Welcome and thank you for joining the Fiscal Year 2020 First Quarter Earnings Call for Richardson Electronics. Before we begin, please ensure you have opened the WebEx participant and chat panel for using the associated icon located at the bottom of your screen. Please note that all audio connections are muted at this time. Should you require technical assistance, a list has been attached to the event producer. With that, I will turn the conference over to Edward Richardson, CEO.

Good morning. And welcome to Richardson Electronics conference call for the first quarter of fiscal year 2020. Joining me today are Robert Ben, Chief Financial Officer; Wendy Diddell, Chief Operating Officer and General Manager for Richardson Healthcare; Greg Peloquin, General Manager of our Power and Microwave Technologies Group; and Jens Ruppert, General Manager of Canvys. As a reminder, this call is being recorded and will be available for audio playback. I would also like to remind you that we will be making forward-looking statements and they are based on current expectations and involve risks and uncertainties. Therefore, our actual results could be materially different. Please refer to our press release and SEC filings for an explanation of our risk factors. Overall, I am pleased with our business in the first quarter. We generated net income in the quarter versus a loss in our last quarter. Our longest-running ALTA750 CT tube has been in the field for more than 15 months and customers are gaining confidence. As a result, our Healthcare business is significantly improving. At the end of the quarter, we received European approval to use the CE Mark, which opens up more sales opportunities throughout Europe. PMG repeated its trend of excellent growth. PMG sales continued to increase on a perpetual basis, as our partnerships with new technology companies gain traction. Canvys and EDG continue to be the workhorses of the company and contribute significantly to our overall profitability. The only negative in the quarter is that the semiconductor wafer fab equipment market hasn’t turned around yet. This segment had its last strong quarter in Q1 FY 2019. Our teams are pushing hard for every opportunity and making changes to improve efficiency throughout the organization. We have been told that the semiconductor wafer fab market will show signs of growth in the near term. When this happens, we are well prepared to support our customers and will be firing on all cylinders. I will now turn the call over to Bob Ben, who will share the highlights of our first quarter, then Greg, Wendy, and Jens will provide more details on their business unit performance.

Thank you, Ed, and good morning. I will review our financial results for our first quarter of fiscal year 2020 followed by a review of our cash position. Net sales for Richardson Healthcare and Canvys increased for the first quarter of fiscal year 2020 by $0.6 million or 26.8% for Healthcare, $0.1 million or 1.4% for Canvys. Total company net sales for the first quarter of fiscal year 2020 were $40.7 million, compared to prior year’s first quarter of $44.2 million, which was a decrease of $3.5 million or 7.9%. PMT net sales decreased $4.2 million due in large part to the comparison to strong semiconductor wafer fab part sales in the first quarter of fiscal 2019. This decline was partially offset by increased revenue from our new technology partners. Gross margin for the quarter improved to 31.9% of net sales, compared to 31.6% of net sales in last year’s first quarter. This was primarily due to a favorable product mix and overabsorption in Richardson Healthcare, partially offset by unfavorable product mix and foreign exchange rates for Canvys. PMT gross margin of 31.7% of net sales was flat to prior year. Operating expenses decreased to $12.8 million for the first quarter of fiscal 2020 compared to $13.1 million in the first quarter of fiscal 2019. The decrease in operating expenses resulted from lower employee benefits, IT, and bad debt expenses. As a result, the company reported an operating income of $0.1 million for the first quarter of fiscal 2020 compared to an operating income of $0.9 million in the first quarter of fiscal 2019. This was an improvement versus an operating loss during our most recent past quarter. Other income for the first quarter of fiscal 2020 including interest income and foreign exchange was $0.2 million compared to other expense of $0.2 million in the first quarter of fiscal 2019. The income tax provision of $0.2 million for the quarter reflected a provision for foreign income taxes, which was lower than in the prior year’s first quarter and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. Although there is no tax benefit shown on our financial statements from U.S. net operating losses, we can use our net operating losses to offset any cash tax liability reported in our U.S. federal income tax return. The amount of federal NOLs is $14.9 million. Overall, we had a net income of $0.2 million for the first quarter of fiscal 2020 as compared to a net income of $0.4 million in the first quarter of fiscal 2019. Earnings per common share, diluted in the first quarter of fiscal 2020, were $0.01, compared to $0.03 per common share diluted in the prior year’s first quarter. We continue to closely manage our cash position. Cash and investments at the end of the first quarter of fiscal 2020 were $46.5 million, compared to $50.0 million at the end of fiscal 2019 and $54.8 million at the end of the first quarter of fiscal 2019. U.S. cash was $23.9 million at the end of the first quarter of fiscal 2020. Capital expenditures were $0.3 million in the first quarter of fiscal 2020, compared to $1.1 million in the first quarter of fiscal year 2019. Approximately $0.2 million related to our IT system and another $0.1 million was for facilities and other projects. Lastly, we paid $0.8 million in dividends in the first quarter. Now, I will turn the call over to Greg, who will discuss the results for our Power & Microwave Technologies Group.

