Good day ladies and gentlemen, and welcome to the FY’16 First Quarter Earnings Call for Richardson Electronics. My name is Tracey and I will be your operator for today. At this time, all participants are in listen-only mode and later we will conduct a Q&A session. [Operator Instructions] I would now like to turn the conference over to your host for today Edward Richardson, CEO.

Good morning and welcome to our first quarter 2016 conference call. Joining me today are, Robert Ben, our new Chief Financial Officer who started with the company on August 17. Wendy Diddell, Executive Vice President of Corporate Development; Greg Peloquin, Executive Vice President and General Manager of our Power & Microwave Technologies Group; Pat Fitzgerald, Executive Vice President and General Manager of Richardson Healthcare; and Jens Ruppert, Executive Vice President and General Manager of Canvys, who started with us on August 1. As a reminder, this call is being recorded and will be available for audio playback on our website. I would 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 differ materially. Please refer to our press release and SEC filings for an explanation of our risk factors. Sales in the first quarter of fiscal year 2016 started off strong at $37.1 million, up 6.8%, over the prior year. Revenue growth came partially from our Richardson Healthcare Group and the acquisition of IMES in June of this year. Our PACS displays, which are part of Richardson Healthcare and Canvys also performed well in the first quarter. We officially launched the Power & Microwave Technologies Group during the quarter, which encompasses our core EDG business. We anticipate this group will contribute to our overall growth later in the fiscal year. Greg, Pat and Jens will share more details about our strategic business units’ operating performance later on in the call. During the quarter, we also continued to make a significant investment in our new IT system. The good news is everyone is becoming more comfortable with this system, we had minimal down time and we are now focusing on enhancements that will improve productivity. Considering the sophistication of our global infrastructure, and the need to maintain worldwide visibility into every customer, every order, and every inventory item, we will continue to invest in improvements until we are comfortable to the system meets our requirements. I would now like to introduce you to Robert Ben, our new Chief Financial Officer, who will share the financial details of the first quarter. Bob replaced Kathy Dvorak, who retired in August. Bob was most recently CFO for Cobra Electronics, a publicly traded electronic manufacturing company. Cobra was recently purchased by Monomoy Capital Partners. Prior to joining Cobra, Bob worked for KPMG and Ernst & Young in mergers and acquisitions and auditing roles. So he brings a great deal of experience which we need to help us achieve our profitable growth. We are very pleased to have Bob on the team. Bob will now present the financial details.

Thank you, Ed, and good morning everyone. I would like to start off by saying how excited I am to have joined Richardson Electronics and look forward to contributing to the success of our growth initiatives and returning value to our shareholders. I am quickly getting up to speed and where the challenges lie and definitely see a lot of potential for profitable sales growth. We are pleased that we closed on the IMES transaction during the first quarter of fiscal 2016. We believe that this will provide us a springboard for significant growth within our Richardson Healthcare segment for the foreseeable future. We also continue to invest in building the Power & Microwave Technologies Group. Sales for the first quarter of fiscal year 2016 were $37.1 million, up 6.8% from the prior year’s first quarter of $34.7 million in revenues. This increase includes the sales of our new higher margin IMES products. Gross margin was down slightly to 30.4% from 30.7% last year. Operating expenses were $12.3 million for the quarter which represents an increase of $1.1 million from last year. This increase was due to including the expenses of IMES, as well as continued investments in our Healthcare and Power Conversion growth initiatives. With these additional expenses, our operating loss for the first quarter of fiscal 2016 was $1.0 million. Interest income for the quarter was about $0.2 million. During the first quarter, there was a foreign currency loss of $0.2 million. Loss from continuing operations before tax was $1.0 million and bottom-line we had a net loss of $1.4 million. We had a tax provision of $0.4 million, which includes estimated foreign income tax expense of $0.2 million as well as an increase in our FIN 48 reserve of $0.2 million which relates to an ongoing income tax audit with our German entity. Cash and investments at quarter end were $85.3 million. Cash used by operating activities, net of our IMES acquisition was $6.5 million for the first quarter. The $6.5 million use of cash includes the $1.4 million net loss and working capital investments of $4.6 million, which is net of foreign exchange in acquired businesses to support future growth initiatives and increase sales. Depreciation and amortization were $0.5 million for the quarter. Our total purchase price paid for the IMES transaction was $12.2 million. We also had capital spending of $1.0 million. Approximately, $0.8 million relates to our investments in our Healthcare and Power conversion growth strategies and approximately $0.2 million relates to our new IT platform. Also we spent $3.3 million in repurchasing our shares during the first quarter and another $0.8 million was paid out in dividends. Now, I will turn the call over to Greg who will discuss the plans for our recently formed Power & Microwave Technologies Group.

