Richardson Electronics RELL FY2026 10-K: Same Gross Profit as 2022, $10M More SG&A
The Hook
Four years ago Richardson Electronics $RELL sold $224.6 million of parts and kept $71.7 million of gross profit. In the fiscal year that just ended, it sold $228.6 million and kept $71.3 million. Same revenue. Same gross profit. Same gross margin, near enough.
Operating income went from $16.0 million to $6.5 million.
Nothing happened above the gross profit line. Everything happened below it. Selling, general and administrative expense went from $55.7 million to $65.7 million, an increase of almost exactly $10 million on a gross profit that did not move. Put another way, overhead went from 24.8 cents of every sales dollar to 28.8 cents. That four-cent difference is the whole company: on fiscal 2026 revenue it is worth about $9.0 million, and the gap between the two years' operating income is $9.5 million.
Richardson's own risk factors describe the mechanism better than any outsider could. From the fiscal 2026 10-K, filed August 3, 2026: "the complexity of our global infrastructure makes it difficult to leverage our fixed cost structure to align with the size of our operations."
Company Snapshot
Richardson Electronics is a LaFox, Illinois manufacturer and specialty distributor of power grid and microwave tubes, RF and microwave components, energy storage and power management products, and customized display systems. It employs 429 people, makes 60 percent of its sales outside the United States, and stocks over 100,000 part numbers. It carries no debt, holds $31.8 million of cash, and has an undrawn $20 million revolver that it extended for three years in October 2025.
This analysis covers the fiscal 2026 Form 10-K, filed August 3, 2026, for the 52 weeks ended May 30, 2026. Fiscal 2025 was also 52 weeks. Fiscal 2024, which appears in some of the tables below, was a 53-week year, so it is very slightly flattered in any multi-year comparison.
One structural change matters for reading the numbers: effective June 1, 2025, Richardson collapsed four reportable segments into three. Healthcare is gone, folded into Power and Microwave Technologies after the company sold most of those assets to DirectMed Imaging in January 2025. Prior periods have been recast.
The Financial Story
Fiscal 2026 was a recovery, and it was a real one at the top. Revenue rose 9.4 percent to $228.6 million. Gross profit rose 10.1 percent to $71.3 million. Gross margin ticked up to 31.2 percent from 31.0 percent. All three segments grew. The company swung from a $2.5 million operating loss to a $6.5 million operating profit and from a $1.1 million net loss to $6.4 million of net income.
It is not a record. Revenue is still 13.0 percent below the fiscal 2023 peak of $262.7 million, and operating income is 74.1 percent below that year's $25.0 million.
| Fiscal year | Revenue | Gross profit | SG&A | Operating income |
|---|---|---|---|---|
| FY2022 | $224.6M | $71.7M | $55.7M | $16.0M |
| FY2023 | $262.7M | $83.7M | $58.7M | $25.0M |
| FY2024 (53 wks) | $196.5M | $60.0M | $59.5M | $0.3M |
| FY2025 | $208.9M | $64.8M | $62.2M | ($2.5M) |
| FY2026 | $228.6M | $71.3M | $65.7M | $6.5M |
Read that SG&A column down. It has gone up every single year, including the two years revenue fell 25 percent. From fiscal 2022 to fiscal 2026 gross profit is down $0.4 million and SG&A is up $10.0 million. Management attributes the fiscal 2026 increase to "higher salaries and incentives due to sales growth, as well as severance expense, partially offset by lower travel and legal expenses." Headcount, meanwhile, went the other way: 442 employees at the end of fiscal 2024, 431 at the end of fiscal 2025, 429 at the end of fiscal 2026. SG&A per employee rose from about $134,700 to about $153,200 across those two years.