Thank you, Bob, and good morning, everyone. In the first quarter of fiscal 2020, PMT sales were $30.6 million versus $34.8 million in Q1 of FY ‘19. Our gross margin stayed consistent in the quarter versus prior year at 31.7%. Q1 results, when compared to prior year, were once again affected by the downturns in the semi-wafer fab market. However, this market decline was partially offset by the growth in our new technology partners supporting RF and power markets, and some market share gains in various legacy tube businesses. We continue to see major booking trends in our PMG business unit. This growth is based on our demand creation model, which capitalizes on our new technology partners’ products, numerous design wins, and our unique global business model. We are taking advantage of our long-term customer relationships, and our customer count continues to grow with our expanded product range. As market conditions change, we carefully control SG&A and invest in key areas where needed. We continue to look at improving our efficiencies and increasing the frequency of our customer contact. These actions allow us to generate more opportunities in growing markets, using our existing global infrastructure and headcount. Our revenue growth in our new technologies is being supported by key partners, such as Qorvo, MACOM, Anokiwave, United Silicon, and Fuji. Our core legacy business continues to be supported by the key tube manufacturers in the industry, such as CPI, Thales, NJRC, and Photonis. Key markets and applications showing growth this fiscal year include 5G wireless infrastructure, SATCOM, and power management. Specific to the 5G infrastructure market, we are continuing to gain traction throughout the world. We have an ever increasing list of design wins in the base station, mobile test equipment, and SATCOM applications. Our global experienced group of field design engineers are even more valuable to our customers and suppliers in this wireless infrastructure rollout. This group of field engineers have hundreds of ongoing designs globally. The overall growth in these markets will help offset the cyclical sales in markets with slower growth rates. We are very excited about the booking trends in our new growth markets. With our technology partners, we can do component-level designing and support the majority of the customers’ board level needs. These customers are the key OEMs in the world as well as medium-sized customers that are supporting a portion of the larger OEM system. We have invested in software that allows us to track key customer contacts and opportunities for both our MRO business and OEM designs worldwide. Our customers welcome RELL’s local field sales engineering team to support their designs and our technology partners love our global reach and the ability of our field engineering resources to design in their product and do true demand creation. I can’t stress enough the value of Richardson Electronics’ unparalleled capability and global go-to-market strategy that is unique to the power and RF microwave industries. Our world leading position in the manufacturing and distribution of electron devices supports legacy equipment, as well as new equipment where solid state cannot replace tubes. With that, I will turn it over to Wendy in Richardson Healthcare.

