Richardson Electronics, Ltd. (NASDAQ: RELL) today reported
financial results for its second quarter ended November 28, 2020.
The Company also announced that its Board of Directors declared a
$0.06 per share quarterly cash dividend.
Second Quarter Results
Net sales for the second quarter of fiscal 2021
increased 7.0% to $42.4 million compared to net sales of $39.6
million in the prior year’s second quarter primarily due to higher
net sales for PMT and Richardson Healthcare, partially offset by
lower net sales for Canvys. 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. PMT sales increased by 11.2% from
last year’s second quarter as a result of higher sales of
semiconductor wafer fab equipment specialty products as well as
power conversion and RF and microwave components. Power grid tube
sales continued to be negatively impacted by the pandemic, however
sales of certain product lines increased from the second quarter of
fiscal 2020. Richardson Healthcare sales increased $0.6 million or
28.2% primarily due to a significant increase in demand for the
ALTA750™ Tubes, which was the highest quantity sold in any
quarter. In addition, equipment sales increased in Latin America.
Canvys sales decreased by $1.2 million or 14.7% due to temporary
decreased customer demand globally related to COVID-19.
Gross margin improved to 33.8% of net sales
during the second quarter of fiscal 2021 compared to 32.0% of net
sales during the second quarter of fiscal 2020. PMT margin
increased to 34.2% from 31.6% due to a favorable product mix and
improved manufacturing efficiencies. Canvys margin as a percent of
net sales increased to 35.5% from 32.9% as a result of its product
mix. Healthcare margin as a percent of net sales was 25.6% in the
second quarter of fiscal 2021 compared to 34.3% in the prior year’s
second quarter primarily due to under absorbed manufacturing
expenses related to tube development and manufacturing
improvements.
Operating expenses were $13.5 million in the
second quarter of fiscal 2021 compared to $13.2 million in the
second quarter of fiscal 2020. The increase in operating expenses
resulted from higher legal and employee compensation expenses,
partially offset by lower travel and consulting expenses.
Throughout the pandemic, the Company decided to support its
employees through regular merit increases and incentive plans, and
by avoiding layoffs or furloughs.
As a result, the Company reported an operating
income of $0.9 million for the second quarter of fiscal 2021
compared to an operating loss of $0.5 million in the prior year’s
second quarter. Other expense for the second quarter of fiscal
2021, including interest income and foreign exchange, was $0.1
million, the same as in the second quarter of fiscal 2020.
The income tax provision of $0.1 million for the
second quarter of fiscal 2021 reflected a provision for foreign
income taxes, which was lower than the prior year’s second quarter,
and no U.S. tax benefit due to the valuation allowance recorded
against the net operating loss. Net income for the second quarter
of fiscal 2021 was $0.7 million compared to a net loss of $0.6
million in the second quarter of fiscal 2020. Earnings per common
share (diluted) in the second quarter of fiscal 2021 was $0.05.
“We were happy with the sales growth in
Healthcare, PMG and semiconductor wafer fab equipment products
despite the ongoing impact of the coronavirus around the world”
said Edward J. Richardson, Chairman, Chief Executive Officer, and
President. “We were also pleased with the significant free cash
flow generated during the quarter reflecting our commitment to
carefully control expenses and capital expenditures” he
concluded.
FINANCIAL SUMMARY – SIX MONTHS ENDED
NOVEMBER 28, 2020
- Net sales for the first six months
of fiscal 2021 were $81.2 million, an increase of 1.2%, compared to
net sales of $80.3 million during the first six months of fiscal
2020. Sales increased by $3.0 million or 5.0% for PMT but decreased
by $1.7 million or 11.4% for Canvys and $0.4 million or 7.0% for
Richardson Healthcare.
- Gross margin increased to $26.7
million during the first six months of fiscal 2021, compared to
$25.6 million during the first six months of fiscal 2020. As a
percentage of net sales, gross margin increased to 32.9% of net
sales during the first six months of fiscal 2021, compared to 31.9%
of net sales during the first six months of fiscal 2020, primarily
as a result of a favorable product mix in PMT and Canvys, and
improved manufacturing efficiencies for PMT.
- Operating expenses increased to
$26.5 million for the first six months of fiscal 2021, compared to
$26.0 million for the first six months of fiscal 2020. The increase
in operating expenses resulted from higher legal and employee
compensation expenses, partially offset by lower travel and
consulting expenses.
- Operating income during the first
six months of fiscal 2021 was $0.2 million, compared to an
operating loss of $0.4 million during the first six months of
fiscal 2020.
- Other expense for the first six
months of fiscal 2021, including interest income and foreign
exchange, was $0.5 million, as compared to other income of $0.2
million in the first six months of fiscal 2020.
- The income tax provision of $0.2
million during the first six months of fiscal 2021 reflected a
provision for foreign income taxes, which was lower than in the
prior year’s first six months, and no U.S. tax benefit due to the
valuation allowance recorded against the net operating loss.
- Net loss for the first six months
of fiscal 2021 was $0.5 million, the same as during the first six
months of fiscal 2020.
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
February 24, 2021, to common stockholders of record as of February
5, 2021.
Cash and investments at the end of the second
quarter of fiscal 2021 were $46.0 million compared to $42.5 million
at the end of the first quarter of fiscal 2021 and $46.1 million at
the end of the second quarter of fiscal 2020. The Company spent
$0.6 million during the quarter on capital expenditures primarily
related to its Healthcare business and IT System, versus $0.5
million during the second quarter of fiscal 2020.
CONFERENCE CALL INFORMATION
On Thursday, January 7, 2021, at 9:00 a.m. CST,
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 second quarter fiscal year 2021
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: 8960048 approximately five minutes before the start
of the call. A replay of the call will be available beginning
at 1:00 p.m. CST on January 7, 2021, for seven days. The
telephone number for the replay is (855) 859-2056; Conference ID:
8960048.
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
that 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 3, 2020, 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)
|
|
Unaudited |
|
|
Audited |
|
|
|
November 28,2020 |
|
|
May 30,2020 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
37,023 |
|
|
$ |
30,535 |
|
Accounts receivable, less allowance of $256 and $334,
respectively |
|
|
21,077 |
|
|
|
20,197 |
|
Inventories, net |
|
|
59,538 |
|
|
|
57,492 |
|
Prepaid expenses and other assets |
|
|
2,798 |
|
|
|
2,442 |
|
Investments - current |
|
|
9,000 |
|
|
|
16,000 |
|
Total current assets |
|
|
129,436 |
|
|
|
126,666 |
|
Non-current assets: |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
17,358 |
|
|
|
17,674 |
|
Intangible assets, net |
|
|
2,388 |
|
|
|
2,505 |
|
Lease ROU asset |
|
|
2,857 |
|
|
|
3,419 |
|
Non-current deferred income taxes |
|
|
529 |
|
|
|
456 |
|
Total non-current assets |
|
|
23,132 |
|
|
|
24,054 |
|
Total assets |
|
$ |
152,568 |
|
|
$ |
150,720 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
15,089 |
|
|
$ |
17,372 |
|
Accrued liabilities |
|
|
13,998 |
|
|
|
10,324 |
|
Lease liability current |
|
|
1,280 |
|
|
|
1,485 |
|
Total current liabilities |
|
|
30,367 |
|
|
|
29,181 |
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Non-current deferred income tax liabilities |
|
|
171 |
|
|
|
161 |
|
Lease liability non-current |
|
|
1,512 |
|
|
|
1,941 |
|
Other non-current liabilities |
|
|
884 |
|
|
|
777 |
|
Total non-current liabilities |
|
|
2,567 |
|
|
|
2,879 |
|
Total liabilities |
|
|
32,934 |
|
|
|
32,060 |
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Common stock, $0.05 par value; issued and outstanding 11,111 shares
on November 28, 2020 and 11,038 shares on May 30, 2020 |
|
|
556 |
|
|
|
552 |
|
Class B common stock, convertible, $0.05 par value; issued and
outstanding 2,097 shares on November 28, 2020 and May 30, 2020 |
|
|
105 |
|
|
|
105 |
|
Preferred stock, $1.00 par value, no shares issued |
|
|
— |
|
|
|
— |
|
Additional paid-in-capital |
|
|
62,124 |
|
|
|
61,749 |
|
Retained earnings |
|
|
52,746 |
|
|
|
54,764 |
|
Accumulated other comprehensive income |
|
|
4,103 |
|
|
|
1,490 |
|
Total stockholders’ equity |
|
|
119,634 |
|
|
|
118,660 |
|
Total liabilities and stockholders’ equity |
|
$ |
152,568 |
|
|
$ |
150,720 |
|
|
|
|
|
|
|
|
|
|
Richardson Electronics,
Ltd.Unaudited Consolidated Statements of
Comprehensive Income (Loss)(in thousands, except per share
amounts)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
November 28,2020 |
|
|
November 30,2019 |
|
|
November 28,2020 |
|
|
November 30,2019 |
|
Statements of Comprehensive Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
42,418 |
|
|
$ |
39,634 |
|
|
$ |
81,230 |
|
|
$ |
80,287 |
|
Cost of
sales |
|
|
28,075 |
|
|
|
26,954 |
|
|
|
54,528 |
|
|
|
54,656 |
|
Gross profit |
|
|
14,343 |
|
|
|
12,680 |
|
|
|
26,702 |
|
|
|
25,631 |
|
Selling,
general and administrative expenses |
|
|
13,491 |
|
|
|
13,161 |
|
|
|
26,467 |
|
|
|
26,008 |
|
Loss on
disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Operating income (loss) |
|
|
852 |
|
|
|
(481 |
) |
|
|
235 |
|
|
|
(378 |
) |
Other
expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment/interest income |
|
|
(15 |
) |
|
|
(123 |
) |
|
|
(33 |
) |
|
|
(243 |
) |
Foreign exchange loss |
|
|
143 |
|
|
|
199 |
|
|
|
585 |
|
|
|
89 |
|
Other, net |
|
|
(18 |
) |
|
|
(15 |
) |
|
|
(36 |
) |
|
|
(16 |
) |
Total other expense (income) |
|
|
110 |
|
|
|
61 |
|
|
|
516 |
|
|
|
(170 |
) |
Income
(loss) before income taxes |
|
|
742 |
|
|
|
(542 |
) |
|
|
(281 |
) |
|
|
(208 |
) |
Income
tax provision |
|
|
53 |
|
|
|
80 |
|
|
|
177 |
|
|
|
257 |
|
Net income (loss) |
|
|
689 |
|
|
|
(622 |
) |
|
|
(458 |
) |
|
|
(465 |
) |
Foreign
currency translation gain (loss), net of tax |
|
|
477 |
|
|
|
222 |
|
|
|
2,613 |
|
|
|
(494 |
) |
Comprehensive income (loss) |
|
$ |
1,166 |
|
|
$ |
(400 |
) |
|
$ |
2,155 |
|
|
$ |
(959 |
) |
Net
income (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares - Basic |
|
$ |
0.05 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.04 |
) |
Class B
common shares - Basic |
|
$ |
0.05 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
Common
shares - Diluted |
|
$ |
0.05 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.04 |
) |
Class B
common shares - Diluted |
|
$ |
0.05 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
Weighted average number of shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares – Basic |
|
|
11,111 |
|
|
|
11,038 |
|
|
|
11,090 |
|
|
|
11,014 |
|
Class B
common shares – Basic |
|
|
2,097 |
|
|
|
2,097 |
|
|
|
2,097 |
|
|
|
2,097 |
|
Common
shares – Diluted |
|
|
11,128 |
|
|
|
11,038 |
|
|
|
11,090 |
|
|
|
11,014 |
|
Class B
common shares – Diluted |
|
|
2,097 |
|
|
|
2,097 |
|
|
|
2,097 |
|
|
|
2,097 |
|
Dividends per common share |
|
$ |
0.060 |
|
|
$ |
0.060 |
|
|
$ |
0.120 |
|
|
$ |
0.120 |
|
Dividends per Class B common share |
|
$ |
0.054 |
|
|
$ |
0.054 |
|
|
$ |
0.108 |
|
|
$ |
0.108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richardson Electronics,
Ltd.Unaudited Consolidated Statements of Cash
Flows(in thousands)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
November 28,2020 |
|
|
November 30,2019 |
|
|
November 28,2020 |
|
|
November 30,2019 |
|
Operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
689 |
|
|
$ |
(622 |
) |
|
$ |
(458 |
) |
|
$ |
(465 |
) |
Adjustments to reconcile net income (loss) to cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
873 |
|
|
|
825 |
|
|
|
1,746 |
|
|
|
1,658 |
|
Inventory provisions |
|
|
215 |
|
|
|
120 |
|
|
|
452 |
|
|
|
281 |
|
Loss on disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Share-based compensation expense |
|
|
178 |
|
|
|
182 |
|
|
|
379 |
|
|
|
370 |
|
Deferred income taxes |
|
|
(55 |
) |
|
|
23 |
|
|
|
(53 |
) |
|
|
(25 |
) |
Change
in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
687 |
|
|
|
(335 |
) |
|
|
(167 |
) |
|
|
1,826 |
|
Inventories |
|
|
613 |
|
|
|
(2,062 |
) |
|
|
(1,008 |
) |
|
|
(3,419 |
) |
Prepaid expenses and other assets |
|
|
(381 |
) |
|
|
(423 |
) |
|
|
(272 |
) |
|
|
202 |
|
Accounts payable |
|
|
211 |
|
|
|
2,590 |
|
|
|
(2,523 |
) |
|
|
(1,365 |
) |
Accrued liabilities |
|
|
1,633 |
|
|
|
486 |
|
|
|
3,412 |
|
|
|
(390 |
) |
Other |
|
|
(236 |
) |
|
|
(165 |
) |
|
|
(438 |
) |
|
|
(109 |
) |
Net cash provided by (used in) operating
activities |
|
|
4,427 |
|
|
|
619 |
|
|
|
1,070 |
|
|
|
(1,435 |
) |
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(562 |
) |
|
|
(475 |
) |
|
|
(1,280 |
) |
|
|
(814 |
) |
Proceeds from maturity of investments |
|
|
— |
|
|
|
— |
|
|
|
16,000 |
|
|
|
8,000 |
|
Purchases of investments |
|
|
— |
|
|
|
(13,000 |
) |
|
|
(9,000 |
) |
|
|
(13,000 |
) |
Net cash (used in) provided by investing
activities |
|
|
(562 |
) |
|
|
(13,475 |
) |
|
|
5,720 |
|
|
|
(5,814 |
) |
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
|
— |
|
|
|
59 |
|
|
|
— |
|
|
|
59 |
|
Cash dividends paid |
|
|
(780 |
) |
|
|
(775 |
) |
|
|
(1,560 |
) |
|
|
(1,550 |
) |
Payment of financing lease principal |
|
|
(46 |
) |
|
|
(45 |
) |
|
|
(91 |
) |
|
|
(75 |
) |
Other |
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
Net cash used in financing activities |
|
|
(826 |
) |
|
|
(765 |
) |
|
|
(1,651 |
) |
|
|
(1,566 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
489 |
|
|
|
218 |
|
|
|
1,349 |
|
|
|
(150 |
) |
Increase (decrease) in cash and cash
equivalents |
|
|
3,528 |
|
|
|
(13,403 |
) |
|
|
6,488 |
|
|
|
(8,965 |
) |
Cash and cash equivalents at beginning of period |
|
|
33,495 |
|
|
|
46,457 |
|
|
|
30,535 |
|
|
|
42,019 |
|
Cash and cash equivalents at end of period |
|
$ |
37,023 |
|
|
$ |
33,054 |
|
|
$ |
37,023 |
|
|
$ |
33,054 |
|
|
|
|
|
|
|
|
|
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|
Richardson Electronics,
Ltd.Net Sales and Gross ProfitFor
the Second Quarter and First Six Months of Fiscal 2021 and Fiscal
2020($ in thousands)
By Strategic Business Unit: |
|
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Net
Sales |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 FY 2021 |
|
|
|
|
|
|
Q2 FY 2020 |
|
|
% Change |
|
PMT |
|
$ |
32,929 |
|
|
|
|
|
|
$ |
29,603 |
|
|
|
11.2 |
% |
Canvys |
|
|
6,701 |
|
|
|
|
|
|
|
7,856 |
|
|
|
-14.7 |
% |
Healthcare |
|
|
2,788 |
|
|
|
|
|
|
|
2,175 |
|
|
|
28.2 |
% |
Total |
|
$ |
42,418 |
|
|
|
|
|
|
$ |
39,634 |
|
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD FY 2021 |
|
|
|
|
|
|
YTD FY 2020 |
|
|
% Change |
|
PMT |
|
$ |
63,181 |
|
|
|
|
|
|
$ |
60,170 |
|
|
|
5.0 |
% |
Canvys |
|
|
13,413 |
|
|
|
|
|
|
|
15,133 |
|
|
|
-11.4 |
% |
Healthcare |
|
|
4,636 |
|
|
|
|
|
|
|
4,984 |
|
|
|
-7.0 |
% |
Total |
|
$ |
81,230 |
|
|
|
|
|
|
$ |
80,287 |
|
|
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
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|
Gross
Profit |
|
|
|
|
|
Q2 FY 2021 |
|
|
% of Net Sales |
|
|
Q2 FY 2020 |
|
|
% of Net Sales |
|
PMT |
|
$ |
11,251 |
|
|
|
34.2 |
% |
|
$ |
9,349 |
|
|
|
31.6 |
% |
Canvys |
|
|
2,379 |
|
|
|
35.5 |
% |
|
|
2,585 |
|
|
|
32.9 |
% |
Healthcare |
|
|
713 |
|
|
|
25.6 |
% |
|
|
746 |
|
|
|
34.3 |
% |
Total |
|
$ |
14,343 |
|
|
|
33.8 |
% |
|
$ |
12,680 |
|
|
|
32.0 |
% |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
YTD FY 2021 |
|
|
% of Net Sales |
|
|
YTD FY 2020 |
|
|
% of Net Sales |
|
PMT |
|
$ |
21,222 |
|
|
|
33.6 |
% |
|
$ |
19,028 |
|
|
|
31.6 |
% |
Canvys |
|
|
4,663 |
|
|
|
34.8 |
% |
|
|
4,906 |
|
|
|
32.4 |
% |
Healthcare |
|
|
817 |
|
|
|
17.6 |
% |
|
|
1,697 |
|
|
|
34.0 |
% |
Total |
|
$ |
26,702 |
|
|
|
32.9 |
% |
|
$ |
25,631 |
|
|
|
31.9 |
% |
|
|
|
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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