Healthcare and Display Businesses Grow Quarter over Quarter
LAFOX, Ill., Oct. 09, 2019 (GLOBE NEWSWIRE) — Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its first quarter ended August 31, 2019. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.
First Quarter Results
Net sales for the first quarter of fiscal 2020 decreased 7.9% to $40.7 million compared to net sales of $44.2 million in the prior year’s first quarter. PMT sales decreased $4.2 million primarily due to the decline in the semiconductor wafer fabrication equipment market, partially offset by higher sales of power conversion and RF and microwave components. Canvys sales increased by $0.1 million or 1.4% due to higher demand in its North American market. Richardson Healthcare sales increased $0.6 million or 26.8% as a result of higher sales of our ALTA750 TM CT tube and replacement parts for diagnostic imaging equipment.
Gross margin decreased to $13.0 million, or 31.9% of net sales during the first quarter of fiscal 2020, compared to $14.0 million, or 31.6% of net sales during the first quarter of fiscal 2019. Margin increased as a percent of net sales primarily due to favorable product mix and manufacturing over absorption in Richardson Healthcare, partially offset by unfavorable product mix and foreign exchange rates for Canvys.
Operating expenses were $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 operating income of $0.9 million in the prior year’s first 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 first quarter of fiscal 2020 reflected a provision for foreign income taxes, which was lower than the prior year’s first quarter and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. The tax provision of $0.3 million in last year’s first quarter included a provision for foreign income taxes and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.
Net income for the first quarter of fiscal 2020 was $0.2 million compared to 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 are pleased with the quarter over quarter growth in our Healthcare business. We are optimistic this trend will continue with increasing customer confidence in the ALTA750 TM CT tube as well as the recent approval to use the CE Mark opening up sales opportunities throughout Europe,“ said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “Revenues resulting from our investments in new power and microwave technologies also continue to increase and Canvys is providing consistent growth helping offset the soft semiconductor wafer fab equipment market,” he concluded.
The Company also announced today that its Board of Directors declared a $0.06 quarterly dividend per share to holders of common stock and a $0.054 cash dividend per share to holders of Class B common stock. The dividend will be payable on November 22, 2019, to common stockholders of record as of November 7, 2019.
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 the fourth quarter of fiscal 2019 and $54.8 million at the end of the first quarter of fiscal 2019. The Company spent $0.3 million during the quarter on capital expenditures primarily relating to our IT system and LaFox manufacturing business versus $1.1 million during the first quarter of fiscal 2019. During the first quarter of fiscal 2020, the Company did not repurchase any shares of its common stock. Currently, there are 11.0 million outstanding shares of common stock and 2.1 million outstanding shares of Class B common stock.
CONFERENCE CALL INFORMATION
On Thursday, October 10, 2019, at 9:00 a.m. CDT, Edward J. Richardson, Chairman and Chief Executive Officer, and Robert J. Ben, Chief Financial Officer, will host a conference call to discuss the Company’s first quarter fiscal year 2020 results. A question and answer session will be included as part of the call’s agenda.
Below are the instructions with the general number and access code. Please note that those using these dial-in instructions and access code only, will be logged in as a guest. If you would like your name announced on the call, please also register using the link below.
Participant Telephone Instructions:
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Access Code: 0355952#
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A replay of the call will be available beginning at 11:00 a.m. CDT on October 11, 2019. The toll-free telephone number for the replay is .
This release includes certain “forward-looking” statements as defined by the Securities and Exchange Commission. Statements in this press release regarding the Company’s business which are not historical facts represent “forward-looking” statements that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K filed on August 5, 2019. The Company assumes no responsibility to update the “forward-looking” statements in this release as a result of new information, future events, or otherwise.
ABOUT RICHARDSON ELECTRONICS, LTD.
Richardson Electronics, Ltd. is a leading global provider of engineered solutions, power grid and microwave tubes and related consumables; power conversion and RF and microwave components; high value flat panel detector solutions, replacement parts, tubes and service training for diagnostic imaging equipment; and customized display solutions. We serve customers in the alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. The Company’s strategy is to provide specialized technical expertise and “engineered solutions” based on our core engineering and manufacturing capabilities. The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair through its global infrastructure. More information is available at .
Richardson Electronics common stock trades on the NASDAQ Global Select Market under the ticker symbol RELL.