Thanks, Bob and good morning everyone. At the beginning of Q1, we launched our new SPEU, the Power & Microwave Technologies Group or PMT. PMT includes our historical EDG business, plus new solutions for the RF, microwave in power and energy markets. We are specifically focusing on suppliers that offer disruptive technologies in these high growth markets while taking advantage of our global infrastructure and customer base. This strategy will efficiently maximize our associated selling opportunities and increase our market share of our customers. During the quarter, we announced agreements with eight new key suppliers that would drive future growth in revenues and profits. Hopefully, you have seen a number of our press releases in the past few weeks announcing agreements with suppliers for technologies such as ultracapacitors, gallium nitrates and silicon carbide among others. You can find the details on our website, www.rellpower.com. These suppliers recognize that Richardson Electronics Limited offers a best structure to launch new technologies, increase demand on a global basis. We have a proven track record of doing this and we are fine tuning our organization to do this even better than ever. The design cycles in these markets are six to 18 months. So it takes some time to get these designs to resonate. However, we are in unique position to support these technologies and these suppliers with the highest design capabilities and standards of Richardson Electronics is already been known for. In the first quarter of FY 16, revenue for PMT was flat with prior year. Sales were $27.2 million versus $27.4 million in Q1 of FY 15. Gross margin decreased from 31.7% to 29.9% mainly due to product mix and the impact of exchange rates. We had a number of regions that showed positive growth in the quarter including North America, and…

Thank you Greg and good morning to everyone. Healthcare sales in the first quarter of fiscal 20916 were $3.2 million, up 147.1% over prior year sales of $1.3 million. Sales increased primarily from the acquisition of International Medical Equipment and Service or IMES on June 15. Sales were also up year-over-year in our PACS display business. Gross margin as a percent of net sales increased to 44.3% during the first quarter of fiscal 2016, as compared to 24.4% in the same period last year due to product mix. IMES products, which consists primarily of high value CT, and MRI replacement parts, typically bring higher margins and PACS displays. Although capital budgets continue to be very tightly managed, we saw another quarter where healthcare providers had moved forward on long delayed projects require to maintain compliance or on projects which will increase their operating efficiency. Sales of our Image Systems brand displays for Picture Archiving & Communication Systems or PACS and related accessories and equipment for operating rooms were up over prior year results for the third consecutive quarter. In our Wireless Flat Panel Detector business, a key focus in the quarter was identifying essential service provider partners with engineers embedded in their customer sites giving them unique insight into which hospitals they have both the need and the budget for digital radiography or DR upgrades. We believe this approach will drive revenue in this category in future quarters. The company continued to make significant investments in its CT and X-ray tube development and manufacturing capabilities including capital equipment and experienced engineering resources. We realized the major milestone in the first quarter with the first sales of Richardson certified pre-owned CT tubes. The integration of IMES was a major focus this quarter, all post-close transactions were processed in the new Richardson…

Thanks, Pat and good morning everyone. In the first 60 days with the company, I am still in the learning mode and I can say that I am excited to be part of the very talented team at Richardson Electronics. Sales for the division was $6.7 million during the first quarter of fiscal 2016, up from $6 million the same time last year. Gross margin in the quarter was 25.6% versus 27.7% during the first quarter last year, primarily due to the decline in the trade. However, our first quarter margin improved from 23.4 in the fourth quarter of fiscal year 2015. The division did a good job controlling cost and maintaining working capital efficiency. We improved on freight cost during the quarter as well. Canvys ended the first quarter of fiscal 2016 with a book-to-bill ratio of 0.72. Order backlog decreased from $18.2 million at the end of the fourth quarter to $15.8 million due to expiry in prime contracts. However, we won several new programs with medical equipment manufacturers at broad – way to the industry in the quarter and we anticipate receiving new prime contracts from several of our existing customers. We are making good progress getting the backlog increased over the next month again. In my first 60 days, we reviewed the business model and are making changes to the organization to leverage synergies between our teams in Marlborough and Donaueschingen at Germany. The project approval process was a justice to provide a quicker turnaround time for quotations, prototypes and eventually product delivery. We are working with our current landlord on a new lease in Marlborough with cost savings over terms of the lease, plus a set of improvements. This will ensure that we have no business interruptions over the next coming months. I also met with many of our customers in both Europe and North America to ensure we are meeting their requirements and to learn about other business opportunities. Over the next quarter, I will continue to review the organization and business strategy with a goal of improving the operating performance of the division. It is clear we offer our customers outstanding products and service. We need to implement new technologies which set us apart from our competitors and enable us to win new programs while reducing the risk that our solutions can be easily duplicated or replaced. I look forward to sharing more of our findings and ideas in our next conference call. I will now turn the call back over to Ed.

