Earnings Call Transcript - RELL Q4 2021

Operator, Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Richardson Electronics Earnings Call for the Fourth Quarter of Fiscal Year 2021. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I will now like to hand the conference over to your host today, Edward Richardson, Chief Executive Officer. Please go ahead.

Edward Richardson, CEO

Good morning and welcome to Richardson Electronics conference call for the fourth quarter of fiscal year 2021. 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'd also like to remind you that we'll be making forward-looking statements. They're 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. I'm pleased to announce, we finished FY '21 on a high note. In Q4, sales exceeded $50 million and operating income was $2.3 million. This was our best quarter since Q1 of FY '12. All three of our business units performed well in the fourth quarter. On a full year basis, sales were $177 million, up nearly $20 million over the prior year. Operating income was $4.5 million, excluding this one-time legal settlement. This is quite an accomplishment considering the obstacles created by COVID-19. I want to thank all Richardson Electronics' suppliers, employees, and customers, who found ways to make the business happen in spite of potential risks and closures impacting both supply and demand. We've learned a lot about our business and ourselves over the past 18 months. Our challenge now is to carry those lessons into our new fiscal year and to continue new opportunities for growth and earnings improvement. With that, I'll turn the call over to Bob Ben, Chief Financial Officer, to review our Q4 and full-year financial performance. Then Greg, Wendy, and Jens will share more details about successes, new programs, as well as their challenges in each business unit.

Robert Ben, CFO

Thank you, Ed, and good morning. I will review our financial results for our fourth quarter and fiscal year 2021, followed by a review of our cash position. In addition, please note that I will be discussing non-GAAP financial measures for fiscal 2021 full year results. I refer you to our fourth quarter fiscal year 2021 press release for a reconciliation of non-GAAP items to the comparable GAAP measures. Net sales for the fourth quarter fiscal 2021 increased to $50.5 million or 35.1% compared to net sales of $37.4 million in the prior year's fourth quarter, primarily due to higher net sales across all three business units. Richardson Healthcare sales increased by $1.3 million or 92.3%, primarily due to an increase in demand for the ALTA750 tubes, reflecting the highest quantity sold in any quarter. In addition, part sales increased, partially offset by lower sales at pre-owned CT scanners in Latin America.

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Thank you, Bob, and good morning, everyone. The Power and Microwave Technologies Group or PMT, sales in the fourth quarter of fiscal year 2021 grew 32.5% to $38.9 million versus $29.3 million in Q4 of last year. In addition to an excellent sales quarter, PMT achieved a book-to-bill of 1.29. This incredible sales growth and strong booking numbers allowed us to finish FY '21 with 15.9% growth and a 1.24 book-to-bill and put us in great position for a strong start to FY '22. Our gross margin decreased in the quarter to 32% versus 33.2% in the prior year. This is mainly due to the product mix. We continue to have excellent growth in our Power and Microwave group or PMG. Our growing line of new technology partners and new products supporting RF and wireless applications like 5G infrastructure and power management applications led to this growth. With respect to 5G wireless and power management, revenues increased by double-digits again in Q4. As the need continues to grow for people to work-from-home, the city, the country, and even the car, they must be able to send and receive large amounts of data from any of these locations quickly. In addition, we had strong sales from Engineering Solutions products supporting the semiconductor and wafer fab equipment market in the quarter. However, our legacy tube business also grew in the quarter while exceeding sales in the prior year. We saw an extremely positive booking trend in PMG. Our book-to-bill in the quarter was 1.48. This was achieved by continued growth in the power management and wireless communications market. Regarding the bookings on the power management side, we saw growth in applications for wind energy, solar, EV, and energy storage. New products such as our soon-to-be-issued patented ULTRA3000 pitch energy module, using wind turbines, continue to gain traction with another excellent booking quarter. In RF and microwave applications in 5G, microwave communications and SATCOM led the growth. The team has done an excellent job identifying niche technology partners who collaborate and support our global demand creation model. We continue to invest and focus on resources to support these growth markets. These resources include design engineers, field engineers, and manufacturing capabilities. We also have added numerous small niche suppliers to fill technology gaps. In Q4, we added Wakefield for the thermal management products and SemiQ for their silicon carbide MOSFETs. Both technology partners will be strong partners going forward as they fill technology gaps in our product offering. This strategy has been highly successful, and we will continue to use it as it adds new products, customers, revenue, and profits by capitalizing on our demand creation infrastructure.

