Good day, and thank you for standing by. Welcome to the Richardson Electronics earnings call for the first quarter of fiscal year 2027. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ed Richardson, Chairman of the Board and CEO. Please go ahead.

Good morning, and thank you for joining Richardson Electronics' fiscal 2027 first quarter conference call. We appreciate your continued support and interest in our company. Joining me today are Bob Ben, Chief Financial Officer, Wendy Diddell, Chief Operating Officer, Greg Peloquin, General Manager of our Power and Microwave Technologies and Green Energy Solutions Groups, and Jens Ruppert, General Manager of Canvas. As a reminder, this call is being recorded and will be available for playback. Before we begin, I'd like to remind everyone that we'll be making forward-looking statements These statements are based on current expectations and involve risks and uncertainties. Actual results may differ materially from those discussed today. Please refer to our press release and SEC filings for discussion of risk factors. I'm pleased to report that we started fiscal 2027 with a strong first quarter. Higher than expected sales growth and expanded gross margin drove a five-time year-over-year improvement in operating income to $5.1 million, or 7.9% of sales. Improved profitability and proactive working capital management generated $5.9 million of cash from operating activities compared with $1.4 million in the prior year first quarter. Backlog grew to $184.4 million, up $20 million from fiscal year 2026 year end. While Bob will review the financial results in detail, the broader takeaways are strong execution across our global teams, growing adoption of key product lines, and positive momentum in our strategic growth priorities. Our performance was led by continuous strength in our power and microwave technologies, particularly in semiconductor wafer fabrication equipment, RF and microwave components, and engineered solutions. Demand remains healthy across key and end markets, including semiconductor manufacturing, defense, communications infrastructure, and industrial applications. This growth reflects favorable market conditions and our multiyear efforts to broaden our customer base, expand technology partnerships, and strengthen our engineering capabilities. We also continue to make progress in green energy solutions. Interest in power management, energy resiliency, and energy storage has strengthened as industrial, commercial, and infrastructure customers seek greater reliability. Lower operating costs and solutions for growing power requirements. We believe these long-term trends support our strategy and create attractive opportunities for Richardson Electronics. At Canvas, customer engagement remains active across medical and industrial markets. Although project timing can create quarterly variability, Customer activity, requests for quote volume, and opportunities for new design wins remain encouraging. We continue to support customers with highly engineered display solutions differentiated by customization, quality, and long-term support. Strategically, we're seeing increased customer interest in our US-based engineering and manufacturing capabilities. Our Made in America initiative, engineering expertise, global infrastructure, Manufacturing footprint and strong balance sheet are creating opportunities in aerospace, defense, power management, and industrial applications. We expect this trend to remain favorable as customers evaluate supply chain continuity, localization, and tariff exposure in sourcing decisions. The macro environment remains uncertain. with trade policies, tariffs, geopolitical developments, energy markets, and global economic conditions creating challenges across industries. However, the underlying demand drivers supporting our business remain strong and we continue to focus on what we can control. Expansion of AI-related infrastructure, semiconductor investment, power systems modernization, We remain disciplined in managing inventory, pricing, operating expenses, and capital allocation. Our strong balance sheet and debt-free position provide flexibility to invest in strategic growth while remaining the financial discipline, that has been a hallmark of the company for 80 years. Overall, we believe the company is well positioned as we move through fiscal 2027. We remain focused on growing higher value engineered solutions, improving profitability, supporting customers, and creating long-term shareholder value. With that, I'll turn the call over to Bob Ben for a detailed review of the quarter's financial results.