Two thirds of the swing to profit is an accounting item leaving, not operations arriving. Fiscal 2025's operating loss was not an operating shortfall. It contained a $5.1 million loss on the disposal of Healthcare assets. Fiscal 2026 contains the opposite sign: an $0.8 million gain on the sale of Healthcare assets the company had retained. Strip both out and the underlying picture is much smaller.
| Operating income | FY2025 | FY2026 | Swing |
|---|---|---|---|
| As reported | ($2.463M) | $6.464M | $8.927M |
| Healthcare disposal item | ($5.074M) | $0.847M | $5.921M |
| Excluding that item | $2.611M | $5.617M | $3.006M |
The company was operationally profitable in fiscal 2025. It just did not look like it. And the underlying improvement is $3.0 million, not $8.9 million. On the same basis, operating margin went from 1.25 percent to 2.46 percent, not from negative to positive.
The one-time items do not stop at the operating line. Pre-tax income was $7.478 million. Inside it sit the $0.847 million Healthcare gain and, in other income, what the filing calls only "a non-recurring gain of $0.9 million" without saying what it was. Together those are $1.769 million, or 23.7 percent of pre-tax income. Below them, the effective tax rate was 14.6 percent against a 21 percent federal statutory rate, helped by research and foreign tax credits and by a $0.5 million reduction in the valuation allowance on state net operating losses. Richardson paid zero US federal cash income tax in fiscal 2026 and $1.7 million abroad. More than half of pre-tax income, $3.9 million of $7.5 million, was earned outside the United States.
Normalize for the one-time gains and tax the remainder at 21 percent and net income is roughly $4.5 million rather than $6.4 million.
The cash statement is where the recovery looks thinnest. Richardson reported $6.383 million of net income and collected $0.762 million of cash from operations. That is 12 cents of operating cash per dollar of reported profit. Capital expenditure was $4.4 million, so free cash flow was negative $3.6 million. The company paid $3.4 million of dividends anyway, and cash fell from $35.9 million to $31.8 million.
The cause is receivables, not inventory. Accounts receivable rose 37.5 percent to $33.2 million while revenue rose 9.4 percent. The $9.0 million increase absorbed 46 percent of the entire $19.7 million revenue increase. Days sales outstanding went from about 42 days to about 53. Inventory, the metric you would normally worry about at a distributor, actually improved: the balance was essentially flat at $103.0 million while cost of sales rose 9.1 percent, so days of inventory fell from roughly 260 to roughly 239, and the inventory reserve came down from $7.6 million to $6.3 million. That is genuinely better. It is still 45 percent of a year of revenue and 51 percent of total assets sitting on the shelf, which is what a business built on stocking obsolete tube technology looks like.
Segment mix contains one uncomfortable detail. Richardson does not disclose operating income by segment. Its chief operating decision maker is given gross profit; SG&A is only reported on a consolidated basis. So there is no bleeding segment to point at, because every segment stops at gross profit and every one of them was positive and growing. The entire earnings problem sits in the unallocated corporate cost base.
| Segment | FY2026 sales | Growth | FY2026 GM | FY2025 GM |
|---|---|---|---|---|
| Power and Microwave Technologies | $160.5M | +9.1% | 31.2% | 30.5% |
| Canvys | $37.3M | +12.4% | 32.0% | 32.9% |
| Green Energy Solutions | $30.8M | +7.3% | 30.3% | 31.4% |
| Total | $228.6M | +9.4% | 31.2% | 31.0% |
The detail: Green Energy Solutions is the one Richardson names as its growth strategy. Its own risk factors say "our growth strategy focuses on expanding our Green Energy Solutions and our power conversion businesses." That segment grew 23.6 percent in fiscal 2025 and 7.3 percent in fiscal 2026, and its gross margin fell. The segment that carried the year was Power and Microwave Technologies, the legacy tube and RF business, up 9.1 percent and the only one of the three to expand margin. By geography, the growth came from Asia Pacific, up 34.2 percent to $58.0 million, while Latin America fell 19.3 percent.
Valuation: What It Is Worth as a Normal Business
Richardson closed at $20.66 on August 7, 2026, for a market capitalization of about $303.5 million across 14,692,493 Class A and Class B shares (price and share count per stockanalysis.com; the share count is the cover page of the 10-K). Net of $31.8 million of cash and no debt, enterprise value is about $271.8 million. Against fiscal 2026 results that is 47.6 times reported net income, 1.33 times sales, and about 26.5 times EBITDA of $10.3 million. Against normalized net income of roughly $4.5 million it is closer to 67 times. Book value is $163.7 million, or 1.85 times.
A five-year discounted cash flow at an 11 percent discount rate and 2 percent terminal growth, taxed at 21 percent, gives the following. Assumptions are stated so you can disagree with them.
| Scenario | Revenue growth | Year-5 operating margin | Implied value per share |
|---|---|---|---|
| Bear: no operating leverage | 1% a year | 2.5% (today's normalized level) | $5.25 |
| Base: partial recovery | 5% a year | 4.5% | $6.67 |
| Bull: back to FY2022 margins | 8% a year | 7.1% | $10.06 |
| Cycle peak repeat: back to FY2023 | 9% a year | 9.5% | $13.89 |
Each case charges working capital at 15 to 20 percent of incremental revenue, which is what the last two years actually cost. At a 9 percent discount rate the base case is $8.07; at 12 percent it is $6.18.
Cross-checking against multiples rather than cash flows gives a similar shape. Arrow Electronics, the largest listed comparable, traded at about 14.7 times earnings on July 31, 2026 (per valueresearchonline.com). Applying distributor multiples of 8 to 12 times EBITDA to Richardson's normalized $9.4 million of EBITDA, plus the net cash, gives $7.28 to $9.85 per share.
Every method lands well below the market price, which means the interesting question is not what the business is worth today but what today's price requires. At 15 times earnings, a $303.5 million market capitalization implies about $20.2 million of net income. That is 91 percent of the all-time peak set in fiscal 2023, and more than four times what fiscal 2026 produced once the one-time gains come out. The market is not pricing this recovery. It is pricing the next one, in full.
Risks
The concentration risk is new. One customer in the PMT segment accounted for $31.5 million, or 14 percent, of consolidated net sales in fiscal 2026. No single customer exceeded 10 percent in either fiscal 2025 or fiscal 2024. That is also the most obvious candidate for the receivables build, though the filing does not connect the two. On the supply side, two suppliers each represented more than 10 percent of total cost of sales.
The inventory is the structural risk. Richardson holds $103.0 million of it against a product line the company itself describes as facing "technical obsolescence," noting that "as technology evolves and companies replace their capital equipment, the market for our products potentially declines," and that some distribution agreements do not permit returns. It has taken $0.5 to $0.6 million of provisions in each of the last three years, which is small relative to the balance.
Governance is concentrated. As of July 27, 2026, Edward J. Richardson, Chairman, Chief Executive Officer and President, beneficially owned 98 percent of the Class B shares, representing 61 percent of the voting power. Public float is $126.2 million against a $303.5 million market capitalization.
The Bottom Line
Richardson Electronics rebuilt its revenue and its gross margin, and gave the operating leverage away to overhead. Same gross profit as four years ago, $10 million more SG&A, $9.5 million less operating income. Two thirds of the swing back to profit was a disposal charge rolling off rather than operations arriving, another 24 percent of pre-tax income was one-time gains, the tax rate was 6 points below statutory, and the whole thing converted into $0.8 million of operating cash while the dividend cost $3.4 million.
None of that makes it a bad business. It is debt free, cash generative across a cycle, and it grew every segment this year. But the fix is not on the revenue line, and it never was. Three things to watch in fiscal 2027: whether SG&A grows slower than gross profit for even one year, whether days sales outstanding comes back toward 42, and whether Green Energy Solutions reaccelerates or the legacy tube business keeps carrying the stated growth strategy.
Every figure above comes from Richardson Electronics' Form 10-K for fiscal 2026, filed with the SEC on August 3, 2026, except the share price, market capitalization and peer multiple, which are attributed inline. This is not investment advice and contains no price targets.
This analysis was assembled from XBRL filing data in the RoboSystems SEC Shared Repository, which covers every company that files with the SEC. robosystems.ai/pricing. New customers get 50% off your first month with code ROBO50.