Wendy Diddell, COO and General Manager, Richardson Healthcare

Thanks, Greg, and good morning, everyone. I am pleased to announce that the Healthcare Group had another good quarter. The number of ALTA tubes sold hit a new high. Strong demand in Europe and the China reloading program positively impacted tube sales. Total sales in the quarter were $2.8 million, a 92.3% increase over sales in the same period last year. Sales of parts and tubes increased over the prior year's fourth quarter. Equipment sales fell short versus Q4 last year due to the ongoing lack of CT scanners as hospitals hold on to equipment longer. We are starting to see this loosen up in the current quarter. FY '21 sales on a full year basis were $10.3 million, 21.7% higher than FY '20. Sales of parts and tubes increased over the prior year, while equipment sales were down slightly. We are very pleased with the team's performance given the challenges created by COVID earlier in the year. The healthcare team had the honor of working every day with people on the front lines, and we thank them for their commitment and sacrifices. Gross margin in the fourth quarter was 29.4% versus a negative 28.6% in Q4 last year. We continue to have lingering supply chain issues related to COVID, primarily slower deliveries on raw materials and key components. This limited the number of tubes we made in the quarter. We were able to meet customer demand, but we still have additional production capacity. Gross margin on a full year basis was 25.1% versus 24.4% in FY '20. We anticipate margin will improve as we move more tube types into production and leverage our production capabilities. As noted last quarter, we have added resources to support the growth, and we are in good shape for increased production requirements. New Tube development remains on schedule. The ALTA750G is now in beta. Full rollout, based on acceptable beta site results, will be late summer, early fall. We anticipate sales growth will be gradual as Canon CT scanners come off of the OEM service contracts. We will begin shipping our first repaired Siemens type Straton Z in small quantities in the fall; additional Siemens types, the MX, MXP, and MXP-46 will follow in calendar year 2022. There are no third-party replacement options for Siemens tubes, and Siemens CT market share is significantly larger than Canon. While this is a repair program, we must follow all of the same development steps to ensure the product we make available exceeds customer expectations. Having a broader range of tubes to offer our customers will increase our importance as a healthcare supplier and support our mission to help reduce healthcare costs. It will have a positive impact on sales and improve gross margin as we leverage our manufacturing operations. We also continue our efforts to expand the number of countries in which our tubes are registered. We recently completed the initial Medical Device Single Audit Program, or MDSAP audit. This is required to sell our tubes into Canada, Japan, and Australia. We hope to receive Canadian registration, our top priority, before the end of calendar year 2021. I will now turn the call over to Jens Ruppert to discuss the results for Canvys.

Jens Ruppert, General Manager, Canvys

Thanks, Wendy, and good morning, everyone. Canvys, which includes the engineering, manufacturing sale of custom displays to original equipment manufacturers in industrial and medical markets, delivered an outstanding performance with sales of $8.8 million during the fourth quarter of fiscal 2021, an increase of 24.7% over our most recent third quarter and an increase of 33.9% over the same period last year. We set a new sales record this quarter based on increased customer demand as our customers sought to compensate for supply chain uncertainties, especially in the electronic component market. On a year-to-date basis, global sales grew by 1.4% to $29.3 million in fiscal year 2021 due to the addition of new customers. This was a remarkable accomplishment considering the COVID-19 pandemic and the serious business impact. Gross margin as a percentage of net sales was 35.3% during the fourth quarter of fiscal 2021, up from 31.0% during the fourth quarter of fiscal 2020. The increased gross margin was related to a favorable product mix and currency effects. On a year-to-date basis, our fiscal year 2021 gross margin as a percentage of sales increased to 35.0% from 32.2% versus fiscal year 2020. Our healthy backlog along with the number of projects that are currently in the engineering stage, positions us well for continued growth, assuming no longer-term impact from the current supply chain obstacles. We continue dealing with extended lead times for selected components from our Asian suppliers. We are making progress with our online awareness initiative. We are adding new application stories to our website and publishing press releases and social media footage promoting our new product platforms, such as a 10.1-inch high-definition monitor and a 15.6-inch full high-definition monitor with USB-C interface. We are confident that our online strategy will result in new leads and business growth. During the quarter, we received several new orders from both existing and first-time medical OEM customers. Some of these applications include cryolipolysis systems that break down fat cells by cooling body fat, cataract and refractive surgical systems, laser systems for therapeutic and refractive applications of cutting-edge corneal surgery; robotic-assisted surgical platforms to improve precision and accuracy in new surgeries, medical device control, capturing high-resolution images and live video from up to two surgical imaging devices; laser systems for the treatment of peripheral and coronary arterial disease with photoablation; dental treatment centers where patients can review radiographic images or live video from an intraoral camera or other video feed such as educational videos or promotions, patient monitoring systems, and surgical navigation systems. In the non-medical space, we received orders for various display products. Our products are used in commercial CT scanners for scanning luggage in airports. CT scanners in such applications improve threat detection and facilitate much faster passenger throughput. We also received orders for all-in-one monitors with an integrated PC to control high-speed, high-precision milling machines and for product expansions used in retail stores, as well as displays for teleprompter and talent systems for well-known news stations. From the variety of customers and applications, as well as the value of orders from existing and new customers, it is clear our customers value our outstanding products and service. While our sales organization stays focused on new opportunities, I will continue to review and adjust our business strategy to improve the operating performance of the division. Maximizing cash flow is an ongoing priority. We will continue to work with our partners to help us reduce inventory while being able to meet the demand of our customers, particularly during the pandemic and the challenges it brings to our supply chain. I will now turn the call back over to Ed.

Edward Richardson, CEO

Thanks, Jens. Another great year for Canvys. I know you had many challenges with hospital closures in the financial condition of the healthcare industry. With your flexible display solutions, you were able to create new opportunities and support demand for patient monitors and other critical equipment. As we start at the bottom of the mountain again in FY '22, I'm very excited about the future of Richardson Electronics. Our power grid tube business is as healthy as ever, with continued strong operating contribution. We've always said that you can't make a business with a single tube, and healthcare will be launching several new tubes in the next year. The semiconductor wafer fab market continues to grow as demand for integrated circuits invades every corner of our lives. Our newest green initiative, ultracapacitor modules used to replace batteries in wind turbines and other critical applications, offers considerable upside for the Company in FY '22 and is a good complement to our growing PMG business. Our patent-pending designs are unique in the industry, and our engineering and manufacturing teams are working around the clock to ramp up production to meet demand. We're taking additional steps to control our supply chain and to increase production levels. The only thing holding us back is component supply. In FY '21, we did not use much cash. Our goal is to protect our cash position and to continue operating frugally to ensure we have free cash flow to invest in new opportunities. We will accomplish this by controlling expenses and focusing on the margin to improve the bottom line. It's an exciting time in the Company. At this point, we'll be happy to answer a few questions.

Operator, Operator

Thank you. And our first question comes from Howard Brous with Wellington Shield. Your line is open.

Howard Brous, Analyst

Thank you. First of all, allow me to congratulate Ed, you and Wendy, and the whole team on just a great quarter. Every way you want to look at it. So congratulations.

Edward Richardson, CEO

Thanks so much, Howard.

Howard Brous, Analyst

You're very, very welcome. And secondly, I was not able to be on the conference call last quarter. So, allow me to congratulate Wendy on joining the Board of Directors.

Wendy Diddell, COO and General Manager, Richardson Healthcare

Thanks, Howard.

Howard Brous, Analyst

You're very, very welcome. So, Wall Street always is pleased about the past, but let me talk with you about going forward. And you did mention one in the press release and two just now, ULTRA3000. And you talked about increased bookings for ULTRA3000. Is this something a number that you plan on releasing quarter by quarter, year by year or not at all?

Edward Richardson, CEO

I'll let Greg address that.

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes. Hi, Howard. We had another strong quarter and bookings on the ULTRA3000 for the GE turbines in the fourth quarter. I can tell you we have a backlog of over $10 million, north of $10 million that is scheduled to ship this fiscal year. As I mentioned, we're dealing with component delivery issues, but we'll serve that market very, very well.

Howard Brous, Analyst

Well, just to specifically address the market, based on my research there are about 350,000 wind turbines worldwide, 60,000 roughly in the United States, growing at multiples of thousands a year. Can I get a sense of what you're looking at in terms of; one, your belief of your market annually, if you will? And totally, what's the TAM annually, what is it overall? And then last but not least, concomitant with that. And I know on a temporary basis, we have shortages of certain parts. That shortage will go away probably between now and the end of the year. So can you give me some sense and some information, please?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Sure. You are correct about the global total addressable market. It represents a significant opportunity, not just for the ULTRA3000 but also for other products we are developing to support wind turbines. Currently, we are taking a targeted approach, focusing on GE turbines, which number around 50,000 worldwide. In North America alone, we're looking at approximately 30,000 turbines. We have been successful with various production orders, alpha orders, and beta site orders, covering about 40% of the installed base in North America. In terms of serviceable available market, it stands at around $85 million for us, based on our product's technology and pricing advantages. We have successfully engaged with four major companies that account for about 40% of that SAM, securing active design-ins and production orders. Our product quality is outstanding, with zero failures in the field, and we expect our patent to be confirmed next week. Overall, we are effectively addressing a strong market.