Thank you, Ed, and good morning. I will review our financial results for our first quarter of fiscal 2027, followed by a review of our cash position. Consolidated net sales increased 18.9% to $64.9 million compared to net sales of $54.6 million in the prior year's first quarter. This was our ninth consecutive quarterly year-over-year increase in sales. The first quarter was led by a 19.7% increase in PMT sales driven by strong growth in semiconductor wafer fab and RF and microwave products. GES sales increased 2.0 million or 27.1% as a result of higher sales of wind products and new products including battery energy storage systems. Canvas sales increased 7.9% reflecting higher sales in North America. Consolidated gross margin for the quarter was 34.6% of net sales compared to 31.0% during the first quarter of fiscal 2026. In the first quarter of fiscal 2027, gross margin benefited by 170 basis points due to an IEPA tariff refund. PMT gross margin increased to 35.4% compared to 31.3% as a result of product mix and the IEPA tariff refund. GES gross margin increased to 32.6% from 29.6% due to product mix that included new products. Canvas gross margin increased to 33.0% from 30.9% primarily due to the IEPA tariff refund. Operating expenses were $17.4 million compared to $16.0 million in the first quarter of fiscal 2026. The increase in operating expenses resulted primarily from higher employee compensation expenses, including incentives driven by the strong sales growth and higher travel expenses. As a percentage of net sales, operating expenses improved to 26.8% in the first quarter of fiscal 2027 versus 29.2% in the prior year's first quarter. Operating income increased over 400% to $5.1 million compared to an operating income of $1.0 million in the prior year's first quarter. Net income was $4.1 million for the first quarter of fiscal 2027 compared to net income of $1.9 million for the first quarter of fiscal 2026. Earnings per common share diluted were $0.27 in the first quarter of fiscal 2027 compared to earnings per common share diluted of 13 cents in the first quarter of fiscal 2026. EBITDA was 6.0 million for the first quarter of fiscal 2027 versus 3.3 million in the first quarter of fiscal 2026. Please note that EBITDA is a non-GAAP financial measure and a reconciliation of the non-GAAP item to the comparable GAAP measure is available in our first quarter fiscal 2027 press release that was issued yesterday after the market closed. Turning to a review of our cash position. Cash and cash equivalents at the end of the first quarter of fiscal 2027 were $36.9 million compared to $31.8 million at the end of fiscal 2026. The increase in cash and cash equivalents related to net income adjusted for non-cash items and higher accounts payable Partially offset by higher accounts receivable Capital expenditures of $1.7 million in the first quarter of fiscal 2027 were primarily related to facilities improvements in IT systems versus $1.0 million in the first quarter of fiscal 2026 Free cash flow was $4.2 million for the first quarter of fiscal 2027 We paid $0.9 million during the quarter for cash dividends. In addition, based on our current financial position, our Board of Directors declared a quarterly cash dividend of $0.06 per common share, which will be paid in the second quarter of fiscal 2027. As of the end of the first quarter of fiscal 2027, the company had no outstanding debt on its revolving line of credit with PNC Bank. Now, I will turn the call over to Greg. who will provide more details for our PMT and GES business groups.