Thank you, Greg, and good morning, everyone. Healthcare started off well in the new fiscal year. Sales increased 26.8% versus the first quarter of FY ‘19. Much of this growth came from our CT X-Ray tube and P3 revenue. Sales also increased as we began to sell parts for newer CT platforms at higher prices. Our gross margin improved to 33.9% versus 28.6% in the prior year and 15.3% in our most recent past quarter. This was primarily due to favorable manufacturing absorption, as well as the drop in lower margin equipment sales. There is still room for improvement as margins are held in check by older equipment and non-core CTO tubes, which were sold at low margin. We are continuing to watch our inventory purchases carefully to ensure we turn this inventory as quickly as possible. The ALTA750 is a form, fit and function replacement for the Canon/Toshiba CXB-750D, and continues to perform very well in the field. Our longest field installations are now nearing 500 days. This helps to build confidence that our tube complies with the OEM. More of our customers are starting to switch from the OEM to put the ALTA750. We have also been adding resources to our proactive outbound sales organization. As a result, we are reaching more customers and receiving inquiries from companies that haven’t yet purchased the ALTA750. This is also contributing to higher tube sales each quarter. We are in discussions with several large customers who are interested in our P3 program. These programs provide parts and/or tube coverage for a six-monthly fee under a three-year contract, and each program is tailored specifically to our customers’ requirements. To date, we have used more of our ALTA750 tubes for transactional sales versus replacements under any of our capitated risk programs. During the quarter, we finally received regulatory approval to use the CE Mark in Europe. This is a significant milestone for the company as we were not able to sell the ALTA750 without the Mark in Europe. We will see the impact of this in future quarters, although the European market is challenging given the stronghold of the OEM. Initial response at the recent International Association of Medical Equipment Remarketers and Servicers convention in Europe was very positive and our code activity is already increasing. We are also pursuing product registrations for Canada, Russia, China, and several other countries. This process will take time but will ultimately expand our sales opportunities. Our engineering team is making good progress on our next tube. We are on track to begin beta testing next summer with the release scheduled prior to the end of calendar year 2020. We are challenging the development team to work concurrently on several other programs. We remain convinced that we are the only company investing in the development of CT replacement tubes. We will share more details of these programs in the coming quarters. To accommodate our product range expansion, we are investing in engineers, as well as increasing our manufacturing space within the LaFox facility. I will now turn the call over to Jens Ruppert to discuss first quarter results for Canvys.

Thanks, Wendy, and good morning, everyone. Canvys, which includes the engineering, manufacture, and sale of custom displays to original equipment manufacturers in industrial and medical markets, delivered strong performance with sales of $7.3 million during the first quarter of fiscal 2020, an increase of 1.5% over the same period last year. The revenue increase for the quarter was related to an increased customer demand, mainly through North America. Gross margin decreased slightly as a percentage of sales in the first quarter of fiscal 2020 to 31.9% from 32.2% in the same period last year. The decreased gross margin, while still very strong for the display business, was related to an unfavorable product mix and foreign currency effects. Q1 fiscal 2020 was another strong quarter for Canvys, and we were able to increase our backlog quarter-over-quarter again. Our backlog consists of purchase orders that typically shipped over one or more years. Customers issue call-off orders that vary quarter-to-quarter based on customer demand, regulatory issues, and other factors. The healthy backlog position, along with a number of projects that are currently in the engineering stage, positions us well for continued growth. During the quarter, we received seven new orders from both existing and first-time medical OEM customers, applications where our displays are used numerous. Some of these include patient monitoring, where our monitors are installed at remote locations such as the Central Nurse Stations or CNS, medical device control capturing high-resolution images and live videos from up to two surgical imaging devices, intravascular imaging systems, catheter-based systems that allow physicians such as interventional cardiologists to acquire images of diseased vessels from inside their artery, surgical lasers for use in general and plastic surgery and in dermatology, surgical robotics, where guidance is provided in conjunction with navigation data, radiotherapy, where highly customized displays are used to monitor the patients during the radiation treatment, microsurgery, where our displays are mounted at surgical microscopes, and dental treatment centers, where patients can view radiographic images or live video from an intraoral camera or other video feeds such as educational videos or promotions. We are proud to support blue-chip companies with recognizable names in the medical industry; currently, seven out of the top 10 medical device companies, as defined by pro-clinical, are our customers for displays. In the non-medical space, we received orders for various displays and all-in-one applications including passenger information systems used on trains, where special certifications are required, product dispensers used in retail stores, and even machine interfaces for high speed and high-position building machines and displays used in control rooms. We continue to look for new customers through trade shows, online marketing, referrals, and cold calling. We continue to focus on meeting the requirements of the Medical Device Regulation or MDR, which is required to sell medical devices in Europe. We recently concluded the GAAP audit to identify areas for improvement. We will be prepared when the transition period ends in May 2020 and believe this will give us a competitive advantage in the medical display market. Considering all the new programs we are working on with existing, as well as new customers, I am optimistic that we will continue to grow our business. We have proven ourselves to be a highly reliable, versatile technology company with the ability to meet diverse display requirements. I will now turn the call back over to Edward.