Howard Brous, Analyst

In the last conference call, I had read that you talked about gross margins I think either you or Wendy talked about gross margins could have been hedged, so I apologize, in excess of 35% and the SG&A absorbed by the DMG group. You're still comfortable with that number? And then two, if you're talking about a SAM of $85 million, do you have the capacity to build it, forgetting about the shortage of parts because that goes away certainly in the next few months?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes. On the capacity side, we have great suppliers that are also increasing their capabilities. As Ed mentioned, we are also doing things ourselves in terms of design engineers and capital expenditures here to subsidize any uptick in the business.

Wendy Diddell, COO and General Manager, Richardson Healthcare

Yes. Through our LaFox manufacturing group power, we are definitely adding the capacity. It will be through multiple shifts, but to keep up with the demand that Greg and his group are generating, we feel confident with that.

Howard Brous, Analyst

So you're looking to increase capacity by doing multiple shifts.

Greg Peloquin, General Manager, Power and Microwave Technologies Group

It's about $0.5 million worth of pick-and-place equipment that's being installed. We've been outsourcing most of the Board level pick-and-place work. We're going to protect ourselves, and we will take a large portion of that in-house, and that will also speed things up for us.

Howard Brous, Analyst

Compare this to batteries in terms of price structure and in terms of replacement. So prices for battery are X, yours is Y, that last how long? How long will yours last?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Currently, the lead-acid batteries used in these turbines have a lifespan of approximately 18 months, while the ultracapacitor modules can last around 15 years. The main issue is the cost of installation, which is quite high due to the need for an organization to work at a height of 300 feet to replace the battery. Many of these turbines are located in remote areas. Additionally, any downtime for a turbine means it's not generating energy, and consequently, it's not producing any income. An ROI analysis has shown that our pricing allows for a return on investment when switching from lead-acid batteries to ultracapacitors in these turbines. Furthermore, there is an environmental benefit to eliminating lead-acid batteries, as they receive government subsidies for doing so. Thus, the critical factor is not just the price of the battery compared to the module cell, but the overall ROI considering installation downtime.

Howard Brous, Analyst

When you talked about the SAM, that's domestic, is that correct?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes.

Howard Brous, Analyst

How do you foresee going international? And I know you have offices throughout the whole world.

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes. So right now, one of our customers in North America is a company called Enel. They're based in Italy. In the second quarter, we are going to have an alpha site design going on. They'll run that for about six months. We are also going to roll it out at the wind show in Europe, like we did here in North America, 14 months ago. And whatever resources we need over there, we do have some people that are from that industry within our organization. So we're going to roll that out, meaning specifically the key customers that would use this product, starting with one that we already have a relationship with in North America called Enel.

Howard Brous, Analyst

All right. Last but not least, BSE, you're talking about having a product for Q2 this year. What type of numbers can we look at one in terms of the revenue per unit and the TAM or SAM as you want to wish to use?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes. The product cost is very similar to the cost of the ULTRA3000. This product uses five ultracapacitors versus in the ULTRA3000. We have alpha products going out in August. We'll do beta site testing. We already have a letter of intent from a large service provider to test the product, and they've requested a letter of intent quote for 900 sites in Atlanta. So it's going to go through the same process as the ULTRA3000. We'll get alpha sites out in August. Beta site testing, same amount of time, usually four to six months, but they're very excited about it. We've met with AT&T, Verizon, and T-Mobile. And the same situation, Howard, in that a lot of these base stations are remote; it's very costly to replace the lead-acid batteries in these generators. And then the downtime, not only the fact that it's not able to charge the customer, but if they lose any customer because the person can't get a signal, the cost of churn, which is either getting a new customer or getting back an old customer, is financially a disaster for them. So they're going to do whatever they need to do to make sure that site is always running and always supporting their customers, and this product helps them do that.