Thank you, Bob, and good morning, everyone. We are excited by the continued progress we are making in both bookings and billings as a result of our multi-year growth strategies underway for GES and PMT. Coming into FY27, key strategic imperatives include developing a stronger backlog, launching new products, expanding our customer base, and advancing multiple development programs from beta testing to pre-production. I am pleased to report that we are making excellent progress towards our goals in Q1 FY27. Starting with GES, our year-over-year sales growth and bookings trends are encouraging as we continue to grow the pipeline of opportunities through both current and new technology partners, as well as engineered solutions developed by our field engineers and design team. GES sales in the quarter grew 27.1% year-over-year. as more customers adopted our key products across a broader set of applications. Within GES, we saw continued progress across key growth opportunities. First, we experienced growth adoption of our pitch energy modules across multiple wind turbine platforms. We served dozens of wind turbine owners and operators, including exclusive partnerships with the top four owner-operators of GE wind turbines, such as RWE, Inver Energy, Enel, and Nextera. We also saw growth from our multi-brand PEM turbine platforms. We continue to grow this program internationally, expanding into Europe, Asia, with new products for other turbine platforms including Suzlan, Senvion, Nordics, and SSB. We have now received orders outside of North America from customers in Brazil, Australia, India, France, and Italy, adding to our strong rollout in North America. Second, we booked a $2 million Best program in Q1. This milestone highlights the accelerating momentum of our BES strategy, supported by a growing pipeline of nearly 50 active opportunities as of today. We expect new partnerships under development. We'll expand our depth of product offering and customer reach in the future. We believe our competitive advantage in BES is rooted in our ability to deliver high engineered custom solutions for unique applications. That capability is supported by years of engineering and manufacturing expertise in niche power management products and markets, differentiating ourselves and technology partners a U.S.-based operating footprint and a nearly 80-year corporate history and a strong balance sheet. Together, these strengths allow us to work closely with customers to design battery energy storage systems tailored to their specific performance, operating, and application requirements. We believe our approach and platform differentiate us from emerging and more standardized off-the-shelf solutions. Today, our pipeline includes niche commercial and industrial applications throughout North America, and we believe there are many opportunities to increase our pipeline throughout FY27 and beyond. We are also focused on converting this growing pipeline into sales with multiple opportunities expected to close in FY27. Our overall GES growth strategy remains centered on power management. We've rapidly designed multiple products, secured patents, and both a strong global customer base and technology partners. Our success is evident in our growing sales pipeline as we capitalize on numerous growth opportunities tied to an evolving power management requirements and significant energy transformation initiatives. With these programs, testing and deployment continue to progress well with our key customers. We expect continued sales growth coupled with our growing backlog to produce double-digit growth for GES and FY27. Turning to PMT, excluding the legacy healthcare business, sales were $46.6 million in the quarter, a 23.1% increase over the prior year's first quarter. This reflects strong growth for both our semiconductor wafer fab customers, as well as our RF and wireless component product line, specifically in SATCOM, radar, and defense communication markets. This continued growth trend in Q1 allowed us to expand sales at a double-digit rate with strong growth and backlog. We are excited about the positive feedback from our SemiFab customers who are expressing ongoing optimism and continued growth well into calendar year 2027. We continue to invest in our infrastructure, including our LaFox-based BES demo center, while also expanding our design and field engineering teams and enhancing our manufacturing capabilities to support growing demand and innovation. Our field engineering team continues to identify new customers and opportunities across our global end markets. We continue to gain market share by developing new products and solutions that are accepted by our customers. In summary, we are encouraged by the success so far of our strategic initiatives underway across PMT and GES, including our new BES program, global expansion of our key engineered solutions products, and new technology partnerships. Our global capabilities and global go-to-market strategy continue to separate us from our competition in power management, RF and microwave, and Green Energy Markets. By combining legacy products and new technology partners and engineered solutions, we believe we are well positioned to deliver continued sales growth. We believe positive momentum has continued as we enter Q2 and the second half of FY27. With expanding backlog, compelling new products, growing market share and strong cross controls, we believe FY27 will be another strong year for growth in sales and profits for both GES and PMT. And with that, I'll turn it over to Jens to discuss Canvas.

Thanks Craig and good morning everyone. Canvas designs, engineers, manufacturers and sells custom display solutions to original equipment manufacturers across global medical and industrial markets. Our mission is to deliver high quality application specific display solutions that meet demanding customer requirements and support long product life cycles. Canvas reported first quarter fiscal 2027 revenue of $8.9 million, an increase of 7.9% compared with $8.3 million in the first quarter of fiscal 2026. Our business remains project-based and can vary from quarter to quarter based on timing of customer programs and shipments. Cross-margin was 33.0% of net sales in the first quarter compared with 30.9% in the same quarter last year. The year-over-year improvement reflected a more favorable overall product mix and disciplined execution, despite continued variability in freight, duties, tariffs, and other supply chain costs. Regional performance was mixed with lower year-over-year revenue in Europe, offset by growth in North America. This highlights the value of our diversified customer base while reflecting regional differences in customer demand and program timing. The quarter unfolded in a resilient but uneven global economy. Tariffs, trade policy changes, logistics conditions, and customer scheduling continued to create uncertainty. We remained focused on disciplined execution, customer collaboration, and supply chain flexibility to support customers' requirements and protect program continuity. During the quarter, Canvas continued to pursue opportunities with both repeat and new medical OEM customers across robotic-assisted surgery, navigation, endoscopy, and human-machine interface applications for medical devices. Our solutions also continue to support commercial and industrial applications, including passenger information systems for trains and buses and HMI technologies used in printing, vending, milling, and packaging equipment. Our commercial initiatives remain centered on increasing Canvas' visibility and market leadership, developing new opportunities, deepening strategic customer relationships, and converting our pipeline into additional design and production programs. We are also continuing to strengthen supply chain flexibility and operational execution so that we can respond effectively as customers' demand patterns and trade conditions evolve. At the end of the first quarter, backlog was 41.8 million, with a book-to-bill ratio of 1.1. These measures provide important visibility into future demand, although the timing of individual programs can cause quarterly fluctuations. Looking ahead, we expect customer investment decisions and production schedules to continue varying by market and program. We remain encouraged by customer engagement, requests for quote activity, and our opportunity pipeline. With our improved first quarter profitability, disciplined execution, and continued focus on design wins, we believe Canvas is well positioned to support sustainable growth and create long-term shareholder value. I will now turn the call over to Wendy.

Thanks, Jens, and good morning, everyone. As we've discussed previously, our corporate strategy remains centered on two key priorities, accelerating profitable growth and improving efficiency. The first quarter's results show strong progress on both fronts. Customer activity and backlog continue to support our growth priorities. At the end of the quarter, PMT and GES backlog increased meaningfully from fiscal year end, reflecting continued demand across semiconductor, power management, wind, and other engineered solution markets. We continue to view backlog as an indicator of demand and future visibility, while recognizing that shipment timing depends on product mix, customer schedules, supply, and program milestones. We also continue to focus on efficiency and cash generation. Inventory was approximately $103.3 million, essentially flat to FY26 year-end, as we balanced inventory discipline with the need to support semiconductor, wind, and other customer programs. Our focus remains on converting inventory and backlog into revenue and cash, improving manufacturing absorption, and directing resources toward the programs that best position us for growth and improved profitability. We also continue to manage sourcing, pricing, operating expenses, and capital commitments carefully. During the fourth quarter, we completed our initial AI readiness and opportunity assessment. In the first quarter, our emphasis shifted from identifying areas to implementing practical use cases and establishing a process for measuring results. We were focused on business outcomes, including reduced manual work, shorter cycle times, better consistency, and improved visibility in business processes. Our use cases include sales, supply chain, manufacturing and engineering, finance, and administrative workflows, with governance and security controls built into the process. We also continue to advance our Made in America strategy where our U.S.-based engineering, manufacturing, testing, and quality capabilities can help customers address localization, tariffs, supply chain continuity, and speed to market. During the quarter, sales activity continued across aerospace, defense, industrial, semiconductor, and power management applications. Our LeFox operation continues to provide us with the ability to support customers from design and sample builds through production and tests. We are seeing increased interest in programs that require the combination of technical support and domestic manufacturing capabilities. Our solid relationships with rail and wind customers are a strong testament to our Made in America strategy, as is our growing relationships with companies like C-Motive, Kiva, and Goshen. We're also working on a new program involving ultracapacitor racks. Our ultracapacitor-based energy storage platform delivers a fully integrated solution designed specifically for the demanding requirements of data centers. By combining power conversion and energy storage into a single cohesive system, we eliminate the complexity of multi-vendor architectures and deliver a streamlined, high-performance backup solution. We started with contract manufacturing quotes and then continued conversations with our own products. Our previous engineering work on other programs offered a fundamental building block. We are now looking to make these racks a standard offering to support smaller battery energy storage installs. Our capital allocation priorities remain focused on organic growth. Battery energy storage is becoming an increasingly important part of our growth strategy. During the quarter, our pipeline continued to grow across commercial, industrial, utility, and data center applications where customers need resiliency, energy management flexibility, and engineered solutions. We began shipments for our first Alaska order, a multi-million dollar project that includes 18 customized battery energy storage systems serving seven remote communities. This project is an important early reference point as we continue to pursue additional opportunities where reliability, customization, and technical expertise are critical. We have also started the build-out of our Energy Storage Demonstration Center at our LAFOX headquarters. In addition, we continue to advance our partnership with Goshen, a leading manufacturer of lithium ion batteries and battery energy storage systems. We've expanded our REST product family during the quarter with the introduction of the REST 211 and REST 422 systems. Together with the REST 760 and the REST 1505 platforms, these additions broaden our ability to serve a wider range of commercial and industrial energy storage applications. Taken together, these activities demonstrate the progress we are making as our emerging battery energy storage strategy moves from development into commercial adoption and scale. In wind and power management, demand remains supported by the global install base of wind turbines, the need for reliability and life extension solutions, and our expanding portfolio of related products. We've shipped more than 90,000 units since we launched the first product. As Greg mentioned, we also continue to make progress with geographic expansion, including the ongoing Suzalon rollout and continuing new customer testing in Europe. Margins on these products is accretive to the company's overall margin, further supporting our profitable growth strategies. Semiconductor demand also remained an important growth driver during the quarter. Key customers have indicated continuing activity into calendar 2027. We are expanding capacity via additional shifts to support higher levels of demand. Overall, the first quarter represented a strong start to our fiscal 2027. We delivered strong sales growth, improved operating performance, increased cash, and continued to advance the strategic initiatives that support our long-term plan. With that, I'll turn it back to Ed.

