- Company Announces Second Half Cash
Dividend of 0.07 Per Share -
Deswell Industries, Inc. (Nasdaq: DSWL) today announced its
unaudited financial results for the second half of the fiscal year
ended March 31, 2019.
Net sales for the six months ended March 31, 2019 were $31.8
million, an increase of 2.8% compared to net sales of $30.9 million
for the six months ended March 31, 2018. Net sales increased by
4.9% to $15.1 million in the plastic segment and increased by 1.0%
to $16.5 million in the Company’s electronic segment.
Total gross margin increased to 17.2% during the six months
ended March 31, 2019, as compared to 12.6% in the same period last
year. Gross profit margin in the plastic segment increased to 20.9%
of net sales for the second half of fiscal 2019, as compared to
14.7% of net sales for the corresponding period of last fiscal
year. The increase in gross profit and margin in the plastic
segment was mainly due to the decreases in labor cost, as a result
of the reduction in headcount, as well as in factory overhead, as a
percentage of sales. Gross profit for the electronic segment for
the six months ended March 31, 2019 increased from 10.8% in second
half of fiscal 2018 to 13.9% in the second half of fiscal 2019. The
increase was mainly due to reduction in raw materials costs.
Operating income for the second half of fiscal 2019 was $0.3
million, as compared to an operating income of $0.2 million for the
same period of fiscal 2018.
The Company reported net income of $1.5 million for the six
months ended March 31, 2019, as compared to net income of $2.5
million for the six months ended March 31, 2018. Non-operating
income for the six months ended March 31, 2019 was $1.4 million, as
compared to non-operating income of $2.3 million in the year-ago
six months. Non-operating income during the six months ended March
31, 2019 was primarily comprised of $756,000 from rental income,
$454,000 of dividend income from securities investment, $88,000
from interest income, $217,000 from a decrease in the fair value of
marketable securities, as well as $350,000 of realized gain from
the sale of marketable securities, Deswell reported basic and
diluted income per share of $0.10 for the second half of fiscal
2019 (based on 15,885,000 and 15,969,000 weighted average shares
outstanding, respectively), as compared to basic and diluted income
share of $0.16 (based on 15,885,000 and 15,953,000 weighted average
shares outstanding), for the six months ended March 31, 2018.
Net sales for the year ended March 31, 2019 were $66.6 million,
an increase of 9.7% compared to net sales of $60.7 million for
fiscal 2018. Operating income for the year ended March 31, 2019
decreased to $0.5 million, as compared to operating income of $1.8
million for fiscal 2018. The decrease was mainly attributed to the
provision of $403,000 for doubtful accounts in fiscal 2019, as
compared to the reversal of $654,000 for doubtful account in fiscal
2018. The Company reported net income of $4.3 million in fiscal
2019, as compared to net income of $6.2 million for the year ended
March 31, 2018. Deswell reported basic and diluted net income per
share of $0.27 for fiscal 2019, (based on 15,885,000 and 16,059,000
weighted average share outstanding, respectively), as compared to
basic and diluted income per share of $0.39 (based on 15,855,000
and 15,985,000 weighted average shares outstanding), for the prior
fiscal year.
The Company's financial position remained strong, with $14.4
million in cash and cash equivalents and working capital totaled
$54.4 million as of March 31, 2019. Furthermore, the Company has no
long-term or short-term borrowings as of March 31, 2019.
Mr. Edward So, Chief Executive Officer, commented, “Fiscal 2019
represents our fourth consecutive year of revenue increases, with
our sales up 75 percent since we returned to growth in fiscal 2016.
Both of our divisions performed well, benefiting from strong
relationships with longstanding customers, as well as the addition
of multiple new customers. We also saw improved gross margins
during the six month period due to reduced labor and raw material
costs. Furthermore, we continue to monitor the ongoing US-China
trade tension and are prepared to proactively adjust our strategy
if necessary to support continued growth. Our balance sheet remains
solid and we look forward to continuing to carefully allocate
capital and focus on driving profitability.”
Second Half Dividend
The Company also announces that its board of directors today
declared a cash dividend of $0.07 per share for the second half of
the fiscal year ended March 31, 2019. The dividend will be payable
on July 12, 2019 to shareholders of record as of June 25, 2019.