Howard Brous, Analyst

Let me go back to wind turbines. Texas wind turbines all froze as a result of the weather going back a bunch of months ago. Ultracapacitors are not heat or cold sensitive. Is that a correct statement?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes, they had to replace all the batteries, similar to a car that won't start in cold weather. If the ultracapacitor modules had been installed in those turbines at that time, you would have been able to start the turbines or operate the pitch system immediately. After that situation, we received a few phone calls and requests for expedites.

Howard Brous, Analyst

Greg, thank you again, Ed, Wendy, and for the whole team. Great quarter; looking forward to the next one. Thank you.

Edward Richardson, CEO

Howard, we might add that our intention is that as this ultracapacitor business builds up, we will make it into a separate strategic business unit. We're not sure yet whether that's one year out or two years out, but we think it's a tremendous market. We're only addressing GE turbines at the moment, and Siemens has a much larger market share in the rest of the world, and our ultracapacitors work in Siemens equipment as well. So there's a tremendous opportunity here.

Greg Peloquin, General Manager, Power and Microwave Technologies Group

And also, I'm going to add to that, Howard, it's not going to be a one-hit wonder. We're in the process of designing and developing other products that go into the wind turbine to function in terms of power management. So, we will have within the next 12 months, a really strong portfolio of products, which will be led by the ULTRA3000, which is giving us the relationships with these owner operators in North America, but we're going to continue to invest, design, and develop new products and have our portfolio going forward.

Howard Brous, Analyst

Thank you. I just want to let you know that as a large shareholder, it is not my intention to climb up one of those wind turbines and service them. It's not going to happen. Thanks, Ed, thanks Wendy, and Greg and the rest of the team. That's all I have.

Operator, Operator

Our next question comes from Eric Landry with BML Capital. Your line is open.

Eric Landry, Analyst

Okay. So I just want to piggyback the prior call here real quick. For this Battery Street Energy product that you are in trials with, I guess, all three of the major wireless providers. Are you in competition with anyone here? Or are they just looking solely at your product?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

I don't know if they're looking at others. There are other companies that have this capability, but right now, they're looking to test ours. I know the one that I talked to specifically was not testing anybody else's at this time. But yes, there's going to be competition on this.

Eric Landry, Analyst

Okay. Are you having to go through the generator set manufacturers and then to the wireless providers, or are the wireless providers coming directly to you to remove the batteries from the generator sets and install the ultracapacitor?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes. So it will be a combination of both. Like the ULTRA3000, we're working directly with the service providers who, like the ULTRA3000, have integrators that go and do this upgrade, if you will, to their generators throughout North America. But we're also talking to the OEMs, such as Kohler, Generac, Cummings, that are the key three providers of generators to those specific service providers in terms of making it standard equipment or designing it into their standard equipment going forward. So, it's kind of a combination area.

Eric Landry, Analyst

Got it. Okay. It sounds exciting. Greg, will you talk about power management? Is that essentially ULTRA3000?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

No. The power management strategy is what developed and found and got us into and recognized the ULTRA3000 opportunity. We have a very strong organization, line card, historical customers that deal in all kinds of what I'm calling power management, but you guess you could call it renewable energy wind applications, solar, battery charging, electric vehicles, energy storage, all those things use ultracapacitors, but they also use a lot of other products that we have. And as we go forward, I think we're going to find more and more customers like the key customers we're dealing with now in the ULTRA3000; they don't want to buy the ultracapacitor. They want to buy that ultracapacitor in a module that does a certain function. And then they want some company to be able to have the ability on a global basis to send that product to their 25 wind farms in North America and also to have inventory throughout the world, which we have through our distribution organization, which was started obviously by the tube business. So the overall strategy is to support this power management, which is growing very, very fast, green energy, of course, and it's products like this, the ULTRA3000, but we're also designing from a component point of view, and a lot of applications supporting the same type of products.

Eric Landry, Analyst

Okay. I just asked because you said at 1.48 B2B that does not reference the ULTRA3000?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

As I mentioned before, we did have a strong booking quarter, but that's not all of it.

Eric Landry, Analyst

Was there any ULTRA3000 sales in the quarter?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes, we began shipping in May, although the quantities were minimal. We are currently in production this quarter and are scheduled to ship. We are still facing component issues this year, which we expect to continue for another 9 to 12 months, but production is underway. We have shipped several beta site products as well.