Thanks Wendy. In closing, our first quarter performance reinforces our progress against multiyear strategy. The comments from Bob, Greg, Jens, and Wendy reflect solid execution across the organization and continued momentum in our chosen markets and programs. I am very proud of the Richardson team. Our priorities remain clear Execute for customers, improve profitability, manage capital with discipline, and convert our strategic initiatives into sustainable growth and long-term value for shareholders, customers, and employees. We'll now open the call for questions.

As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to one question and one follow-up. Again, we ask that you please limit yourself to one question and a follow-up until all have had a chance to ask a question, after which we will answer additional questions from you as time permits. Please stand by while we compile the Q&A roster. Our first question comes from Bobby Brooks with Northland Capital Markets. Your line is open.

Hi, this is Keaton Schokey on for Bobby. Congrats on the quarter. And my first question is on backlog. We saw it grow another 12% sequentially, and I was curious if we could get a sense of visibility for backlog converting to revenues over the next 12 months. And then as you look at your pipeline for new orders, what are your expectations for backlog growth through year end?

I'll speak to PMT and GES. Our current backlog I did that analyst and probably about 75% of the backlog is scheduled to shift in the quarter. I'm sorry, the fiscal year. That is continued backlog growth in Q2. And based on the number of new products, number of quotes, number of new customers, we feel that we're going to have strong top line growth and continued growth in backlog to suit the future in our fiscal year 2027.

Jens, do you want to take Canvas?

Sure, sure. I'm happy to trust Canvas, yeah. So our backlog, you know, we have a lot of orders. They go out like two years, three years, but we're expecting orders coming in like every quarter. So it's really hard to say. The majority of the backlog will shift also within the fiscal year. But again, you know, some of the orders we have, like frame contracts, they carry out for two years or even longer.

Okay, thank you for the color on that. And then on the IEPA tariff refunds, what are your expectations for refunds going forward? Have those most have been worked through? Should we expect the benefit to continue in the next quarter?

Hi, this is Bob Ben. Unfortunately, it's really hard to answer that question. You know, we're getting these refunds sporadically and they don't even really tell us what exactly, you know, time periods they relate to. So I wish I could give you more specific information, but Unfortunately, I don't have that to give.

But, Keaton, I don't think we expect the same amount that we received in Q1. I don't think we expect to receive that much.

Okay. Okay. That's helpful.

And then can you help me understand the revenue mix within GES? How much of that growth was specifically from the wind ultracompositors versus the BESS and the other new products?

yeah the majority of it was in the wind and associated products as you've seen over the last four calls we continue to have we currently have over 23 customers that are using our product and we have over 10 different products that we're selling into the wind turbine platforms today that you know where they're obviously we started the group so that's the majority of it on the inside and then

Okay, thank you. I'll return to the queue.

Thank you. As a reminder, please press star 1-1 to ask a question. Our next question comes from Anya Soderstrom with Sidoti. Your line is open.

