Healthcare and Display Businesses Grow Quarter over Quarter

Highlights

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.

CASH DIVIDEND

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.

Participant Instructions

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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US Toll:  
Access Code:  0355952#

Register, receive a unique attendee ID by email and therefore be identified by name during the call (Note, this option cannot be shared by more than one person):

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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 .

FORWARD-LOOKING STATEMENTS

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: