that you are seeing on screen. We have one in Amsterdam and another one in Asia. We also have legal entities in 24 countries. We are the importer of record, and we transact all of our business in local currencies, so it makes it very easy for us to expand our customer base and to really engage with our technology partners on a global basis. They do not have to find alternative partners. Our focus now is on engineered solutions. As I mentioned, we started out as a seller of Power Grid Tubes, and over the years, as technology changed, so did we. We have rapidly become more known for our engineered solutions.
These are products that we either manufacture, and we manufacture here in La Fox in our 250,000 sq ft facility, or that we have manufactured for us under an exclusive partnership. Today, again, 55% of the products we sell are those that we considered engineered solutions or proprietary to Richardson. That is important because a lot of us, or a lot of, I should say, shareholders throughout the years have thought of us as merely a distribution company, but we are much, much more than that and our focus has been in value-add solutions. We have teams of engineers. Again, we provide system integration, everything from prototype design all the way through quantity manufacturing. We have three business units. So we are complex for a small, little publicly traded company. Our largest business unit is the Power & Microwave Technologies group.
In FY 2026, which we finished at the end of May of this year, that business unit was about $160 million. It is comprised of three different segments. One is the Legacy Tube business I have been referring to, or what we refer to as EDG. That is the largest. The second piece is PMG, which we started in 2014. If you knew us from the past, you might remember RFPD, which we sold back in 2011. This is a much smaller, similar business in that it is component distribution. Our third part of that business is the semiconductor wafer fab equipment market. In that segment, we actually manufacture products that are used in, again, semi fab equipment. That is the largest business unit. The business unit that we have been investing in and focusing on over the last several years is what we refer to as Green Energy Solutions.
You can also think of that as more power management related. That business in FY 2026 was about $30, almost $31 million in revenue. In that group, again, we are designing products, power management products, that are used in energy storage and other power management applications. I am going to talk a little bit more about that later. What is nice about that business unit, we share the sales organization between PMT. We do have some dedicated green energy people, but a lot of the organization is shared. We are able to leverage that existing global infrastructure that I mentioned earlier and expand the number of products that we take through that infrastructure on a global basis.
In this business unit, it is going to be products for wind, solar, some hydrogen, EVs, primarily in the, both in the automotive as well as in EV rail, and then in the synthetic diamonds, which traditionally has been more of a retail market, but now rapidly expanding into commercial with applications that are used on the semiconductor wafer fab market. Our third business unit is Canvys. That business in 2026 was about $37.5 million. That is a custom OEM display group. Everything we design is one-to-one specific to one customer application. The majority of that business is in medical, and our customer list is pretty much the who is who in medical equipment, including companies like Siemens and Medtronic and a host of others. Very prominent brands.
Again, what is unique about that is that our engineers work very closely with the OEMs, and again, we are developing a display solution that is used for a specific piece of equipment. That is our smallest business. I should say, it is a little bit bigger than green energy, but a lot of the emphasis in our business is being placed on green energy. Canvys, from that perspective, will ultimately be probably the smallest business unit, but a very nice little, very low capital intensive business that we make good money and will continue running. This is just meant to show you the kind of breadth of the customers that we serve, and again, very prominent names in each one of those business units I just mentioned. Over the past couple of years, we have really made tremendous progress with our key strategies.
The one primary goal, again, was to strengthen our growth engine. Historically, the EDG portion of our business, which is part of PMT, has been flat in terms of revenue growth. We have counted on both our PMG business as a growth engine. Our semiconductor business is very cyclical, as you can imagine, with that market. Our Green Energy Solutions business, again, is where we are investing quite a bit of our time, effort, and money. All three of those business units are showing nice year-over-year growth. We are also, as we focus more and more on our engineered solutions, benefiting from higher margins. Obviously, a product that we manufacture, the margins are much stronger than products that we distribute.
We are constantly reviewing our SG&A and looking at opportunities to streamline the operations, make sure that we are moving as much product through as tight of an organization as we can. We are also looking for ways to improve our efficiencies so that we drive more of our incremental revenue and margin to the bottom line. Like most companies, we have been deploying AI and looking for various areas where AI can improve our processes. That is still in what I would call its infancy, but making really good progress. Improving cash flow is a very strategic measure for us. Up until the end of FY 2026, we had been building inventory primarily related to a single supplier that is exiting the Power Grid Tube business. Those purchases are done, and the rest of the team has done an excellent job managing inventory and new purchases.
We anticipate in FY 2027 and going forward that we will start to convert a lot of that inventory into cash. As we ended FY 2026, again, that was at the end of May. Q4 itself was one of our strongest quarters with $66 million in sales. We ended the year at $228.6 million in sales, up from $209 million in FY 2025. So nice year-over-year growth in sales, and you can also see that that flowed through to the bottom line. For the quarter, we made $3.7 million in Q4 of FY 2026 versus $1.1 million the prior year. On a full year basis, we made $6.4 million in net income versus a loss of $1.1 million the year before. Again, that was a result of a lot of our strategic initiatives, and close attention to our SG&A and, again, driving more of that revenue to the bottom line.
Another strong point coming out of FY 2026 that we are very excited about is the growth in backlog. We ended backlog with $164.4 million. The last time it was anywhere near that was in FY 2022, and that is when we were coming out of COVID. Seeing that uptick has been a very well-received indicator of the health of our business. As I mentioned earlier, we have a very strong balance sheet, no debt. At the end of the year, we had $31.8 million in cash, and as I just mentioned, we are focused on cash generation. We do have a line of credit with PNC. We choose not to use that. In general, again, we are very tight when it comes to investing capital.
