Richardson Electronics, Ltd. (NASDAQ: RELL) today reported
financial results for its fourth quarter and fiscal year ended May
30, 2020. The Company also announced that its Board of
Directors declared a $0.06 per share quarterly cash dividend.
Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2020
decreased 11.4% to $37.4 million compared to net sales of $42.2
million in the prior year’s fourth quarter primarily due to
COVID-19 and its impact on demand. Richardson Electronics is an
“essential business” and continued operating its manufacturing and
distribution businesses on a global basis throughout the pandemic
under strict safety guidelines. Sales of specialty products for
semiconductor wafer fab equipment increased from last year’s fourth
quarter, although overall PMT sales decreased $2.7 million or 8.6%.
Canvys sales decreased by $0.8 million or 10.2% due to lower sales
to medical OEMs in its European market, partially offset by higher
North American sales. Richardson Healthcare sales decreased $1.3
million or 47.2% due to hospital closures, restrictions on
non-emergency procedures, and many people postponing care during
shelter in place orders to help stop the spread of the virus.
Reduced sales of refurbished CT systems in Latin America also
contributed to the revenue decline.
Gross margin increased to 30.4% of net sales
during the fourth quarter of fiscal 2020 compared to 29.7% of net
sales during the fourth quarter of fiscal 2019 due to a favorable
product mix and improved manufacturing efficiencies in PMT. PMT
margin increased to 33.2% from 30.3%. Canvys margin as a percent of
net sales decreased from 32.1% to 31.0% and Healthcare margin as a
percent of net sales was minus 28.6% in the fourth quarter of
fiscal 2020 due to higher manufacturing under absorption, scrap and
inventory reserve costs related to tube development and production
improvements on significantly lower net sales.
Operating expenses were $12.7 million in the
fourth quarter of fiscal 2020 compared to $12.5 million in the
fourth quarter of fiscal 2019. The increase in operating
expenses resulted from higher salaries and severance expenses,
partially offset by lower travel and IT expenses.
As a result, the Company reported an operating
loss of $1.3 million for the fourth quarter of fiscal 2020 compared
to an operating loss of $6.4 million in the prior year’s fourth
quarter, which included a non-cash goodwill impairment of $6.3
million. Other income for the fourth quarter of fiscal 2020,
including interest income and foreign exchange, was $0.2 million,
compared to other income of $0.3 million in the fourth quarter of
fiscal 2019.
The income tax provision of $0.2 million for the
fourth quarter of fiscal 2020 reflected a provision for foreign
income taxes, which was lower than the prior year’s fourth quarter
provision and no U.S. tax benefit due to the valuation allowance
recorded against the net operating loss. Net loss for the fourth
quarter of fiscal 2020 was $1.3 million compared to a net loss of
$6.4 million in the fourth quarter of fiscal 2019.
“While our overall results were negatively
impacted by the coronavirus, the Richardson team demonstrated its
resourcefulness and resilience through superior support to our
customers and suppliers. We were pleased to see continued sales
growth in Canvys North America and in semiconductor wafer fab
equipment specialty products,” said Edward J. Richardson, Chairman,
Chief Executive Officer, and President. “Given the ever changing
situation in the global economy, we will continue to closely manage
expenses and cash flow. It is difficult to predict what the new
‘normal’ will look like, but I am convinced our business will be
stronger with the ongoing investments we are making in our growth
initiatives,” he concluded.
Fiscal 2020 Results
Net sales for fiscal 2020 were $155.9 million, a
decrease of 6.5% compared to net sales of $166.7 million for fiscal
2019. Sales decreased by $10.4 million or 8.1% for PMT, but
increased by $0.9 million or 3.4% for Canvys. Sales for Richardson
Healthcare decreased by $1.3 million or 13.2% due to lower sales in
the fourth quarter of fiscal 2020 resulting from the impact of the
coronavirus.
Gross profit decreased to $49.7 million for
fiscal 2020, compared to $51.7 million for fiscal 2019. As a
percentage of net sales, gross margin increased to 31.9% of net
sales for fiscal 2020, compared to 31.0% of net sales for fiscal
2019, primarily due to a favorable product mix and improved
manufacturing efficiencies for PMT.
Operating expenses decreased to $51.3 million
for fiscal 2020, compared to $52.2 million for fiscal 2019. The
decrease was due to lower travel, severance, legal and IT expenses,
partially offset by higher employee compensation expenses.
Throughout the pandemic, the Company decided to support its
employees through regular merit increases and incentive plans, and
by avoiding layoffs or furloughs.
Operating loss for fiscal 2020 was $1.7 million,
as compared to an operating loss of $6.8 million, inclusive of the
non-cash goodwill impairment, in fiscal 2019. Other income in
fiscal 2020, including interest income and foreign exchange, was
$0.4 million, versus $0.5 million in fiscal 2019.
The income tax provision of $0.6 million for
fiscal 2020 reflected a provision for foreign income taxes, which
was lower than in the prior year and no U.S. tax benefit due to the
valuation allowance recorded against the net operating loss. Net
loss for fiscal 2020 was $1.8 million, compared to a net loss of
$7.3 million for fiscal 2019.
CASH DIVIDEND AND POSITION
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 August 27, 2020, to common stockholders of record as of August
6, 2020.
Cash and investments at the end of fiscal 2020
were $46.5 million compared to $43.9 million at the end of the
third quarter of fiscal 2020 and $50.0 million at the end of fiscal
2019. The Company spent $0.5 million during the quarter on
capital expenditures primarily related to our LaFox manufacturing
and Healthcare businesses as well as our IT System, versus $0.7
million during the fourth quarter of fiscal 2019. Total capital
expenditures in fiscal 2020 were $1.8 million compared to $3.9
million in fiscal 2019.
CONFERENCE CALL INFORMATION
On Thursday, July 23, 2020, 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 fourth quarter and fiscal year 2020
results. A question and answer session will be included as
part of the call’s agenda.
Participant Instructions
To listen to the call, please dial (USA/CANADA)
(866) 784-8065 or (International) (602) 563-8684 and enter
Conference ID: 2958443 approximately five minutes prior to the
start of the call. A replay of the call will be available
beginning at 1:00 p.m. CDT on July 23, 2020, for seven days.
The telephone number for the replay is (800) 585-8367; Conference
ID: 2958443.
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 and
other reports we file with the Securities and Exchange Commission.
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 www.rell.com.
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) |
|
|
|
|
|
|
|
|
|
May 30, 2020 |
|
|
June 1, 2019 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
30,535 |
|
|
$ |
42,019 |
|
Accounts receivable, less allowance of $334 and $339,
respectively |
|
|
20,197 |
|
|
|
24,296 |
|
Inventories, net |
|
|
57,492 |
|
|
|
53,232 |
|
Prepaid expenses and other assets |
|
|
2,442 |
|
|
|
3,067 |
|
Investments - current |
|
|
16,000 |
|
|
|
8,000 |
|
Total current assets |
|
|
126,666 |
|
|
|
130,614 |
|
Non-current assets: |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
17,674 |
|
|
|
19,111 |
|
Intangible assets, net |
|
|
2,505 |
|
|
|
2,763 |
|
Lease ROU asset |
|
|
3,419 |
|
|
|
— |
|
Non-current deferred income taxes |
|
|
456 |
|
|
|
529 |
|
Total non-current assets |
|
|
24,054 |
|
|
|
22,403 |
|
Total
assets |
|
$ |
150,720 |
|
|
$ |
153,017 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
17,372 |
|
|
$ |
16,943 |
|
Accrued liabilities |
|
|
10,324 |
|
|
|
11,273 |
|
Lease liability current |
|
|
1,485 |
|
|
|
— |
|
Total current liabilities |
|
|
29,181 |
|
|
|
28,216 |
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Non-current deferred income tax liabilities |
|
|
161 |
|
|
|
212 |
|
Lease liability non-current |
|
|
1,941 |
|
|
|
— |
|
Other non-current liabilities |
|
|
777 |
|
|
|
832 |
|
Total non-current liabilities |
|
|
2,879 |
|
|
|
1,044 |
|
Total liabilities |
|
|
32,060 |
|
|
|
29,260 |
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity |
|
|
|
|
|
|
|
|
Common stock, $0.05 par value; issued and outstanding 11,038 shares
at May 30, 2020 and 10,957 shares at June 1, 2019 |
|
|
552 |
|
|
|
547 |
|
Class B common stock, convertible, $0.05 par value; issued and
outstanding 2,097 shares at May 30, 2020 and 2,097 shares at June
1, 2019 |
|
|
105 |
|
|
|
105 |
|
Preferred stock, $1.00 par value, no shares issued |
|
|
— |
|
|
|
— |
|
Additional paid-in-capital |
|
|
61,749 |
|
|
|
61,012 |
|
Retained earnings |
|
|
54,764 |
|
|
|
59,703 |
|
Accumulated other comprehensive income |
|
|
1,490 |
|
|
|
2,390 |
|
Total stockholders’ equity |
|
|
118,660 |
|
|
|
123,757 |
|
Total liabilities and
stockholders’ equity |
|
$ |
150,720 |
|
|
$ |
153,017 |
|
|
|
|
|
|
|
|
|
|
|
|
Richardson Electronics, Ltd. |
Consolidated Statements of Comprehensive Loss |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
May 30, 2020 |
|
|
June 1, 2019 |
|
|
May 30, 2020 |
|
|
June 1, 2019 |
|
Statements of
Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
37,362 |
|
|
$ |
42,163 |
|
|
$ |
155,898 |
|
|
$ |
166,652 |
|
Cost of sales |
|
|
25,990 |
|
|
|
29,651 |
|
|
|
106,225 |
|
|
|
114,917 |
|
Gross profit |
|
|
11,372 |
|
|
|
12,512 |
|
|
|
49,673 |
|
|
|
51,735 |
|
Selling, general and
administrative expenses |
|
|
12,660 |
|
|
|
12,535 |
|
|
|
51,327 |
|
|
|
52,156 |
|
Impairment of goodwill |
|
|
— |
|
|
|
6,332 |
|
|
|
— |
|
|
|
6,332 |
|
Loss on disposal of assets |
|
|
2 |
|
|
|
23 |
|
|
|
3 |
|
|
|
23 |
|
Operating loss |
|
|
(1,290 |
) |
|
|
(6,378 |
) |
|
|
(1,657 |
) |
|
|
(6,776 |
) |
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment/interest income |
|
|
(37 |
) |
|
|
(138 |
) |
|
|
(377 |
) |
|
|
(540 |
) |
Foreign exchange (gain) loss |
|
|
(132 |
) |
|
|
(121 |
) |
|
|
(15 |
) |
|
|
84 |
|
Other, net |
|
|
(27 |
) |
|
|
(5 |
) |
|
|
(51 |
) |
|
|
(9 |
) |
Total other income |
|
|
(196 |
) |
|
|
(264 |
) |
|
|
(443 |
) |
|
|
(465 |
) |
Loss before income taxes |
|
|
(1,094 |
) |
|
|
(6,114 |
) |
|
|
(1,214 |
) |
|
|
(6,311 |
) |
Income tax provision |
|
|
186 |
|
|
|
263 |
|
|
|
624 |
|
|
|
1,017 |
|
Net loss |
|
|
(1,280 |
) |
|
|
(6,377 |
) |
|
|
(1,838 |
) |
|
|
(7,328 |
) |
Foreign currency translation
loss, net of tax |
|
|
(346 |
) |
|
|
(736 |
) |
|
|
(900 |
) |
|
|
(1,976 |
) |
Comprehensive loss |
|
$ |
(1,626 |
) |
|
$ |
(7,113 |
) |
|
$ |
(2,738 |
) |
|
$ |
(9,304 |
) |
Net loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares - Basic |
|
$ |
(0.10 |
) |
|
$ |
(0.50 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.57 |
) |
Class B common shares -
Basic: |
|
$ |
(0.09 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.51 |
) |
Common shares - Diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.50 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.57 |
) |
Class B common shares -
Diluted: |
|
$ |
(0.09 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.51 |
) |
Weighted average number
of shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares - Basic |
|
|
11,038 |
|
|
|
10,957 |
|
|
|
11,026 |
|
|
|
10,923 |
|
Class B common shares -
Basic |
|
|
2,097 |
|
|
|
2,097 |
|
|
|
2,097 |
|
|
|
2,106 |
|
Common shares - Diluted |
|
|
11,038 |
|
|
|
10,957 |
|
|
|
11,026 |
|
|
|
10,923 |
|
Class B common shares -
Diluted |
|
|
2,097 |
|
|
|
2,097 |
|
|
|
2,097 |
|
|
|
2,106 |
|
Dividends per common
share |
|
$ |
0.060 |
|
|
$ |
0.060 |
|
|
$ |
0.240 |
|
|
$ |
0.240 |
|
Dividends per Class B
common share |
|
$ |
0.054 |
|
|
$ |
0.054 |
|
|
$ |
0.220 |
|
|
$ |
0.220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richardson Electronics, Ltd. |
Consolidated Statements of Cash Flows |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
|
May 30, 2020 |
|
|
June 1, 2019 |
|
Operating
activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,838 |
) |
|
$ |
(7,328 |
) |
Adjustments to reconcile net loss
to cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,386 |
|
|
|
3,173 |
|
Inventory provisions |
|
|
1,013 |
|
|
|
1,076 |
|
Loss on disposal of assets |
|
|
3 |
|
|
|
23 |
|
Share-based compensation expense |
|
|
683 |
|
|
|
697 |
|
Deferred income taxes |
|
|
(7 |
) |
|
|
315 |
|
Impairment of goodwill |
|
|
— |
|
|
|
6,332 |
|
Change in assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
3,895 |
|
|
|
(2,030 |
) |
Inventories |
|
|
(5,452 |
) |
|
|
(4,242 |
) |
Prepaid expenses and other assets |
|
|
620 |
|
|
|
622 |
|
Accounts payable |
|
|
631 |
|
|
|
(2,424 |
) |
Accrued liabilities |
|
|
(889 |
) |
|
|
1,097 |
|
Other |
|
|
(122 |
) |
|
|
126 |
|
Net cash provided by (used in) operating
activities |
|
|
1,923 |
|
|
|
(2,563 |
) |
Investing
activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(1,776 |
) |
|
|
(3,874 |
) |
Proceeds from maturity of investments |
|
|
21,000 |
|
|
|
9,800 |
|
Purchases of investments |
|
|
(29,000 |
) |
|
|
(17,800 |
) |
Net cash used in investing activities |
|
|
(9,776 |
) |
|
|
(11,874 |
) |
Financing
activities: |
|
|
|
|
|
|
|
|
Payment of financing lease principal |
|
|
(166 |
) |
|
|
— |
|
Proceeds from issuance of common stock |
|
|
59 |
|
|
|
259 |
|
Cash dividends paid on Common and Class B Common shares |
|
|
(3,101 |
) |
|
|
(3,076 |
) |
Net cash used in financing activities |
|
|
(3,208 |
) |
|
|
(2,817 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(423 |
) |
|
|
(1,192 |
) |
Decrease in cash and cash equivalents |
|
|
(11,484 |
) |
|
|
(18,446 |
) |
Cash and cash equivalents at beginning of period |
|
|
42,019 |
|
|
|
60,465 |
|
Cash and cash equivalents at end of period |
|
$ |
30,535 |
|
|
$ |
42,019 |
|
|
|
|
|
|
|
|
|
|
|
|
Richardson
Electronics, Ltd. |
Net Sales
and Gross Profit |
For the
Fourth Quarter and Fiscal 2020 and Fiscal 2019 |
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
Strategic Business Unit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY 2020 |
|
|
|
|
|
|
Q4 FY 2019 |
|
|
% Change |
|
PMT |
|
$ |
29,322 |
|
|
|
|
|
|
$ |
32,080 |
|
|
|
-8.6 |
% |
Canvys |
|
|
6,593 |
|
|
|
|
|
|
|
7,343 |
|
|
|
-10.2 |
% |
Healthcare |
|
|
1,447 |
|
|
|
|
|
|
|
2,740 |
|
|
|
-47.2 |
% |
Total |
|
$ |
37,362 |
|
|
|
|
|
|
$ |
42,163 |
|
|
|
-11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD FY 2020 |
|
|
|
|
|
|
YTD FY 2019 |
|
|
% Change |
|
PMT |
|
$ |
118,480 |
|
|
|
|
|
|
$ |
128,902 |
|
|
|
-8.1 |
% |
Canvys |
|
|
28,926 |
|
|
|
|
|
|
|
27,968 |
|
|
|
3.4 |
% |
Healthcare |
|
|
8,492 |
|
|
|
|
|
|
|
9,782 |
|
|
|
-13.2 |
% |
Total |
|
$ |
155,898 |
|
|
|
|
|
|
$ |
166,652 |
|
|
|
-6.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
|
|
|
|
Q4 FY 2020 |
|
|
% of Net Sales |
|
|
Q4 FY 2019 |
|
|
% of Net Sales |
|
PMT |
|
$ |
9,741 |
|
|
|
33.2 |
% |
|
$ |
9,734 |
|
|
|
30.3 |
% |
Canvys |
|
|
2,045 |
|
|
|
31.0 |
% |
|
|
2,359 |
|
|
|
32.1 |
% |
Healthcare |
|
|
(414 |
) |
|
|
-28.6 |
% |
|
|
419 |
|
|
|
15.3 |
% |
Total |
|
$ |
11,372 |
|
|
|
30.4 |
% |
|
$ |
12,512 |
|
|
|
29.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD FY 2020 |
|
|
% of Net Sales |
|
|
YTD FY 2019 |
|
|
% of Net Sales |
|
PMT |
|
$ |
38,288 |
|
|
|
32.3 |
% |
|
$ |
40,254 |
|
|
|
31.2 |
% |
Canvys |
|
|
9,313 |
|
|
|
32.2 |
% |
|
|
9,085 |
|
|
|
32.5 |
% |
Healthcare |
|
|
2,072 |
|
|
|
24.4 |
% |
|
|
2,396 |
|
|
|
24.5 |
% |
Total |
|
$ |
49,673 |
|
|
|
31.9 |
% |
|
$ |
51,735 |
|
|
|
31.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Details Contact: |
|
40W267 Keslinger Road |
Edward J. Richardson |
Robert J. Ben |
PO BOX 393 |
Chairman and CEO |
EVP & CFO |
LaFox, IL 60147-0393 USA |
Phone: (630) 208-2205 |
(630) 208-2203 |
(630) 208-2200 | Fax: (630) 208-2550 |
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