Richardson Electronics, Ltd. (NASDAQ: RELL) today reported
financial results for its first quarter ended August 31, 2019.
The Company also announced that its Board of Directors
declared a $0.06 per share quarterly cash dividend.
First Quarter Results
Net sales for the first quarter of fiscal 2020
decreased 7.9% to $40.7 million compared to net sales of $44.2
million in the prior year’s first quarter. PMT sales
decreased $4.2 million primarily due to the decline in the
semiconductor wafer fabrication equipment market, partially offset
by higher sales of power conversion and RF and microwave
components. Canvys sales increased by $0.1 million or 1.4% due to
higher demand in its North American market. Richardson Healthcare
sales increased $0.6 million or 26.8% as a result of higher sales
of our ALTA750 TM CT tube and replacement parts for diagnostic
imaging equipment.
Gross margin decreased to $13.0 million, or
31.9% of net sales during the first quarter of fiscal 2020,
compared to $14.0 million, or 31.6% of net sales during the first
quarter of fiscal 2019. Margin increased as a percent of net
sales primarily due to favorable product mix and manufacturing over
absorption in Richardson Healthcare, partially offset by
unfavorable product mix and foreign exchange rates for Canvys.
Operating expenses were $12.8 million for the
first quarter of fiscal 2020 compared to $13.1 million in the first
quarter of fiscal 2019. The decrease in operating expenses
resulted from lower employee benefits, IT and bad debt expenses.
As a result, the Company reported an operating income of $0.1
million for the first quarter of fiscal 2020 compared to operating
income of $0.9 million in the prior year’s first quarter.
Other income for the first quarter of fiscal
2020, including interest income and foreign exchange, was $0.2
million, compared to other expense of $0.2 million in the first
quarter of fiscal 2019.
The income tax provision of $0.2 million for the
first quarter of fiscal 2020 reflected a provision for foreign
income taxes, which was lower than the prior year’s first quarter
and no U.S. tax benefit due to the valuation allowance recorded
against the net operating loss. The tax provision of $0.3
million in last year’s first quarter included a provision for
foreign income taxes and no U.S. tax benefit due to the valuation
allowance recorded against the net operating loss.
Net income for the first quarter of fiscal 2020
was $0.2 million compared to net income of $0.4 million in the
first quarter of fiscal 2019. Earnings per common share
(diluted) in the first quarter of fiscal 2020 were $0.01 compared
to $0.03 per common share (diluted) in the prior year’s first
quarter.
“We are pleased with the quarter over quarter
growth in our Healthcare business. We are optimistic this trend
will continue with increasing customer confidence in the ALTA750 TM
CT tube as well as the recent approval to use the CE Mark opening
up sales opportunities throughout Europe,“ said Edward J.
Richardson, Chairman, Chief Executive Officer, and President.
“Revenues resulting from our investments in new power and microwave
technologies also continue to increase and Canvys is providing
consistent growth helping offset the soft semiconductor wafer fab
equipment market,” he concluded.
CASH DIVIDEND
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 November 22, 2019, to common stockholders of record as of
November 7, 2019.
Cash and investments at the end of the first
quarter of fiscal 2020 were $46.5 million compared to $50.0 million
at the end of the fourth quarter of fiscal 2019 and $54.8 million
at the end of the first quarter of fiscal 2019. The Company
spent $0.3 million during the quarter on capital expenditures
primarily relating to our IT system and LaFox manufacturing
business versus $1.1 million during the first quarter of fiscal
2019. During the first quarter of fiscal 2020, the Company
did not repurchase any shares of its common stock. Currently,
there are 11.0 million outstanding shares of common stock and 2.1
million outstanding shares of Class B common stock.
CONFERENCE CALL INFORMATION
On Thursday, October 10, 2019, 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 first quarter fiscal year 2020 results.
A question and answer session will be included as part of the
call’s agenda.
Participant Instructions
Below are the instructions with the general
number and access code. Please note that those using these
dial-in instructions and access code only, will be logged in as a
guest. If you would like your name announced on the call,
please also register using the link below.