Thanks, Jens. Congratulations on having another excellent quarter, particularly given the economic challenges in Europe. All in all, it was a good start to the year. As you have heard from the team, we are where we are, and with ongoing economic concerns, we will continue to fight for profitable revenue growth. Healthcare is moving in the right direction, PMG continues to add topline growth, Canvys and EDG are healthy. We have plenty of room to grow within our existing infrastructure. We will continue to monitor expenses and capital expenditures and use cash wisely to support our key initiatives. At this point, we will be happy to answer a few questions.

All right. [Operator Instructions] All right. It looks like we do have a couple of callers in the verbal question queue. Caller, your line is unmuted.

Good morning, everyone. Mark Zinski here.

Hi, Mark.

I am going to start off with Greg, if I could. Greg, I wondered if you could give some more color on what you are seeing in the 5G space? Is there more activity in China versus North America for instance?

Yeah. So China continues to -- in terms of design wins and getting that product or their protocol to market, again as you read in the news ahead of the U.S. So, the 5G overall market is growing slightly, and these global trade and the tariffs will have a disruptive effect the longer it continues. But in terms of our business, it’s still very, very strong. That’s mainly because with these global tariffs and trade agreements going on, China is looking internally or domestically to buy and use as much technology as they can to support their 5G rollout. So, the products that we are focusing on, as we’ve mentioned many times on the call, are Gems technology and steer beam antenna technology, which will be the antennas used in these new infrastructure rollout. They are 10 years away from that technology. Our designs continue to grow. Our portion of that market continues to grow. That speaks mainly of the fact that we have unique technology that’s exclusive to China. So, that’s where that and you will see a lot in terms of the timing of it. The forecast coming from the OEMs in China is that the first half of calendar year 2020 will be very, very strong, and we have the designs in queue and we are receiving prototype orders. So we are looking to have a pretty strong second half of our fiscal year.

Okay. And then I am wondering on gross margin, I mean, despite the sales drop-off, you are able to keep gross margin the same. Is that -- is there anything new going on there and is that kind of sustainable should sales declines continue?

Yeah. With the drop-off in sales dollars that was driven by a number of semi-fab customers, and that’s where also the growth was. The core legacy tube business is still very strong, meaning flat to single-digit growth, which is good for the tube business. And those margins are very strong. The team has done a great job keeping those margins or expanding them to offset the loss in margin dollars on the semi-fab wafer slowdown. So, it’s the pricing and our support of customers and keeping our margins on the core legacy business very strong.

Okay. Thanks. And then, switching to Healthcare, Wendy, have you guys publicly stated what you think the sort of the gross margin potential is in Healthcare? You’re at almost 34% now, based on let’s say reasonable sales growth, have you guys given the number?

Yeah. I think we have consistently put out a number in the low to mid ‘40s.

Okay. And then just to clarify, how many tubes are in the market right now?

We don’t provide that information.

Okay. I mean, does -- model types?

Oh! So from the tubes that we are producing here, just the ALTA750D, and then we also sell CPO or certified pre-owned and harvested tubes.

Okay. And then you are expecting to launch a new tube by the end of 2020?

That’s correct.

Okay. And does that have basically kind of the same or similar sales profile as the 750?

Yes. What it will help us do is sell more of the ALTA750, because to get a lot of the hospitals to switch from the OEM to either an in-house model or a third-party service model, they have to be able to have tubes for all of their Canon systems, and this will allow us to get much closer to that level of coverage. So it will increase the sales of the ALTA750 as well as the new tube.

Okay. Great. And then finally, Jens, if I could just ask you about Canvys, did you say that the backlog sequentially went up for Canvys or was that year-over-year?

Yes.

Also…

Yeah. It’s the highest backlog since at least three quarters, yeah.

Okay. Great. Okay. That’s it from me. Thank you.

Thanks, Mark.

All right. We will go to the next caller in the question queue. I am showing that to be Denis Amato. Please go ahead.

Good morning.

Good morning.

I just wanted to first start off by congratulating you on managing what obviously was a somewhat difficult quarter from the top line, but I think you managed successfully that challenge. I have inquired in the past and I think you have answered properly regarding why you don’t use some of your excess cash to repurchase stock, and I think I understand your long-term strategy and I can accept that. The problem I am having is after reviewing your most recent proxy statement, I discovered that with the exception of Mr. Richardson, not one director, when you take out stock options, not one director owns even one share of stock; and of your four named executives, only two own stock. When I added up all the stock, it’s owned outright. I was dismayed to find that I own more stock than all nine put together. And you have got to admit that that’s not exactly a vote of confidence in the long-term strategy, especially when your stock is yielding over 4%, which I am sure nobody can get that in short-term investments. So, can you provide some type of explanation and give shareholders some kind of comfort as to why there is so little interest from directors and management in owning outright the stock.