Richardson Electronics, Ltd. Consolidated Balance Sheets (in thousands, except per share amounts) Unaudited Audited August 31, 2019 June 1, 2019Assets Current assets: Cash and cash equivalents $46,457 $42,019Accounts receivable, less allowance of $296 and $339, respectively 21,946 24,296Inventories, net 54,137 53,232Prepaid expenses and other assets 2,424 3,067Investments – current — 8,000Total current assets 124,964 130,614Non-current assets: Property, plant and equipment, net 18,640 19,111Intangible assets, net 2,696 2,763Lease ROU asset 4,107 —Non-current deferred income taxes 579 529Total non-current assets 26,022 22,403Total assets $150,986 $153,017Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $12,906 $16,943Accrued liabilities 10,338 11,273Lease liability current 1,541 —Total current liabilities 24,785 28,216Non-current liabilities: Non-current deferred income tax liabilities 216 212Lease liability non-current 2,678 —Other non-current liabilities 692 832Total non-current liabilities 3,586 1,044Total liabilities 28,371 29,260Stockholders’ equity Common stock, $0.05 par value; issued and outstanding 11,029 shares at August 31, 2019 and 10,957 shares at June 1, 2019 551 547Class B common stock, convertible, $0.05 par value; issued and outstanding 2,097 shares at August 31, 2019 and June 1, 2019 105 105Preferred stock, $1.00 par value, no shares issued — —Additional paid-in-capital 61,200 61,012Common stock in treasury, at cost, no shares at August 31, 2019 and June 1, 2019 — —Retained earnings 59,085 59,703Accumulated other comprehensive income 1,674 2,390Total stockholders’ equity 122,615 123,757Total liabilities and stockholders’ equity $150,986 $153,017
Richardson Electronics, Ltd. Unaudited Consolidated Statements of Comprehensive Loss (in thousands, except per share amounts) Three Months Ended August 31, 2019 September 1, 2018 Statements of Comprehensive Loss Net sales $40,653 $44,157 Cost of sales 27,702 30,204 Gross profit 12,951 13,953 Selling, general and administrative expenses 12,847 13,099 Loss on disposal of assets 1 — Operating income 103 854 Other (income) expense: Investment/interest income (120) (126)Foreign exchange loss (110) 286 Other, net (1) (8)Total other (income) expense (231) 152 Income before income taxes 334 702 Income tax provision 177 271 Net income 157 431 Foreign currency translation loss, net of tax (716) (740)Comprehensive loss $(559) $(309)Net income per share Common shares – Basic $0.01 $0.03 Class B common shares – Basic $0.01 $0.03 Common shares – Diluted $0.01 $0.03 Class B common shares – Diluted $0.01 $0.03 Weighted average number of shares: Common shares – Basic 10,990 10,829 Class B common shares – Basic 2,097 2,132 Common shares – Diluted 10,990 10,982 Class B common shares – Diluted 2,097 2,132 Dividends per common share $0.060 $0.060 Dividends per Class B common share $0.054 $0.054
Richardson Electronics, Ltd. Unaudited Consolidated Statements of Cash Flows (in thousands) Three Months Ended August 31, 2019 September 1, 2018 Operating activities: Net income $157 $431 Adjustments to reconcile net income to cash used in operating activities: Depreciation and amortization 833 764 Inventory provisions 161 215 Loss on disposal of assets 1 — Share-based compensation expense 188 165 Deferred income taxes (48) 58 Change in assets and liabilities: Accounts receivable 2,161 (198)Inventories (1,357) 77 Prepaid expenses and other assets 625 37 Accounts payable (3,955) (5,419)Accrued liabilities (876) 227 Other 56 13 Net cash used in operating activities (2,054) (3,630)Investing activities: Capital expenditures (339) (1,072)Proceeds from maturity of investments 8,000 — Purchases of investments — (2,300)Net cash provided by (used in) investing activities 7,661 (3,372)Financing activities: Proceeds from issuance of common stock — 192 Cash dividends paid (775) (764)Payment of financing lease principal (30) — Other 4 — Net cash used in financing activities (801) (572)Effect of exchange rate changes on cash and cash equivalents (368) (413)Increase (decrease) in cash and cash equivalents 4,438 (7,987)Cash and cash equivalents at beginning of period 42,019 60,465 Cash and cash equivalents at end of period $46,457 $52,478
Richardson Electronics, Ltd.Net Sales and Gross ProfitFor the First Quarter of Fiscal 2020 and Fiscal 2019($ in thousands)By Strategic Business Unit: Net Sales Q1 FY 2020 Q1 FY 2019 % Change PMT $30,567 $34,769 -12.1%Canvys 7,277 7,173 1.4%Healthcare 2,809 2,215 26.8%Total $40,653 $44,157 -7.9% Gross Profit Q1 FY 2020 % of Net Sales Q1 FY 2019 % of Net Sales PMT $9,679 31.7% $11,007 31.7%Canvys 2,321 31.9% 2,313 32.2%Healthcare 951 33.9% 633 28.6%Total $12,951 31.9% $13,953 31.6%
For Details : 40W267 Keslinger RoadEdward J. RichardsonRobert J. BenPO BOX 393Chairman and CEOEVP & CFOLaFox, IL 60147-0393 USAPhone: | Fax: