- Company Announces First Half Cash Dividend
of 0.09 Per Share -
Deswell Industries, Inc. (Nasdaq: DSWL) today announced its
unaudited financial results for the first six months of fiscal
2021, ended September 30, 2020.
Net sales for the six months ended September 30, 2020 were $27.7
million, a decrease of 26.6% compared to net sales of $37.7 million
for the six months ended September 30, 2019. Net sales decreased by
40.4% to $8.7 million in the plastic segment and decreased by 17.8%
to $18.9 million in the Company’s electronic segment.
Total gross margin increased to 20.2% of net sales during the
six months ended September 30, 2020, as compared to 17.4% of net
sales in the same period last year. Gross profit margin in the
plastic segment decreased slightly to 20.4% of net sales for the
first half of fiscal 2021, compared to 21.0% of net sales for the
corresponding period of last fiscal year. The slight decrease in
gross profit and margin in the plastic segment was mainly due to an
increase in factory overheads as a percentage of net sales,
offsetting decreases in raw materials cost and subcontracting
charges. Gross profit margin in the electronic segment increased to
20.1% of net sales for the first half of fiscal 2021, compared to
15.0% of net sales for the corresponding period of last fiscal
year. The increase in gross profit and margin in the electronic
segment was mainly attributable to decreases in raw materials cost,
as a result of cost control measures in the first six months of
fiscal 2021. Operating income in the first half of fiscal 2021 was
$1.0 million, compared to operating income of $1.2 million for the
same period of fiscal 2020.
The Company reported net income of $1.5 million for the six
months ended September 30, 2020, compared to net income of $1.2
million for the six months ended September 30, 2019. This was
primarily due to an increase in gross profit margin and
non-operating income, as a percentage of sales, for the six months
ended September 30, 2020. Deswell reported basic and diluted income
per share of $0.10 for the first half of fiscal 2021 (based on
15,915,000 and 15,959,000 weighted average shares outstanding),
compared to basic and diluted income per share of $0.08 for the
first half of fiscal 2021 (based on 15,912,000 and 15,973,000
weighted average shares outstanding) respectively, for the six
months ended September 30, 2019.
The Company's financial position remained strong, with $19.4
million in cash and cash equivalents and working capital totaled
$53.5 million as of September 30, 2020. Furthermore, the Company
has no long-term or short-term borrowings as of September 30,
2020.
Mr. Edward So, Chief Executive Officer, commented, “The
worldwide Covid epidemic significantly impacted our business during
the six month period limiting support from company employees and
consultants overseas, disrupting our supply chain and delaying
product delivery to customers. We did see revenue improve a bit in
the back half of the six month period and are confident that
revenue will improve as the pandemic subsides.
“In spite of the significant revenue decrease, I am very pleased
with our ability to improve gross margin to 20 percent from 17
percent of sales and minimized the decrease in operating income
primarily by aggressively improving our labor efficiency and
reducing overhead.
“Finally, the Hong Kong stock market was less volatile in the
first 6 months of current fiscal year resulting in a reduced
unrealized loss on marketable securities by $725,000 which helped
us report an increase in net income for the six month period.”
First Half Dividend
The Company also announces that its board of directors today
declared a cash dividend of $0.09 per share for the first half of
the fiscal year ended September 30, 2020. The dividend will be
payable on December 10, 2020 to shareholders of record as of
November 23, 2020.
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)
September 30,
March 31,
2020
2020
ASSETS
(Unaudited)
(Audited)
Current assets :
Cash and cash equivalents
$
19,439
$
22,514
Fixed deposits maturing over three
months
3,489
783
Time deposits maturing over twelve
months-current portion
1,451
-
Marketable securities (note 2)
21,901
19,441
Accounts receivable, net
14,017
12,301
Inventories (note 3)
10,164
8,578
Prepaid expenses and other current
assets
1,608
1,752
Total current assets
72,069
65,369
Property, plant and equipment - net
27,766
28,586
Time deposits maturing over twelve
months
-
1,424
Total assets
$
99,835
$
95,379
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
$
8,207
$
4,604
Accrued payroll and employee benefits
6,415
6,077
Customer deposits
1,305
1,172
Other accrued liabilities
1,824
1,718
Income taxes payable
830
735
Total current liabilities
18,581
14,306
Deferred income tax liabilities
832
751
Total liabilities
19,413
15,057
Shareholders' equity
Common shares nil par value - authorized
30,000,000 shares, 17,061,810 shares issued as of March 31, 2020
and September 30, 2020; 15,915239 shares outstanding as of March
31, 2020 and September 30, 2020
53,143
53,143
Treasury stock at cost; 1,146,571 and
1,146,571 shares as of March 31, 2020 and September 30, 2020
(2,821
)
(2,821
)
Additional paid-in capital
7,989
7,989
Accumulated other comprehensive income
5,316
5,316
Retained earnings
16,795
16,695
Total shareholders' equity
80,422
80,322
Total liabilities and shareholders'
equity
$
99,835
$
95,379
DESWELL INDUSTRIES,
INC.