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,
2019
2018
ASSETS (Unaudited) (Audited) Current assets : Cash and cash
equivalents $ 14,371 $ 15,192 Time deposits maturing over three
months 371 2,190 time deposits maturing over twelve months - 3,129
Marketable securities (note 2) 24,446 17,282 Accounts
receivable,net. 15,734 15,912 Inventories (note 3) 13,030 12,933
Prepaid expenses and other current assets 2,006
2,267 Total current assets 69,958 68,905 Property,
plant and equipment - net 30,211 31,494
Total assets $ 100,169 $ 100,399 LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities Accounts
payable $ 6,253 $ 8,596 Accrued payroll and employee benefits 5,676
5,566 Customer deposits 1,298 1,707 Other accrued liabilities 1,662
1,873 Income taxes payable 657 603
Total current liabilities 15,546 18,345 Deferred income tax
liabilities 659 775 Total liabilities
16,205 19,120
Shareholders' equity Common shares nil par value - authorized
30,000,000 shares, shares issued and outstanding as of March 31,
2019 and March 31, 2018 - 15,885,239, respectively. 53,063 53,063
Treasury stock at cost; 1,146,571 shares as of March 31, 2019 and
2018 (2,821 ) (2,821 ) Additional paid-in capital 8,005 8,005
Accumulated other comprehensive income 5,316 5,316 Retained
earnings 20,401 17,716 Total
shareholders' equity 83,964 81,279
Total liabilities and shareholders' equity $ 100,169 $
100,399
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,
2019
2018
2019
2018
Net sales $ 31,786 $ 30,908 $ 66,581 $ 60,667 Cost of sales
26,306 27,015 56,311 50,953 Gross
profit 5,480 3,893 10,270 9,714 Selling, general and administrative
expenses 4,696 4,372 9,459 8,806 Other income (expense), net
(501 ) 696 (278 ) 894 Operating income (loss)
283 217 533 1,802 Non-operating income, net (note 3) 1,402
2,265 3,884 4,395 Income before income taxes
1,685 2,482 4,417 6,197 Income taxes 169 (39 )
1447 7 Net income attributable to Deswell Industries, Inc. $
1,516 $ 2,521 $ 4,273 $ 6,190 Other comprehensive income $ -
$ -
$
-
$
-
Comprehensive income (loss) attributable to Deswell Industries,
Inc. $ 1,516 $ 2,521 $ 4,273 $ 6,190 Net income per
share attributable to Deswell Industries, Inc. (note 5) Basic: Net
income per share $ 0.10 $ 0.16 $ 0.27 $ 0.39 Weighted average
common shares outstanding shares (in thousands) 15,885
15,885 15,885 15,885 Diluted: Net
income (loss) per share $ 0.10 $ 0.16 $ 0.27 $ 0.39 Weighted
average number of shares outstanding (in thousands) 15,969
15,953 16,059 15,985
DESWELL
INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(U.S. dollars in thousands)
Year ended Mar 31,
2019
2018
Cash flows from operating activities : Net income $ 4,273 $ 6,190
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 2,114 2,138 Provision for
(reversal of) doubtful accounts, net 403 (674 ) Additional charges
for obsolescence allowance of inventories, net 256 296 Loss on
disposal of property, plant and equipment 22 61 Unrealized holding
gain on marketable securities (891 ) (1,401 ) Gain on sales of
marketable securities (746 ) (609 ) Scrip dividend received (33 )
(168 ) Deferred income tax (116 ) (114 ) Changes in operating
assets and liabilities : Accounts receivable (225 ) (2,079 )
Inventories (353 ) (2,541 ) Prepaid expenses and other current
assets 261 152 Accounts payable (2,343 ) 3,444 Accrued payroll and
employee benefits 110 923 Customer deposits (409 ) (445 ) Other
accrued liabilities (211 ) 399 Income taxes payable 54
127 Net cash provided by operating activities
2,166 5,699 Cash flows from
investing activities Purchase of property, plant and equipment (878
) (1,707 ) Proceeds from sale of property, plant and equipment, net
of transaction costs 25 6 Purchase of marketable securities (12,704
) (5,357 ) Proceeds from sales of marketable securities 7,210 6,580
Release of fixed deposits maturing over three months 1,819 3,232
Decrease in (increase in) fixed deposits maturing over twelve
months 3,129 (227 ) Net cash (used in)
provided by investing activities (1,399 ) 2,527
Cash flows from financing activities Dividends paid
(1,588 ) (1,112 ) Net cash used in financing
activities (1,588 ) (1,112 ) Net (decrease)
increase in cash and cash equivalents (821 ) 7,114 Cash and cash
equivalents, beginning of year 15,192 8,078
Cash and cash equivalents, end of year 14,371
15,192 Supplementary disclosures of cash flow
information : Cash paid during the year for : Interest - - Income
taxes - 85
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Investor Relations:John Nesbett/Jennifer BelodeauIMS
Investor Relations203.972.9200
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