Eric Landry, Analyst

Okay. Does the inventory number have something to do with these ultracapacitors?

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes, the increase, as I mentioned before, we're very aggressive. And I'm not kidding when I say if that product is available on a Tuesday, you grab it and get it in stock, and you put it in inventory to support deliveries in two or three months because they will go to the next day. So this company has always been very aggressive, but it's mainly aggressive in terms of supporting the customers' needs. And so yes, we did increase our inventory. Quite a few ultracapacitors in stock right now, needless to say. So I don't know you get...

Edward Richardson, CEO

The entire order.

Greg Peloquin, General Manager, Power and Microwave Technologies Group

So, you might get them for Christmas, just telling you.

Eric Landry, Analyst

Would be great. With the semiconductor wafer fab product, not as prominent as perhaps you were expecting. I'm just mentioned the gross margin was about, I don't know, 300 basis points lower than the prior quarter, and I am assuming that's a decent margin product for that.

Edward Richardson, CEO

Yes, it was up substantially. Our semiconductor wafer fab business is in excess of $22 million for the year. The good news about that is the market is telling us that their business is going to increase 50% in the year to come. We already have a very substantial backlog. So we're counting on that business. And as you know, it's quite profitable. But what takes the margin down, and I'll let Greg tell you, but it has to do with the conductor business, which is a 20% margin.

Greg Peloquin, General Manager, Power and Microwave Technologies Group

Yes. It's just a product mix, Eric. The 5G business is lower margin than the wafer fab business, and it just grew so much in the quarter that it's just product mix lowered the margin a little bit, but obviously increased the profit dollars because of the huge sales.

Eric Landry, Analyst

And so for fiscal 2022, somewhere around $35 million for semiconductor wafer fab is not out of the question?

Edward Richardson, CEO

What's the number?

Eric Landry, Analyst

$35 million; that's basically 50% above '22m, isn't it?

Edward Richardson, CEO

We’re not forecasted to reach that number, but that's the indication we're receiving from the markets and MKS. The actual amount we achieve is still uncertain. We are taking a conservative approach in how we plan for next year’s growth. However, based on calculations, a 10% to 20% increase in the semiconductor fabrication business next year seems plausible.

Eric Landry, Analyst

Okay. Wendy, could you elaborate a bit more on the Siemens opportunity? I understand this involves a different process compared to Canon, where you're opening the insert and replacing the anode and cathode. The volume potential seems much larger for Siemens, but is this considered a lower-tech repair for Siemens than for Canon, potentially leading to lower margins? How does that work?

Wendy Diddell, COO and General Manager, Richardson Healthcare

It's a good question. The answer is that repairing the Siemens product is still a very sophisticated process. We are working on several different types, which adds complexity. However, we are moving forward with the insert process. Although it's not a new tube, it involves a repair method. We're continuing to validate the repairs to ensure they are repeatable and that we can utilize existing parts while being very careful to avoid any patent issues. Consequently, this process will take us at least until mid-calendar year 2022 before we feel confident in a repair process that will meet customer expectations. Regarding margins, we feel optimistic about that. There is no third-party replacement for the Siemens tube, and the models we're focusing on, such as the MX, MXP, MXP-46, and Straton Z, will provide the only alternative solutions to the OEM. The OEM is quite expensive and protective of their market. We believe we can price our solutions in the range of $80,000 to $90,000 with a reasonable warranty. This is what we are targeting. The margin primarily involves labor in the repair process, and I think it will result in a strong margin.

Eric Landry, Analyst

Okay. So then I guess the next question is, why do you think it is that no one has done this if it's such a large market with decent margins? I would think that somebody would have tried this prior to you guys.

Wendy Diddell, COO and General Manager, Richardson Healthcare

It's interesting to note that our competitors in the third-party market primarily focus on new tube development and do not engage in repairs. Due to existing patents, we are also not involved in developing new tubes. This situation has significantly limited the market for third-party replacements.

Edward Richardson, CEO

The answer is that we have invested $30 million in new equipment and now operate one of the most advanced CT factories globally. This significant investment, along with the engineers we have, is necessary to develop a reliable repair process. We have also incorporated Siemens engineers, which has been very beneficial. Ultimately, the investment required to enter this business and the advanced technology needed for tube repairs act as barriers to entry for others.

Eric Landry, Analyst

Okay. Before I pass it on to someone else, is $14 million a reasonable expectation for this year regarding your G&A?

