- Company Announces Second Half Cash
Dividend of 0.10 Per Share -
Deswell Industries, Inc. (Nasdaq: DSWL) today announced its
unaudited financial results for the second half of the fiscal year
ended March 31, 2023.
Net sales for the six months ended March 31, 2023 were $33.1
million, a decrease of 27.6% compared to net sales of $45.7 million
for the six months ended March 31, 2022. Net sales decreased by
42.2% to $7.5 million in the plastic segment and by 21.8% to $25.6
million in the Company’s electronic segment.
Total gross margin increased to 17.3% during the six months
ended March 31, 2023, as compared to 16.5% in the same period last
year. For the plastic segment, gross profit margin decreased to
17.8% of net sales for the second half of fiscal 2023, as compared
to 19.2% of net sales for the corresponding period of the last
fiscal year. The decrease in gross profit margin in the plastic
segment is mainly attributable to relative increases in labor costs
and a decrease in sales revenue, partially offset by lower raw
material costs. Gross profit margin in the electronics segment
increased from 15.4% in the second half of fiscal 2022 to 17.2% in
the second half of fiscal 2023. The increase in gross profit margin
in the electronics segment is the result of the depreciation of the
renminbi, and decreased raw material and labor costs due to
continuous cost control measures taken.
Operating income for the second half of fiscal 2023 decreased
from $1.7 million in the second half of fiscal 2022 to $0.8 million
in the second half of fiscal 2023.
The Company reported net income of $2.6 million for the six
months ended March 31, 2023, as compared to net income of $4.1
million for the six months ended March 31, 2022. Non-operating
income for the six months ended March 31, 2023 was $1.7 million, as
compared to non-operating income of $2.0 million in the six months
ended March 31, 2022. Non-operating income during the six months
ended March 31, 2023 was primarily comprised of $381,000 from
unrealized gain in marketable securities, $330,000 from rental
income, $445,000 on dividend income from securities investments,
and $461,000 from realized gain on the sale of marketable
securities, as compared to an unrealized gain of $27,000 on
marketable securities, rental income of $1,028,000, dividend income
of $454,000 from securities investments and a realized gain of
$420,000 on the sale of marketable securities in the second half of
fiscal 2022. Deswell reported basic and diluted income per share of
$0.16 for the second half of fiscal 2023 (based on 15,935,000 and
16,000,000 weighted average shares outstanding, respectively), as
compared to basic and diluted income per share of $0.25 (based on
15,935,000 and 16,038,000 weighted average shares outstanding,
respectively), for the six months ended March 31, 2022.
Net sales for the year ended March 31, 2023 were $77.5 million,
a decrease of 9.8% compared to net sales of $86.0 million for
fiscal 2022. Operating income for the year ended March 31, 2023
increased to $2.9 million from $2.8 million in fiscal 2022. The
Company reported net income of $2.1 million in fiscal 2023, as
compared to net income of $8.2 million for the year ended March 31,
2022. The decrease in net income was mainly attributable to the
decrease in non-operating income for fiscal 2023, with operating
income relatively consistent as compared to the prior fiscal year.
Deswell reported basic and diluted net income per share of $0.13
for fiscal 2023, (based on 15,935,000 and 16,072,000 weighted
average shares outstanding, respectively), as compared to basic net
income per share of $0.52 and diluted net income per share of $0.51
(based on 15,929,000 and 16,135,000 weighted average shares
outstanding, respectively), for the prior fiscal year.
The Company's financial position remained strong, with $22.2
million in cash and cash equivalents and working capital totaling
$60.9 million as of March 31, 2023. Furthermore, the Company has no
long-term or short-term borrowings as of March 31, 2023.
Mr. Edward So, Chief Executive Officer, commented, “Our results
in the second half of 2023 were impacted by the global economic
environment, particularly a pullback in consumer spending related
widespread higher cost of living expenses. Our plastics segment
experienced decreased orders for robotic vacuums and other home
products in the back half of the year, and our electronics segment
was negatively affected by a decline in demand for home
entertainment products as compared to fiscal year 2022. We believe
the demand constraint experienced in both segments is related to
consumers spending more time traveling outside of their homes and
also taking a more cautious approach to their discretionary
spending on household items. On a positive note, demand for
professional audio products remained strong in the second half of
2023 and we saw supply chain improvements as well as an easing in
the global chip shortage.
“Our balance sheet remains strong with a solid cash position and
no debt providing us with the flexibility to embark on the
cost-effective redesign of certain products as well as increasing
our leadership position and market recognition as a reliable and
efficient manufacturing partner.”
Second Half Dividend
The Company also announced that its board of directors today
declared a cash dividend of $0.10 per share for the second half of
the fiscal year ended March 31, 2023. The dividend will be payable
on July 20, 2023 to shareholders of record as of July 5, 2023.
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,
professional audio equipment, home audio products, and
Internet-of-Things (IoT) products.
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,
2023
2022
ASSETS
(Unaudited)
(Audited)
Current assets:
Cash and cash equivalents
$
22,160
$
13,465
Fixed deposits maturing over three months
3,053
4,354
Time deposits maturing over twelve months - current portion
1,047
1,564
Marketable securities
20,722
24,499
Accounts receivable, net
15,704
18,195
Inventories
17,325
23,819
Prepaid expenses and other current assets
1,149
1,926
Total current assets
81,160
87,822
Property, plant and equipment - net
26,051
27,017
Deferred income tax assets
262
259
Time deposits maturing over twelve
months
2,906
313
Total assets
$
110,379
$
115,411
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
$
6,949
$
9,838
Accrued payroll and employee benefits
7,943
7,611
Customer deposits
2,216
2,343
Other accrued liabilities
1,989
2,950
Income taxes payable
1,149
1,232
Total current liabilities
20,246
23,974
Deferred income tax liabilities
484
659
Total liabilities
20,730
24,633
Shareholders' equity
Common shares nil par value; authorized 30,000,000 shares,
17,081,810 shares issued as of March 31, 2022 and 2023;
15,935,239 shares outstanding as of March 31, 2022 and 2023
53,202
53,202
Treasury stock at cost; 1,146,571 shares as of March 31, 2022 and
2023
(2,821
)
(2,821
)
Additional paid-in capital
7,973
7,973
Accumulated other comprehensive income
5,316
5,316
Retained earnings
25,979
27,108
Total shareholders' equity
89,649
90,778
Total liabilities and shareholders' equity
$
110,379
$
115,411
DESWELL INDUSTRIES, INC. CONSOLIDATED
STATEMENT OF OPERATIONS & COMPREHENSIVE INCOME
(UNAUDITED) (U.S. dollars in thousands, except per share
data)
Six Months ended
Year ended
March 31,
March 31,
2023
2022
2023
2022
Net sales
$
33,105
$
45,708
$
77,543
$
85,980
Cost of sales
27,380
38,176
64,704
72,028
Gross profit
5,725
7,532
12,839
13,952
Selling, general and administrative
expenses
5,215
5,791
10,966
11,267
Other income (expense), net
337
(37
)
1,014
74
Operating income
847
1,704
2,887
2,759
Non-operating (expenses) income, net
1,737
2,020
(573
)
5,308
Income, before income taxes
2,584
3,724
2,314
8,067
Income taxes expense (benefit)
(35
)
(338
)
255
(165
)
Net income attributable to Deswell
Industries, Inc.
$
2,619
$
4,062
$
2,059
$
8,232
Other comprehensive income
$
-
$
-
$
-
$
-
Total comprehensive income attributable to
Deswell Industries, Inc.
$
2,619
$
4,062
$
2,059
$
8,232
Net income per share attributable to
Deswell Industries, Inc.
Basic:
Net income per share
$
0.16
$
0.25
$
0.13
$
0.52
Weighted average common shares outstanding (shares in thousands)
15,935
15,935
15,935
15,929
Diluted:
Net income per share
$
0.16
$
0.25
$
0.13
$
0.51
Weighted average common shares outstanding (shares in thousands)
16,000
16,038
16,072
16,135
DESWELL INDUSTRIES, INC. CONSOLIDATED
STATEMENT OF CASH FLOWS (UNAUDITED) (U.S. dollars in
thousands)
( U.S. dollars in thousands )
Year ended
Mar 31,
2023
2022
Cash flows from operating activities:
Net income
$
2,059
$
8,232
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
1,709
1,736
Reversal of credit losses, net
(229
)
(148
)
Allowance of for obsolete inventories, net
116
(25
)
(Gain) loss on disposal of property, plant and equipment
(18
)
24
Unrealized holding loss (gain) on marketable securities
3,973
(872
)
Gain on sale of marketable securities
(581
)
(1,073
)
Exchange loss arising from marketable securities
-
117
Deferred income tax benefit
(178
)
(557
)
Changes in operating assets and liabilities: Accounts receivable
2,720
(3,339
)
Inventories
6,378
(7,601
)
Prepaid expenses and other current assets
777
563
Accounts payable
(2,889
)
316
Accrued payroll and employee benefits
332
504
Customer deposits
(127
)
660
Other accrued liabilities
(961
)
934
Income taxes payable
(83
)
346
Net cash provided by (used in) operating
activities
12,998
(183
)
Cash flows from investing activities
Purchase of property, plant and equipment
(792
)
(1,504
)
Proceeds from sale of property, plant and equipment, net of
transaction costs
67
50
Purchase of marketable securities
(3,469
)
(11,543
)
Proceeds from sales of marketable securities
3,854
11,245
Release (increase) of fixed deposits with original maturing over
three months
1,301
(1,654
)
Increase of fixed deposits with original maturing over twelve
months
(2,076
)
(26
)
Net cash used in investing activities
(1,115
)
(3,432
)
Cash flows from financing activities
Dividends paid
(3,188
)
(3,186
)
Proceeds from exercise of stock options
-
43
Net cash used in financing activities
(3,188
)
(3,143
)
Net increase in cash and cash
equivalents
8,695
(6,758
)
Cash and cash equivalents, beginning of
year
13,465
20,223
Cash and cash equivalents, end of year
22,160
13,465
Supplementary disclosures of cash flow
information:
Cash paid during the year for: Interest
-
-
Income taxes
418
68
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230620005975/en/
Investor Relations: John Nesbett/Jennifer Belodeau IMS
Investor Relations 203.972.9200
jnesbett@imsinvestorrelations.com
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