Hi, thank you for taking my questions. Congratulations on the great quarter. Hi, Wendy and everyone. I'm just curious with the backlog, how much of that is GIS?

43.2 million for GES, 99.4 for PMT.

Okay, and then we got within PMT, how much of that revenue is from the semiconductor wafer fab and what do you see in terms of that growing sequentially? What's your visibility for the second quarter there?

I don't know if we to say what that is for backlog. But the forecast, the input from the customer base, we have numerous customers in the semi wafer fab space. They look at this type of growth that we're seeing in Q1 to continue well into definitely the rest of our fiscal year 2027, but even in the father for calendar year 2027. Very positive feedback from the customer base.

Okay, thank you. And then within the SUSELON opportunity, that's really in its early innings. What kind of opportunity do you see there? How big can that be?

The SUSELON platform? Is that what you said? Yeah.

I thought she said SUSELON. SUSELON, S-U-Z-L-O-N. SUSELON, yeah. Yeah. Yeah.

So that we had a very strong shipments in Q1 for Suzlan for the replacement business of their lead acid batteries. It was, I think, about a million and a half dollars. But the good news there is we're working on their new platform for their new turbines called the SX9. And we've been confirmed our product will be installed on an OEM point of view versus the MRO. So we'll have both the MRO business worldwide on all Suzilon turbines, but then we'll also be standard equipment, if you will, on their new platforms as they introduce new turbines. So it's been a very good relationship. It's been a long one, a lot of work, but like Richardson's DNA, we've done every sort of unique need that they had for that product to work in their turbine over what's going on in about two years. A very good example of Richardson's capabilities there, for sure.

Okay, thank you. And just one last one for me. How do you anticipate the high interest rates to affect?

Well, first of all, we don't have any debt, as you know, so, you know, there really isn't any impact there. Were you thinking something more specific?

Yeah, I know. I don't expect it to It might affect you directly, but it might affect your customers' demand, I would assume, given they're so capital-intense.

Yeah, maybe Greg can speak to the wind customers.

Yeah, the interest rates obviously have affected anyone who's borrowing money, but what we've seen is a positive-negative in that This administration has greatly reduced the subsidies and grants that they get for putting in new wind turbines or even new solar, which falls well for us because what people are doing, and we did see a huge increase with one of our largest, I call them the four sisters, and we mentioned them in our notes. They repower, so they take apart the turbine and just rebuild it with all new products to make it last for another you know 10 to 15 years and our ultracapacitor pitch energy modules work perfect for that because once they do the repower that would be the last time they have to put a battery in the turbine. So in a way that the benefit to us is the reduction in grants and subsidies in terms of interest rates you know people borrowing money I don't know has a direct effect on our business but anyone that has to borrow money to do that it would.

Okay thank you that was all for me.

Thank you. Our next question comes from Ross Taylor with ARS Investment Partners. Your line is open.

Thank you. And congratulations. How are you doing? Good. Good quarter. I wanted to ask you guys more of a philosophical question. We've often, Wendy, had discussions about, you know, the desire to build kind of Repeat Business. A lot of what Richardson is expert at is things that are limited runs, smaller runs. Are you guys making or do you see progress and opportunity to have business that really becomes more repeat so we can basically effectively build a core business that covers the operating costs and makes a reasonable return over the next few years?

Certainly that's true. I'll jump in first and other people can add to it. Certainly that's true of our tube business. The tube business is, you know, EDG is MRO, and that is very much repeat business, long-term repeat business, very steady.

Yeah, and so you have that base business that's very consistent, very measurable. And then, you know, we have to pick opportunities that we can win at. and we have found so far that these opportunities are very niche, very unique. And so they're not really what I'll call consumer goods at all. And there's so much project based. So, you know, we've seen over time that the pitch energy module business somewhat getting more and more consistent each quarter. We'll get a large order every other quarter. That's starting to get consistent, but it's project based. Most of these other programs that we're working on, and so we're going to see, you know, large bookings and then booking slowed down a little bit as we build and shift the product to these one year contracts for backlog. So, you know, really, we don't look for, we look at opportunities where we can win at and over time, for a good example, the pitch energy modules were project based, but we've now added, you know, Almost a dozen new products in that so we can kind of get a more steady stream of revenue with the customers we have today as opposed to just the repower, which is a three-month program or a six-month program.