I couldn’t really tell you that. I frankly agree with you. I think they should be buying the stock. I have a fair position. But they all have their own financial responsibilities and their own portfolios and are heavily invested probably in the companies that they were CEOs before retiring and joining our Board. At some point, I guess we should ask them and they should come in.

Well, I mean, most companies have some requirement, either a minimal requirement for directors to own some stock. I mean, they are receiving compensation, some of that should at least at this point go into buying the stock, and I mean, you can see the message it sends, you are telling shareholders to have confidence in the company and when it’s extreme that not one director has purchased outright even one share. I mean, that’s a terrible message to send to the investment community, and I would really encourage you to have directors and officers at least do some purchasing of the stock. I mean options are nice, they are given to them, and that doesn’t show any confidence in the company. So, that’s my, I guess, my question in short form is, find out why there is no more confidence in that, because you can’t expect shareholders to have confidence, if management and directors don’t.

No. I understand, Denis. And I will pass the word along to the Board for sure, but let me tell you that in the downturn, the executive staff got incentives substantially. Our key management team usually has a 50% incentive over their base salary based upon financial achievements, and because the company over the last few years was not profitable, we cut that down first to 25%. We cut it in half and then I believe this year it was back up to 37.5%. We still haven’t gone up. So what we did in place of that was we gave stock grants to compensate them for some of their financial loss. So there is more there that needs the eye as far as the executives in the company are concerned.

Okay. Well, if you would pass it on to the Board that shareholders are watching and they -- whether the current shareholders or prospective shareholders, that sends a message that I don’t think you want to say.

No. I hear you and we are happy to do that. We will pass it along.

Thank you.

Thank you.

All right. We will go to the next caller in the question queue. I believe that to be Mark Field. Please go ahead.

Good morning.

Hi. Thanks for taking my questions. I have been watching your stock for quite a bit, so I had a few questions. The first one is, how would the tariff potentially or the increasing of tariffs going to affect your business -- the relevant businesses going forward?

Well, the majority of the tariffs that impact us are already in place. It’s possible, of which I am not aware of, there may be more semiconductors now affected, but certainly the tubes, these tariffs that were placed on tubes were done initially and pretty much covered the gamut. Yet, frankly, we buy -- I don’t know, our total sales, let’s put it that way of products made in China are probably $3 million or $4 million in total, that may be high, and so the impact of the tariff is not large and we have been able to pass it along. Most of those tubes were proprietary and it doesn’t make sense. I mean they put tariffs on some tubes that have been made in the United States for 35 years and some of those tubes we moved manufacturing, which I know there is in the favor of moving. We moved manufacturing from France to China and now we are bringing some of that manufacturing back due to the tariffs and some ethical issues, I would say. But it has very little impact on it. The biggest impact it does have is the administrative cost of trying to monitor those tariffs, and making sure we are collecting them properly. Then do all the duty drawback on everything that sold outside of the United States; 60% of our sales are outside the United States. So we bring the product in and we test it and package it and so forth, then reship it to Europe and elsewhere in the world and on those we claim a duty drawback. So it’s complicated. It’s very expensive to monitor and that’s the biggest cost to us, the administrative costs to try to monitor that.

So on that note, would you look at maybe Vietnam or a cheaper alternative or they don’t have the technology or the -- with ALTA to do that?

Well, what we chose to do this year is, this operation in LaFox, Illinois, near Chicago, has always been two manufacturing facilities. And with our production down on semiconductor wafer fab products, we actually laid off some of the employees that were involved in that. But what we have decided to do because of the tariffs, we had one factory that we set up to manufacture for us and we moved production from that factory in France to that factory, two years or three years ago, and they have given us problems with not complying with the agreement, as far as selling products that other entities besides us and then with the tariff combined, we are moving some of that manufacturing back here, but not to the Philippines or Vietnam, no.

Okay.

The company might still start on products, so cost is an issue, but availability and quality is more than an issue.

