- Company Announces Second Half Cash
Dividend of 0.09 Per Share -
Deswell Industries, Inc. (Nasdaq: DSWL) today announced its
unaudited financial results for the second half of the fiscal year
ended March 31, 2020.
Net sales for the six months ended March 31, 2020 were $27.7
million, a decrease of 13.0% compared to net sales of $31.8 million
for the six months ended March 31, 2019. Net sales decreased by
29.5% to $10.7 million in the plastic segment and increased by 2.0%
to $17.0 million in the Company’s electronic segment.
Total gross margin increased to 19.2% during the six months
ended March 31, 2020, as compared to 17.2% in the same period last
year. Gross profit margin in the plastic segment increased to 23.3%
of net sales for the second half of fiscal 2020, as compared to
20.9% of net sales for the corresponding period of last fiscal
year. The increase in gross profit margin in the plastic segment
was mainly due to decrease in raw materials cost, offsetting the
increases in labor cost, as well as in factory overhead, as a
percentage of sales. Gross profit margin for the electronic segment
for the six months ended March 31, 2020 increased from 13.9% in
second half of fiscal 2019 to 16.7% in the second half of fiscal
2020. The increase was mainly due to the reduction in labor cost as
a result of the implementation of cost control measures.
Operating income for the second half of fiscal 2020 remained
approximately the same as the same period of fiscal 2019 at $0.3
million.
The Company reported net loss of $2.6 million for the six months
ended March 31, 2020, as compared to net income of $1.5 million for
the six months ended March 31, 2019. Non-operating expense for the
six months ended March 31, 2020 was $2.6 million, as compared to
non-operating income of $1.4 million in the year-ago six months.
Non-operating expense during the six months ended March 31, 2020
was primarily comprised of $3,927,000 from a decrease in the fair
value of marketable securities, offsetting rental income of
$761,000, dividend income of $485,000 from securities investment,
and interest income of $126,000. Deswell reported basic and diluted
loss per share of $0.16 for the second half of fiscal 2020 (based
on 15,915,000 and 15,966,000 weighted average shares outstanding,
respectively), as compared to basic and diluted income share of
$0.10 (based on 15,885,000 and 15,969,000 weighted average shares
outstanding), for the six months ended March 31, 2019.
Net sales for the year ended March 31, 2020 were $65.4 million,
a decrease of 1.8% compared to net sales of $66.6 million for
fiscal 2019. Operating income for the year ended March 31, 2020
increased to $1.4 million, as compared to operating income of $0.5
million for fiscal 2019. The Company reported net loss of $1.3
million in fiscal 2020, as compared to net income of $4.3 million
for the year ended March 31, 2019. The decrease in net income was
mainly attributed to the non-operating expense of $2.4 million in
fiscal 2020, as compared to the non-operating income of $3.9
million in fiscal 2019. Deswell reported basic and diluted net loss
per share of $0.08 for fiscal 2020, (based on 15,914,000 and
16,020,000 weighted average share outstanding, respectively), as
compared to basic and diluted income per share of $0.27 (based on
15,855,000 and 16,059,000 weighted average shares outstanding), for
the prior fiscal year.
The Company's financial position remained strong, with $22.5
million in cash and cash equivalents and working capital totaled
$51.1 million as of March 31, 2020. Furthermore, the Company has no
long-term or short-term borrowings as of March 31, 2020.
Mr. Edward So, Chief Executive Officer, commented, “We are
pleased with our fiscal 2020 results which included a strong
increase in operating income despite challenges related to Covid-19
and trade conflicts. Our first priority has been the safety of our
employees and to that end we delayed the reopening of our
facilities following the Chinese New Year holiday, which resulted
in lost production days. Supply chain interruptions also presented
some headwinds but we managed through those challenges and have
been able to support our customers.
“While we continue to see demand negatively impacted by the
international economic environment, we continue to nurture new
customer relationships which we are optimistic can develop into
larger commitments. One of the many strengths of our company is our
strong balance sheet which enables us to weather challenging
periods and stay focused on the long term performance of the
business. Finally, we brought expenses down in fiscal 2020 and will
continue to proactively manage costs to maximize operating
profitability for our shareholders.”