We had capital expenditures in 2026 of about $4.5 million, and a lot of that's related to the manufacturing business, as well as some upgrades in IT systems that we need to do just to keep up with Microsoft Corporation. That's an area where, again, I think you'll be pleased to see the continued strengthening of the balance sheet and improvements in cash flow. Capital allocation, we do pay a dividend. It is $0.06 a share per quarter, and we anticipate that will continue. Other things from a capital perspective, I've already mentioned we are investing in our Green Energy Solutions, and I'll talk more about battery energy storage, which is a key growth area and could require some additional capital. But for the most part, we are investing in our growth initiatives in terms of people and to a lesser degree in terms of facility requirements.
We are not currently in discussions on any acquisitions. We keep an open mind towards acquisitions. They would tend to be smaller in nature and more geared towards engineering and the Green Energy Solutions/power management part of the business. Let's talk a little bit about the growth strategies in a little bit more detail. All right, so wind and power management, again, is probably the biggest part of our Green Energy Solutions platform right now, and everything that we do in that market is aftermarket. It's MRO. It is not dependent on new wind turbines. It's not dependent on offshore wind. We have a patented product, which is the ULTRA3000, and that is used to replace lead-acid batteries in primarily GE turbines. But the ULTRAPEM is a similar product, also patented, that is being used in other OEMs.
The biggest one right now that we're just launching is Suzlon out of India. We've at this point penetrated about 15% of that market, so still plenty of runway and sales upside. It's become a very steady revenue generator for us. The margins have improved and we're also using that customer base to identify new product opportunities, and we are launching several in FY 2027. The energy storage or battery energy storage market, as I mentioned earlier, is one of our key growth platforms for the future. With the growth of AI and data centers, everybody's heard that we simply, as a nation, don't have enough infrastructure to support the energy requirements, and battery energy storage allows us to do that. We are focused on niche markets and commercial and industrial demand.
This is an opportunity area that in FY 2027 you will see the pipeline growing and you will see backlog start to grow. But really look at this as being a game changer for the company in FY 2028. The semi wafer fab market is the third area. This is on fire. If you follow any of the major semiconductor wafer fab equipment manufacturers, you'll see that they are predicting significant growth in calendar year 2026 going through to calendar year 2027. When that cycle is up, our revenue in this segment is up, and that is absolutely true now. It's a very good business for us. Our objective here is to make this part of our business icing on the cake and not the cake itself.
We're looking more at the energy storage, the wind and power management, and our other traditional business to continue to grow so that we can withstand times when the semi market is in a down cycle. But right now, that's a very strong market for us. The final growth platform is Made in America, with a lot of the new regulations and goals to bring manufacturing back on shore. Again, we have a very large manufacturing presence here in La Fox, Illinois, and we have added several people dedicated to selling our manufacturing capabilities. We're starting to see some nice opportunities develop in that particular part of the business. So lots of tailwinds that are supporting these growth platforms right now, both near term and, as I mentioned, into the longer term. Pay attention to this in our calls.
It's an area where we spend most of our time. This is the wind turbine opportunity I mentioned earlier. You can see it's a very large global opportunity, and as I mentioned, we've only penetrated about 15% of that market. So lots of upside here. Again, these products are patented, which makes it very difficult for anyone to enter the market. Energy storage, again, I mentioned this. This is the battery energy storage. Again, you can see there's extremely large market opportunity. A lot of players, but we are focused on doing what we do best, which is targeting our solutions to a niche market where they're requiring certain special accommodations or they need help. They need handholding. How do they maneuver through the system? Where do they get the rebates? How do they meet certain regulations? So that is our role in this market.
We are starting out a partnership with Gotion, where we are reselling their units. From there, we will move up the food chain in terms of doing more of the container that you see at the bottom of the screen, and then adding our own IP down the road. This is just another picture of how that looks, where we start today with our technology partners. Moving to the right increases our content and increases our margin and our bottom-line performance on this business unit. Again, just getting started here. We shipped our first system to the Alaskan communities, and we are in the process still of fulfilling that order and continuing to work with various partners on other programs that are in that, again, commercial, industrial, smaller range.
We do participate and can participate in utility scale, but look for, again, our initial programs to be in the commercial and industrial markets. As we go through FY 2027, and we just finished our first quarter and we'll be announcing first quarter results first week in October. Things that you can expect, again, continued growth in the semi wafer fab market. The steady increasing demand of the wind turbine modules. What's, again, nice about that's become a very bread-and-butter item for us. So we can ship from stock and take care of our customers. The growing battery energy storage pipeline, which I mentioned, is just a huge opportunity. Again, we are differentiating ourselves by focusing on niche markets. The longer-term goal of reshoring policies and bringing manufacturing back to the U.S.
We are well-positioned to help our suppliers, our customers, and people that we haven't talked to yet in terms of bringing manufacturing back to the U.S. So all through this, obviously through FY 2027 and beyond, we'll continue to monitor what's going on throughout the world. Right now, and knock on wood, we've been very stable. Haven't had significant supply chain challenges, and we've been able to manage through any issues that have come up as a result of various geopolitical events and the tariff situation. All right, so with that, I will say thank you. I went through that very quickly. We hope that we get to talk to you more in the one-on-ones, but we always welcome talking to anybody in between our calls. Adam, I'll turn it back over to you.
Thank you, Wendy, and thank you for everyone for watching. If you have any questions or would like to schedule a meeting with Richardson Electronics, please send me an email at info@lythampartners.com. If you'd like to learn more about Lytham Partners, you can visit our website at lythampartners.com or follow us on LinkedIn to stay connected about future events. We hope you all enjoy the rest of your conference, and have a great day.