So you mentioned semiconductor, so you talked about the earnings impacting based on the declines of the PMT semiconductor wafer fab equipment business. Can you give us more color on what you are seeing in the semiconductor industry as a whole and how that impacts you guys? Because the more I have been listening to conference calls, the more honest CEOs of semiconductor companies are saying, it’s not great out there, and then there are other people who are trying to be a little more optimistic when it doesn’t really look that way. So I appreciate your insight because you have kind of on the front lines?

Yeah. This is Greg. Overall, the market for semiconductors has slowed down versus prior year, even our numbers have slowed down, but we are still growing. And when you look at the overall semiconductor market, it’s huge and we are such a small niche version of that. The specific customers and products that we designed into in those markets, those are growing and we are growing our market share within those customers and markets. Now, it doesn’t look last year, but again, we are starting from a smaller number, so we continue to gain market share and continue to design wins and these are strong growth markets, I mean, 5G happening, it’s going to happen and also the power management market to support a lot of the 5G applications is also growing. So those are two markets we are addressing and we are doing very well in from an overall percent growth. So again we are starting from a small number. We have a very small percent of that market right now.

So that’s very helpful. So, basically, if I look at the whole semiconductor area, because I know there’s a lot of people that are going through inventories, you have a niche market, so I shouldn’t just group you guys if they are having issues in the whole semiconductor space?

Exactly. Yeah. And again, you are exactly right. The overall semiconductor market in some applications is showing slowdown, but the specific markets we address, they are largely specific to RF and wireless microwave, 5G and then power management. Again, I want to make sure, like you said, they’ve slowed down since last year, but we have continued to gain market share and are able to grow those markets.

That’s encouraging. I know you have all these different businesses, but gross margins where can I see these gross margins? Where would you be happy or really are -- where is it realistic to see the gross margins in 2020 and beyond? I know things are lumpy and sometimes some business higher in quarters and lower, but maybe on an average that would make things helpful to me?

Well, a lot of it depends on how fast growth is portion of the PMG business, because there’s slower margin business, it’s just distribution. There’s also the infrastructures to support it is much less cost than the other businesses, particularly in manufacturing. If you look at the manufacturing portion of our business in Canvys, certainly, probably 35% or the low 30%’s to 35% is where we should end up.

That’s fair. And so, Mr. Richardson, I see that your cash has gone from like 54.8% to 46.5% and I’d love cash-rich flow changes which you are part of that. And you also give a dividend, where would your cash have to go on that low side for you to say, let me just hold off the dividend until we start generating -- some of the cash that’s going in the other direction?

Well, we look at it all the time, every quarter, we talk about it, and I would tell you that the Board is more concerned about cash flow than anything else we are doing. These gentlemen are CEOs of their own right and run divisions of two companies, for the most part, Healthcare companies. So they really concentrate on the availability of cash and we all know how tough it is to borrow money, especially as you are marginally profitable. So that’s it. It’s an issue and we will continue to look at it. We are hopeful that if Healthcare continues the way it did in the last quarter, then in the not too distant future, we can go at least cash flow neutral if not cash flow positive. So that’s the objective. And at the same time, we have reduced the amount of capital levers spending on Healthcare. We have most of the equipment in place. We have capacity to build the 1,000 tubes a year with the equipment we have. So it will be a while before we invest a lot more capital and equipment in Healthcare. So I think you will see a tail off and hopefully with Healthcare coming along we will start to get cash flow neutral, if not positive.

So looking at your whole business and I am not going to hold you to this. Is there a part of your area, and I think, from the conference call, I kind of conceptualized. But do you see any part of your business that you could see like some hockey stick type growth that can just dominate your business or you are so diversified you don’t necessarily see that?

No. You have two segments, Healthcare for sure. I mean the total market for replacement parts and service for diagnostic imaging applications is something like $9 billion. So we are so small and have the opportunity with what we are doing, and we think we are really sort of have an exclusive position in the design and development of replacement CT tubes to compete with the OEMs. It’s a tremendous opportunity there. We guess that at one time there were 60,000 scanners worldwide with CT tubes that are $100,000 a piece in them, and that’s our target market, and those tubes are replaced about depending upon the manufacturer every three years or so. So, on the other hand, I would call it Greg’s business because he is the one that’s built it in the past and is building it again, but PMG has a tremendous opportunity for growth. When Greg -- when we sold the company, Greg was General Manager of RFPD in 2011, it was $370 million. And then Greg went to Aero for three years. And then wisely came back to it, when he left Aero, it was $500 million. So that will give you some idea of the opportunity for those products and we wish we were anywhere close to that, but we have got a long, long way to go to get to that size again. So there is one. Between the two of them, Canvys has done quite well last year, Jens grew that business 30%. So the markets are out there, it’s just right now he is doing a great job and a very poor economy in Europe of milking the business and we are getting better operating contributions out of Canvys now than ever. At the moment, we love that business.