Wendy Diddell, COO and General Manager, Richardson Healthcare

I'm sorry, $14 million for G&A?

Eric Landry, Analyst

For the corporate outcome for quarter.

Wendy Diddell, COO and General Manager, Richardson Healthcare

Yes. Yes. Look that sounds about right.

Operator, Operator

Thank you. Our next question comes from Anthony Chiarenza with Key Equity Investors. Your line is open.

Anthony Chiarenza, Analyst

Good morning, everyone and congratulations on an outstanding quarter. A couple of questions. First one, you talked about book-to-bill ratios in different sectors of the business. Do you have an overall book-to-bill ratio for the Company, just to give a sense of how quickly the whole company is growing?

Edward Richardson, CEO

Yes, we can do that. Bob, do you want to open?

Robert Ben, CFO

Yes, Anthony, this is Bob Ben. Yes, for the whole company going out of the fiscal year, our book-to-bill was 1.25.

Anthony Chiarenza, Analyst

Okay. That sounds good. Second question, regarding health care, as you look from the third quarter to the fourth quarter, there's a slight drop in revenue. Is that significant, or is that just a normal fluctuation?

Wendy Diddell, COO and General Manager, Richardson Healthcare

That's normal fluctuations from quarter to quarter.

Anthony Chiarenza, Analyst

Yes. So you expect that to grow as you go into the year, maybe running more like over $3 million perhaps?

Wendy Diddell, COO and General Manager, Richardson Healthcare

That is our goal, yes. And as we introduce the new tube that will help us get there.

Anthony Chiarenza, Analyst

Okay. That sounds good. And the final question is on cash management. As we look at the share price, obviously, it's moved up some. But I think you would agree that the share price is undervalued at this point. Have you given some thought? And has the Board given some thought to a share buyback program?

Edward Richardson, CEO

Well, we talk about it all the time, but the answer is. If you look at our Board members, they're all CEOs of their own companies, many of them out of the tube business, and they're very concerned that we have adequate cash to fund growth in the future. Our goal right now is to get to the point where we're cash flow positive rather than burning cash. But in the meantime, we're going to sort of keep our powder dry and maintain the cash we have for running the business.

Anthony Chiarenza, Analyst

At this point, you would expect to be cash flow positive, considering how the business is performing after the fourth quarter, and it appears that you will be cash flow positive as you move into fiscal 2022.

Edward Richardson, CEO

Well, I think right now, we're showing a small use of cash in our projections. But if the numbers come in the way I think, I think we'll be cash flow positive within 12 months or so.

Anthony Chiarenza, Analyst

That sounds good. You still have a strong cash position at this point, which provides a lot of flexibility for the business. Even using a small portion for share buybacks can demonstrate to the market that you are optimistic about the Company's outlook. This sends a message that you believe the Company will continue to perform well.

Edward Richardson, CEO

Well, we look at it every quarter, but the answer normally from the Board is no, keep the cash for investing in the business. But it's something that it's a topic of discussion every quarter. So we talk about it.

Anthony Chiarenza, Analyst

And on the related front, is there any thought to actually raising the dividend? That's another way to send a message to sort of the market that you're believing that your earnings are good and you’d be tire consistent. It's kind of a strong way to make the statement to the market.

Edward Richardson, CEO

No, I understand. I don't think it is for the foreseeable future that we'll be raising the dividend either.

Anthony Chiarenza, Analyst

Okay. I appreciate that. I understand. And again, good luck, and congratulations again on a fantastic quarter.

Edward Richardson, CEO

Thank you very much. We really appreciate it.

Operator, Operator

Thank you. Our next question comes from Mike Hughes with SGF Capital. Your line is open.

Mike Hughes, Analyst

Good morning. Thanks for taking my question. On the tube business, I think the medical equipment manufacturers in the past have said to the customers, if you don't use our tubes, you risk the warranty. And President Biden a few weeks ago, signed an executive order, I think it's called the right-to-repair order. I think it was mainly consumer-oriented, but has your general counsel looked at that? Does that potentially help your case and prevent the Siemens of the world from doing that and invoking that threat?

Wendy Diddell, COO and General Manager, Richardson Healthcare

Mike, that's a good suggestion. We certainly followed along with it. We're waiting to see what happens. We've read a lot about it ourselves; it doesn't have much substance at this point. It's more of a concept, but we believe the concept works in our favor. We're eager to see how the government proceeds with this. Yes, it will be beneficial to us.