Second Half Dividend
The Company also announces that its board of directors today
declared a cash dividend of $0.09 per share for the second half of
the fiscal year ended March 31, 2020. The dividend will be payable
on July 10, 2020 to shareholders of record as of June 25, 2020.
Dividends to be declared in the future will depend upon the
Company’s future growth and earnings, of which there can be no
assurance, and the Company’s cash flow needs for future
development.
About Deswell
Deswell manufactures injection-molded plastic parts and
components, electronic products and subassemblies, and metallic
molds and accessory parts for original equipment manufacturers
(“OEMs”) and contract manufacturers at its factories in the
People’s Republic of China. The Company produces a wide variety of
plastic parts and components used in the manufacture of consumer
and industrial products; printed circuit board assemblies using
surface mount (“SMT”) and finished products such as telephones,
telephone answering machines, sophisticated studio-quality audio
equipment and computer peripherals.
To learn more about Deswell Industries, Inc., please visit the
Company’s website at www.deswell.com.
Forward-Looking Statements
Statements in this press release that are "forward-looking
statements" are based on current expectations and assumptions that
are subject to risks and uncertainties. For example, our statements
regarding our expected growth in sales from the electronic division
in the coming year and our efforts to reduce overhead costs in our
plastic division are forward-looking statements. Actual results
could differ materially because of the following factors, among
others, which may cause revenues and income to fall short of
anticipated levels or our overhead expenses to increase: our
dependence on a few major customers; vigorous competition forcing
product price reductions or discounts; the timing and amount of
significant orders from our relatively few significant customers;
continuing increases in resin prices that cannot be passed on to
customers; unexpected production delays; obsolete inventory or
product returns; losses resulting from fraudulent activity of our
customers or employees; labor shortages that increase labor and
costs; changes in the mix of product products we manufacture and
sell; adverse currency fluctuations in the Renminbi and Hong Kong
dollar when translated to US dollars; potential new accounting
pronouncements; and the effects of travel restrictions and
quarantines associated with major health problems, such as the
Severe Acute Respiratory Syndrome, on general economic
activity.
For further information regarding risks and uncertainties
associated with the Company’s business, please refer to the “Risk
Factors” section of Company’s Annual Report on Form 20-F, copies of
which may be obtained from the Website maintained by the Securities
and Exchange Commission at http://www.sec.gov.
All information in this release is made as of the date of this
press release. Deswell undertakes no duty to update any
forward-looking statement to conform the statement to actual
results or changes in Deswell’s expectations.
DESWELL INDUSTRIES,
INC.
CONSOLIDATED BALANCE
SHEET
(U.S. dollars in
thousands)
March 31,
March 31,
2020
2019
ASSETS
(Unaudited)
(Audited)
Current assets :
Cash and cash equivalents
$
22,514
$
14,371
Time deposits maturing over three
months
783
371
Marketable securities (note 2)
19,441
24,446
Accounts receivable, net
12,301
15,734
Inventories (note 3)
8,578
13,030
Prepaid expenses and other current
assets
1,752
2,006
Total current assets
65,369
69,958
Property, plant and equipment - net
28,586
30,211
Time deposits maturing over twelve
months
1,424
-
Total assets
$
95,379
$
100,169
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
$
4,604
$
6,253
Accrued payroll and employee benefits
6,077
5,676
Customer deposits
1,172
1,298
Other accrued liabilities
1,718
1,662
Income taxes payable
735
657
Total current liabilities
14,306
15,546
Deferred income tax liabilities
751
659
Total liabilities
15,057
16,205
Shareholders' equity
Common shares nil par value - authorized
30,000,000 shares, 17,031,810 and 17,061,810 shares issued as of
March 31, 2019 and 2020; 15,885,239 and 15,915,239 shares
outstanding as of March 31, 2019 and 2020
53,143
53,063
Treasury stock at cost; 1,146,571 and
1,146,571 shares as of March 31, 2019 and 2020
(2,821
)
(2,821
)
Additional paid-in capital
7,989
8,005
Accumulated other comprehensive income
5,316
5,316
Retained earnings
16,695
20,401
Total shareholders' equity
80,322
83,964
Total liabilities and shareholders'
equity
$
95,379
$
100,169
DESWELL INDUSTRIES,
INC.
CONSOLIDATED STATEMENT OF
OPERATIONS & COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(U.S. dollars in thousands,
except per share data)
Six months ended
Year ended
March 31,
March 31,
2020
2019
2020
2019
Net sales
$
27,655
$
31,786
$
65,368
$
66,581
Cost of sales
22,335
26,306
53,504
56,311
Gross profit
5,320
5,480
11,864
10,270
Selling, general and administrative
expenses
4,818
4,696
10,026
9,459
Other expense, net
245
501
425
278
Operating income
257
283
1,413
533
Non-operating income, (expense), net
(2,579
)
1,402
(2.360
)
3,884
Income (loss) before income taxes
(2,322
)
1,685
(947
)
4,417
Income taxes
247
169
373
144
Net income (loss) attributable to Deswell
Industries, Inc.
$
(2,569
)
$
1,516
$
(1,320
)
$
4,273
Other comprehensive income
$
-
$
-
$
-
$
-
Total comprehensive income (loss)
attributable to Deswell Industries, Inc.
$
(2,569
)
$
1,516
$
(1,320
)
$
4,273
Net income per share attributable to
Deswell Industries, Inc. (note 4)
Basic:
Net income (loss) per share
$
(0.16
)
$
0.10
$
(0.08
)
$
0.27
Weighted average common shares outstanding
shares (in thousands)
15,915
15,885
15,914
15,885
Diluted:
Net income (loss) per share
$
(0.16
)
$
0.10
$
(0.08
)
$
0.27
Weighted average common shares outstanding
shares (in thousands)
15,966
15,969
16,020
16,059
DESWELL INDUSTRIES,
INC.
CONSOLIDATED STATEMENT OF CASH
FLOWS (UNAUDITED)
( U.S. dollars in thousands )
Year ended
Mar 31,
2020
2019
Cash flows from operating activities :
Net (loss) income
$
(1,320
)
$
4,273
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
1,973
2,114
Provision for doubtful accounts, net
297
403
Additional charges for obsolescence
allowance of inventories, net
426
256
(Gain) loss on disposal of property, plant
and equipment
(29
)
22
Unrealized holding loss (gain) on
marketable securities
5,179
(891
)
Gain on sales of marketable securities
(29
)
(746
)
Deferred income tax
92
(116
)
Scrip dividend received
356
(33
)
Changes in operating assets and
liabilities :
Accounts receivable
3,136
(225
)
Inventories
4,026
(353
)
Prepaid expenses and other current
assets
254
261
Accounts payable
(1,649
)
(2,343
)
Accrued payroll and employee benefits
401
110
Customer deposits
(126
)
(409
)
Other accrued liabilities
56
(211
)
Income taxes payable
78
54
Net cash provided by operating
activities
13,121
2,166
Cash flows from investing activities
Purchase of property, plant and
equipment
(507
)
(878
)
Proceeds from sale of property, plant and
equipment, net of transaction costs
188
25
Purchase of marketable securities
(2,121
)
(12,704
)
Proceeds from sales of marketable
securities
1,620
7,210
Release of (increase in) fixed deposits
maturing over three months
(412
)
1,819
(Increase) decrease in fixed deposits
maturing over twelve months
(1,424
)
3,129
Net cash used in investing activities
(2,656
)
(1,399
)
Cash flows from financing activities
Dividends paid
(2,386
)
(1,588
)
Exercise of stock options
64
-
Net cash used in financing activities
(2,322
)
(1,588
)
Net (decrease) increase in cash and cash
equivalents
8,143
(821
)
Cash and cash equivalents, beginning of
year
14,371
15,192
Cash and cash equivalents, end of year
22,514
14,371
Supplementary disclosures of cash flow
information :
Cash paid during the year for :
Interest
-
-
Income taxes
160
149
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version on businesswire.com: https://www.businesswire.com/news/home/20200611005145/en/
Investor Relations Contact: John Nesbett/Jennifer
Belodeau IMS Investor Relations 203.972.9200
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