CONSOLIDATED STATEMENT OF
OPERATIONS & COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(U.S. dollars in thousands,
except per share data)
Six months ended
September 30,
2020
2019
Net sales
$
27,690
$
37,713
Cost of sales
22,095
31,169
Gross profit
5,595
6,544
Selling, general and administrative
expenses
4,720
5,208
Other income (expense), net
84
(180
)
Operating income
959
1,156
Non-operating income, net
804
219
Income before income taxes
1,763
1,375
Income taxes
231
126
Net income attributable to Deswell
Industries, Inc.
$
1,532
$
1,249
Other comprehensive income
$
-
$
-
Comprehensive income attributable to
Deswell Industries, Inc.
$
1,532
$
1,249
Net income per share attributable to
Deswell Industries, Inc. (note 4)
Basic:
Net income per share
$
0.10
$
0.08
Weighted average common shares
outstanding
shares (in thousands)
15,915
15,912
Diluted:
Net income per share
$
0.10
$
0.08
Weighted average common shares
outstanding shares (in thousands)
15,959
15,973
DESWELL INDUSTRIES,
INC.
CONSOLIDATED STATEMENT OF CASH
FLOWS (UNAUDITED)
( U.S. dollars in thousands )
Six months ended
September 30,
2020
2019
Cash flows from operating activities :
Net income
$
1,532
$
1,249
Adjustments to reconcile net income to net
cash:
Depreciation and amortization
895
1,014
Provision for doubtful accounts, net
432
202
Allowance for obsolete inventories
132
53
Loss on disposal of property, plant and
equipment
10
34
Unrealized holding loss on marketable
securities
527
1,252
Realized gain on disposal of marketable
securities
(54
)
(29
)
Scrip dividend received
(448
)
10
Deferred tax
81
(28
)
Changes in operating assets and
liabilities :
Accounts receivable
(2,148
)
(6,036
)
Inventories
(1,718
)
2,114
Prepaid expenses and other current
assets
144
(6
)
Accounts payable
3,603
2,470
Accrued payroll and employee benefits
338
368
Customer deposits
133
(217
)
Other accrued liabilities
106
100
Income taxes payable
95
49
Net cash provided by operating
activities
3,660
2,599
Cash flows from investing activities
Purchase of property, plant and
equipment
(85
)
(270
)
Proceeds from sale of property, plant and
equipment, net of transaction costs
-
5
Purchase of marketable securities
(3,026
)
(1,264
)
Proceeds from disposal of marketable
securities
541
1,620
Increase in fixed deposits maturing over
three months
(2,706
)
(1,471
)
Increase in fixed deposits maturing over
twelve months
(27
)
(1,417
)
Net cash used in investing activities
(5,303
)
(2,797
)
Cash flows from financing activities
Dividends paid
(1,432
)
(1,114
)
Exercise of stock options
-
64
Net cash used in financing activities
(1,432
)
(1,050
)
Net decrease in cash and cash
equivalents
(3,075
)
(1,248
)
Cash and cash equivalents, beginning of
period
22,514
14,371
Cash and cash equivalents, end of
period
19,439
13,123
Supplementary disclosures of cash flow
information :
Cash paid during the year for :
Interest
-
-
Income taxes
78
57
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version on businesswire.com: https://www.businesswire.com/news/home/20201110005173/en/
Investor Relations Contact: John Nesbett/Jennifer
Belodeau IMS Investor Relations 203.972.9200
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