Mike Hughes, Analyst

Okay. Great. And then on the ultracapacitor ramp, I think you said $10 million in revenue for this fiscal year. I know it's tough to know given the supply chain issues, but how does that kind of ramp throughout the year? Meaning, do we start with a couple of million dollars? Or is the number more nominal early in the year and then really hockey sticks later in the year? How do you envision that unfolding?

Edward Richardson, CEO

Yes, the component issue is lead times and allocation is so fluid, it is very hard, as you mentioned. However, on paper, it is scheduled. On paper, a large percent of it, 75% of it, is scheduled to ship this calendar year and the balance in the fiscal year.

Eric Landry, Analyst

Okay. And kind of evenly by quarter, is that how to think about it?

Edward Richardson, CEO

Yes. Interestingly, they have taken steps to ship to 12 or 13 different sites for installation, which requires significant scheduling on their part to ensure proper integration. However, it is planned out to be mostly equal each month.

Mike Hughes, Analyst

Okay. In that business, the ultracapacitor business has gross margins kind of consistent with the PMT business, is that right?

Edward Richardson, CEO

Yes. We actually think it's accretive to the Company's business overall margin. So it will be accretive.

Mike Hughes, Analyst

Okay. Okay. So just kind of stepping back, you just put up in revenue. And it sounds like kind of on a go-forward basis, the ultracapacitor business is going to contribute maybe $1 million to $2 million a quarter in revenue. It sounds like the semi-cap equipment business is going to step up a little bit. The PMG business, I assume that, that is going to continue to perform at the level that you just reported. The health care business is getting a little bit better. So just on a go-forward basis, is it safe to think that the $50 million for the next few quarters at least is kind of a floor and maybe you put up a number in the mid-50s over the next few quarters?

Robert Ben, CFO

Well, I think if you look at the total year, that will come close to making the $50 million average for each quarter. We're looking for an increase in the coming year to be something like what we did in the past year. And so that would almost get you there.

Mike Hughes, Analyst

The percentage increase similar to the year you just finished. Is that what you're saying?

Robert Ben, CFO

That's correct. Yes.

Operator, Operator

Thank you. And our next question comes from an unidentified analyst. Your line is open.

Unidentified Analyst, Analyst

Good morning. Just a quick question or speculation of a question, I'm not sure what, but I'm trying to rationalize the price drop as I look at the screening today. And I'm just wondering...

Edward Richardson, CEO

We certainly don't understand.

Unidentified Analyst, Analyst

I'm ecstatic at the direction of the Company. And I'm kind of thinking that maybe the Company is in limbo between a value proposition or value managers and growth. And so my question is whether considering the number of green funds in the market and the excitability for that, what society needs you would probably command maybe 5 times what the price of the stock is today fully recognized and if that's where you're going. So I'm just wondering if there will be any outreach to some of those new funds or managers. I know with the COVID it's kind of difficult. But at the same time, it seems there's such I know that the managers have been picking up shares, but I'm wondering if they've got it completely on a computer program to squeeze out individuals like myself to capture those shares. And it's quite disconcerting to see that disconnect. I think you're heading in the growth, the clear growth, but one that should be greatly rewarded for what you're doing. And so I'm just hoping that there will be more outreach.

Edward Richardson, CEO

We certainly agree. We're going to do a small financial conference, it's virtual, but in August and see if we can get the story out there a little more to some new investors. At the same time, as I mentioned earlier, in the coming years, we'll break out the ultracapacitor business as a separate strategic business unit because I think that will get the attention of the investors that are looking for green investments, and it certainly fits that category. We think that will probably help as well.

Unidentified Analyst, Analyst

Do you think that could be a spin-off or something like that?

Edward Richardson, CEO

No, not today. We'd like to get the whole company to be very successful before we spend anything off.

Unidentified Analyst, Analyst

Okay. Great. I appreciate it.

Edward Richardson, CEO

All right, thank you for your investment and for your questions.

Operator, Operator

I'm not showing any further questions at this time. I would now like to turn the call back over to Edward Richardson for closing remarks.

Edward Richardson, CEO

Okay. Well, thank you for your ongoing interest in Richardson Electronics. We're certainly optimistic about the future and hope you are as well. If you have any other questions, please give us a call. We're here and happy to answer those questions. We look forward to hosting our annual shareholder meeting and discussing our first quarter performance with you in October. Thank you very much.

Operator, Operator

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