Thank you.

Did you see any light at the end of the tunnel in Europe or it could be a 2021 type of phenomenon?

Jens, do you want to comment on that? You know much better than I.

I think we received mixed signals out of the market. The good thing is 70% of our business is really the medical-related. That means there is much better stability in the market and we believe that this is a phenomenon only right now and we will get over this. So there is still growth in the market. We have a lot of new opportunities working on that and others, where we are working on since years that will come to fruition, maybe this year or next year. So there is a lot of growth potential, absolutely. So I am staying optimistic here.

I just got two more. So a year ago, your stock was about $10.40 and I understand what moved it up and as far as earnings and moving it down was earning. So what was so compelling for someone to buy your stock at $10.40 and are those factors still in place now as your stock has been cut in half?

Well, I think we did a -- maybe we were a little bit early, but we were very optimistic on the Healthcare business and then as usual, the financial market gets impatient in a hurry. The numbers didn’t increase; they actually dropped while we had some difficulty getting traction with the sale of the ALTA tube and some of the other tubes. Hence, it was difficult, I say, gee, you told us that there is a great opportunity and 90 days later, it’s not a great opportunity and they sold the stock. So, I mean, you guys know the market better than I do.

I am aware of that. That’s a fair answer. I am the last person who made this comment, I kind of agree, it’s nice to see insiders buying, as I am potentially going to be a new investor. Again it’s nice to see that they see more than anybody sees and for them to sit on their hands to not buy something when it’s on sale makes me nervous. So no disrespect Mr. Richardson, but I have invested a lot in small caps, it’s been over 25 years now. I don’t know whether the time has gone, but your salary looks a little high for a small company and I don’t -- again, no disrespect, but do you want to comment on that?

No. I don’t get you. If you really looked at the history, you would see it’s sort of balancing out. So I don’t want to tell you, but in past years, my salary was quite low.

All right. Hopefully, we will be able to talk off-line at some point and thank you for taking my questions.

Okay. Thank you. Appreciate the investment.

All right. We did get a written question that came in on WebEx from Alex Lutwin. It says, Mr. Richardson, what do you think about searching to buying own shares from paying dividends because I am sure it is very difficult to find alternative investments with the same potential return as RELL shares now?

Okay. Well, this is again a discussion that we have with the board every quarter and what we have looked at is, yes, we have $46 million in cash at the end of the quarter, but a high percentage of that cash is still trapped with our foreign entities and we have repatriated as much of that cash as we can and we are still doing some more, but there is certainly a fixed amount that we can bring back to the United States. As was mentioned earlier in the call, we went from $50 million in May, down to $46 million to support the growth of the company in one quarter. So the Board continues to be very, very concerned that, I know they did the math for me this last Board meeting that, we have $20 million, $25 million plus in U.S. to support growth here, and that’s where all the investment is, for the most part. And on that basis, if you took the last couple of year’s history, we are going to be cash poor in two years. So they are more concerned about that than buying our own stock back. My answer to that was, what I said earlier was, if we can get some traction out on Healthcare, I think instead of using cash, that will go cash flow in neutral for sure, is not positive in that short-term and that’s our objective. But anyway, the question is the Board constantly looking at the value of buying stock versus getting cash, and so obviously, when we have a lot of cash, the bank will loan you money. When you don’t and you are relatively profitable, they give ice away in winter, so we are trying to conserve our cash.

All right. I am not showing any other questions at this time.

All right. Well, thank you very much for joining us and for your ongoing interest in Richardson Electronics. We look forward to discussing our fiscal 2020 second quarter results with you in January. Thanks, Teagan, we will open it up or we -- I guess, we have got all the questions. So just thank everybody for the questions and joining the call and give us a call later if you have further questions.

All right. That concludes our conference. Thank you for using AT&T Event Conferencing Enhanced. You may now disconnect.