Plus, in those markets that we serve that Greg just mentioned, our market share is still fairly low. We have a lot of runway left to expand our penetration when you look at, for example, the GE wind turbines in the United States. We're not even at that 20% level. So we have a long way to go, Russ, where we'll continue to sell these units.

Okay, so basically with that, what I'm hearing you say is on those areas, you'll basically be able to get both market share growth, and then over time, that will basically become a recycling business where perhaps every 10 years or so, customers might need to replace the module, and you'll be able to pick up that as a cash flow business.

Yes.

Can you answer, I'm going to slide two questions into one, which is talk about the opportunities in both battery storage and also we saw a competitor in the electric locomotive space deliver some engines, I think, down into LA for the Union Pacific Yard. Can you talk about Where do you guys stand? How do you see the electric opportunity, locomotive opportunity?

Yeah, so right now we're still very active in electric locomotives and diesel locomotives. As you know, we have large programs for starter modules. We're working on an IGBT module for locomotive management. So we're still hearing from our customers, and we've finished the large order for Burlington Northern Santa Fe that they expect that they will be building and getting more contracts for electric locomotives. So we're just waiting on them. We don't have a lot of input on that for the electric locomotive part. What was the other question?

The other part was about, and we're happy to have you on the electric motor, the electric locomotives. Can you talk about the economics in the starter modules as well and compare those to the Electric Locomotives themselves. What do we look at on a unit basis?

Oh, I mean, in terms of cost and resale?

Yeah, what you sell it for and does it carry kind of corporate average margins, better or worse?

Yeah, I mean, we make strong margins, corporate average margins on the starter modules. It's obviously a much smaller number within the diesel locomotive itself, but It's good margin. We have a niche and we can expand that technology and other products that we're working on. But no, it doesn't offset the electric locomotive modules that we make and have installed today.

What's the cost of a starter module for a diesel?

Yeah, I'm not going to share that. I got too many customers and competitors listening. I give them the family discount. They know that. All right.

Okay, and then the battery storage space?

Yeah, we really, and it's been confirmed by customers, by integrators, by industry people, this microgrid growth, that's what the current order is with Box in Alaska. There are small microgrids in seven different towns on a federal property. The next one that we'll be coming up with is for a large energy company in California due to NDAs. I can't give you the name, but I'm sure you can figure it out, Ross. And we'll be receiving an order to support them with the battery, hence the container. Somebody else will be putting in the whole infrastructure and the build out of these microgids. But about 10 to 20 different projects that we'll be supporting this company on over the next two years. It'll be about $10 million. The products we work on, because there's too many people involved and companies involved and margins lower on these huge data centers, these microgrids really fit a niche that we're doing. Our product seems to fit that. Our engineering and value-added capabilities allow us to take a product and design it to that really specific site of anything between 200 kilohertz and 5 megawatts. And we're just seeing so many opportunities for that. and with our relationship with our technology partners, our own internal engineering capabilities, to be honest with you, we're winning more than I thought. It's really been defined our strategy. We thought it would work and so far it has. Obviously, you can see with the bookings and shipments in a very short amount of time and the funnel continues to grow.

Yeah, it's a real exciting opportunity for you guys. Okay, thank you very much. I'll jump back. Thank you.

Thanks, Ross.

Thank you. As a reminder, please press star 1-1 to ask a question. Again, to ask a question, please press star 1-1. I'm showing no further questions at this time. I would now like to turn it back to Ed Richardson for closing remarks.

Thanks again for joining us today and for your questions during the Q&A portion of the call. We appreciate your continuing interest in Richardson Electronics and we look forward to speaking with you again in the next quarter. Until then, please feel free to call us at any time. We're happy to answer your questions.

This concludes today's conference call. Thank you for participating. You may now disconnect.