Thanks, Jens. We are pleased to have you on our management team and look forward to seeing your impact on the Canvys business. You did a nice job in your first quarter. With one quarter behind us, we feel good about our plans to grow our revenues and return Richardson Electronics to profitability. As you heard from Greg, Pat and Jens, we are investing in people, in technologies, to support our focus on the high growth power energy and healthcare markets. We are committed to utilize our existing infrastructure to support our core business as well as our growth initiatives. These investments take time to mature and provide a return to the company and our shareholders. We still have significant cash in our balance sheet and we tend to use it wisely and conservatively. We’ll continue to evaluate acquisition targets while pursuing organic growth opportunities. We’ll also continue to repurchase shares and pay dividends. Due October 5, we used with $65.3 million to repurchase 5.8 million shares of our stock reducing the number of shares outstanding to 12.9 million. We ask that you continue to be patient. We are committed to our strategy which will increase shareholder value. At this point, we will be happy to answer a few questions. Tracey, please open the line for questions.

[Operator Instructions] Your first question comes from the line of Mark Zinski. Your line is now open.

Yes, good morning everyone.

Good morning, Mark.

First of all, congratulations on the improvement. I want to start with the Healthcare division, specifically the gross margin there is pretty impressive and I understand that it’s also a function of product mix, but, is that a gross margin range that we can expect to continue going forward?

I would say, yes, it may fluctuate, because it depends again on the mix, if we have more flat panel detector or display sales. But, in general, I would say that’s a trend.

Okay, and then do you think that there are other similar type companies like IMES out there that could be potential acquisition targets?

Yes, yes, we are looking at several, actually while we speak and, it always takes a willing buyer and a willing seller. So we are not sure whether we can conclude the transaction, but there are several candidates that we are looking at.

And they would have similar gross margin profiles?

About the same, yes.

About the same, okay, great. My next question I guess is for Robert, welcome to the team.

Thank you.

Just wanted to ask you about the SG&A run rate. If you think that this is sort of a good number, going forward that incorporates both new IMES expenses as well as the continued investment.

I think in general, that’s correct. You have to keep in mind though that we – as I said in my comments, and others have said, we continue to invest in our growth initiatives both in the healthcare space and the power and microwave conversion areas. And so, we are ramping up and I think you are going to – it could increase slightly. I think in general, the run rate is about where we are going to be, but again we are in a growth mode and so there is some timing of certain expenses from quarter-to-quarter in terms of who is hired, when and when certain expenses actually materialize.

Okay, understood. Thanks. And next just in terms of just the general macro environment, Ed, it looks like, so far you are not really seeing any impact from any kind of China slowdown and are you seeing anything in terms of vertical weakness in the manufacturing sector in the US?

China was actually up for us in the quarter. And so we are encouraged by that. I guess the only weakness that we are really seeing, we sell a number of products that go into the semiconductor wafer fab equipment market, and those products are manufactured here in La Fox. And we haven’t seen a lot of weakness yet, but we are seeing predictions that that market will be flat to down single-digits next year. So we are concerned about it.

Okay, great. And then just lastly, in terms of these – the several, the new distribution agreements you have, for the PMT segment, these – just want to clarify that these are new technologies that are going to be additive that they are not going to be cannibalizing any of the existing technologies?

Majority of it will be new business, new applications for this type of technology. One of the things that the strategy supports is that, we, as you know, have a very large market share for the electron device side and as those customers want to produce a solid state version, we are now able to support them with the best technology in the industry for their power and microwave applications. So it’s not to change what’s currently out there, it’s to support it as customers over time do go look at solid state and new products to compete in their business.

Okay, and then lastly, do those – these new technologies, do they have any kind of sort of overarching exposure to one industry or another or are they pretty across the board?

Yes, well, it’s focused on niche markets and niche applications which is kind of the strategy. I mean, there is probably another dozen suppliers that want to sign with us, but we are being very selective that these products focus on our current applications and our current markets that the two business has all the market share and they will be the leading technologies as this business goes to solid state and these new applications in energy management et cetera.

Okay, great. That’s it for me. Thanks a lot.

And Mark, I think, one thing you should understand is the majority of our two business is sort of the end-users for replacement and existing equipment and the customer is that…

[Operator Instructions]

Sorry, I guess, we have run out of time here for questions this morning. If you have any further questions, please give us a call this the afternoon and we will try to answer them for you. We thank you again for joining us and for your ongoing support of Richardson Electronics. We look forward to discussing our fiscal 2016 second quarter with you in January. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.