Richardson Electronics New Products Should Drive Growth Right Through A Recession (RELL)

Don White

A year ago, I wrote an article about Richardson Electronics (NASDAQ:RELL) titled Richardson Electronics Is Cutting Edge, Profitable, And Growing Yet Trades Below Book. At that time, I categorized it as a turnaround play. A stock that had performed poorly for years and been left for dead by investors, despite strong recent evidence of a turnaround. The stock was trading at $8.00 and I placed a one year price target of $14.00. It is now one year later and the stock has risen to $15.79.

If you are a value investor, it’s still a value. It’s trading at a run rate PE ratio of about 10 despite increasing growth. But RELL is now also in the early stage of full throttle growth. It has at least four major new product lines just coming to market or in beta testing in secular growth industries. Three already have large orders. All are potentially large markets that are less cyclical than most. In fact, three of them are EVs, wind power, and lab grown diamonds.

I believe the opportunity today is as great as a year ago despite the doubling of the stock. This is due to the transition to a growth company. The stock trades at a forward PE ratio of about 10. The market has recognized the turnaround but not the growth story.

Background

Richardson is an electrical components manufacturer and distributor based in La Fox, Illinois. It designs or manufactures over half its products and serves as a distributor for the rest. The distributor business is value added so it gets better margins than most distributors. They often help their customers with engineering or other custom services. The customer base is diversified with its largest customer at about 10% of revenues. It’s also very diversified by the industries of its customers.

The company was founded in 1947 by the current CEO Ed Richardson’s father. Mr. Richardson has been with the company about 60 years and is now 80. His mother worked there until she was 95 and he does not plan to retire. Mr. Richardson owns 15.2% of the common stock and 98.2% of the Class B common stock. That gives him control with 62.5% of the voting rights. He plans a book shortly about the company history called Never Give Up.

Financial Results

Financial results over the last five fiscal years are shown below.

Operating reults last 5 years

Richardson forms 10-K

As shown above, the company was operating close to breakeven with declining sales in the three years ended May 2020. The worst year was YE 5/20 when revenues fell 6%. Sales began to pick up in FYE 5/21 and accelerated, growing by 27% in FYE 5/22.

The company has been losing at least $5 million per year with its CT tube aftermarket business started from scratch about seven years ago. This level of loss goes back many years. That business has been very slow to develop but is starting to get traction. In the shaded line in the

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Districts share plans for new, innovative programming

With schools looking ahead to the most “normal” academic year since the start of the COVID-19 pandemic, we asked superintendents, “What new and innovative programs are being introduced within your district for the 2022-23 school year?” Here are responses from schools chiefs in Nassau County; the responses have been edited for length and clarity.

SHARI L. CAMHI

Baldwin Union Free School District

As part of Baldwin Union Free School District’s ongoing effort to provide students with real-life, hands-on professional experiences across various career paths, we are excited to launch a state-of-the-art recording studio, which will allow for work-based learning in the field of music and sound engineering to take place right within our school system. Featuring a control room equipped with a sound recording and mixing console, a music room, a drum booth, vocal booth and podcast technology, the stylized and inspirational space will mirror the recording studios used in today’s music industry by veteran artists, music producers and sound engineers. Our students will fully engage with the studio technology in countless ways, whether creating a podcast for a history class or recording a “poetry slam” for an English project.

New courses centered on the field of sound engineering will also be made available to coincide with the studio launch, including Podcast Production, Music & Arts Sound Engineering, and Voice-Over Production. Immersing our students into the world of work will ensure that Baldwin High School graduates are that much more prepared for their future profession.  

STEVEN J. MALONEY

Bay Shore School District

The Bay Shore School District offers its students participation in a K-2 STEAM program, which was first implemented in the fall of 2021.

STEAM education, which incorporates science, technology, engineering, art and mathematics, allows students to learn about science and engineering principles while exploring their creativity with hands-on project-based experiences. Bay Shore teachers designed a curriculum to include lessons in topics like robotics and coding that incorporate visual arts. The program’s impact goes far beyond math, technology or art lessons; children enhance their critical thinking, problem-solving and collaboration skills. These are key qualities in today’s fast-paced, interconnected world. Developing these abilities ensures graduates from Bay Shore are ready for success in their postgraduate endeavors.

To further the goals of the program, each of the district’s K-2 buildings has a dedicated STEAM teacher who leads classes on a set weekly schedule, in the same way physical education, art and music are taught. This program has created new avenues for collaboration with our parent groups, which have donated materials for the STEAM classes.

By implementing a full K-2 STEAM curriculum, these skills are ingrained and cultivated in students from an early age. 

SHARON A. DUNGEE

Central Islip School District

It is imperative that as educators, we implement high-quality, innovative programs that span the spectrum of the curricula. This sets the stage for us to provide students with opportunities to achieve their personal best for success and equips them with the tools they will need to compete in the 21st century’s

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