Participant Telephone Instructions:US Toll Free:
1-877-369-5230US Toll: 1-617-668-3632Access Code:
0355952#
International Dial-in Numbers
Register, receive a unique attendee ID by email
and therefore be identified by name during the call (Note, this
option cannot be shared by more than one person):
WebEx Entry Link: FY20 1st Quarter
Earnings Call for Richardson Electronics
Need urgent assistance? Call 1-301-250-7202
A replay of the call will be available beginning
at 11:00 a.m. CDT on October 11, 2019. The toll-free
telephone number for the replay is (833) 922-0391.
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.
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 |
|
|
August 31, 2019 |
|
June 1, 2019 |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
46,457 |
|
$ |
42,019 |
Accounts receivable, less allowance of $296 and $339,
respectively |
|
|
21,946 |
|
|
24,296 |
Inventories, net |
|
|
54,137 |
|
|
53,232 |
Prepaid expenses and other assets |
|
|
2,424 |
|
|
3,067 |
Investments - current |
|
|
— |
|
|
8,000 |
Total current assets |
|
|
124,964 |
|
|
130,614 |
Non-current assets: |
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
18,640 |
|
|
19,111 |
Intangible assets, net |
|
|
2,696 |
|
|
2,763 |
Lease ROU asset |
|
|
4,107 |
|
|
— |
Non-current deferred income taxes |
|
|
579 |
|
|
529 |
Total non-current assets |
|
|
26,022 |
|
|
22,403 |
Total
assets |
|
$ |
150,986 |
|
$ |
153,017 |
Liabilities and
Stockholders’
Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
12,906 |
|
$ |
16,943 |
Accrued liabilities |
|
|
10,338 |
|
|
11,273 |
Lease liability current |
|
|
1,541 |
|
|
— |
Total current liabilities |
|
|
24,785 |
|
|
28,216 |
Non-current liabilities: |
|
|
|
|
|
|
Non-current deferred income tax liabilities |
|
|
216 |
|
|
212 |
Lease liability non-current |
|
|
2,678 |
|
|
— |
Other non-current liabilities |
|
|
692 |
|
|
832 |
Total non-current liabilities |
|
|
3,586 |
|
|
1,044 |
Total
liabilities |
|
|
28,371 |
|
|
29,260 |
Stockholders’
equity |
|
|
|
|
|
|
Common stock, $0.05 par value; issued and outstanding 11,029 shares
at |
|
|
|
|
|
|
August 31, 2019 and 10,957 shares at June 1, 2019 |
|
|
551 |
|
|
547 |
Class B common stock, convertible, $0.05 par value; issued and
outstanding 2,097 |
|
|
|
|
|
|
shares at August 31, 2019 and June 1, 2019 |
|
|
105 |
|
|
105 |
Preferred stock, $1.00 par value, no shares issued |
|
|
— |
|
|
— |
Additional paid-in-capital |
|
|
61,200 |
|
|
61,012 |
Common stock in treasury, at cost, no shares at August 31, 2019 and
June 1, 2019 |
|
|
— |
|
|
— |
Retained earnings |
|
|
59,085 |
|
|
59,703 |
Accumulated other comprehensive income |
|
|
1,674 |
|
|
2,390 |
Total stockholders’
equity |
|
|
122,615 |
|
|
123,757 |
Total liabilities and
stockholders’
equity |
|
$ |
150,986 |
|
$ |
153,017 |
|
|
|
|
|
|
|
Richardson Electronics, Ltd. |
|
Unaudited Consolidated Statements of Comprehensive
Loss |
|
(in thousands, except per share amounts) |
|
|
|
Three Months Ended |
|
|
|
August 31, 2019 |
|
|
September 1, 2018 |
|
Statements of Comprehensive Loss |
|
|
|
|
|
|
|
|
Net sales |
|
$ |
40,653 |
|
|
$ |
44,157 |
|
Cost of sales |
|
|
27,702 |
|
|
|
30,204 |
|
Gross profit |
|
|
12,951 |
|
|
|
13,953 |
|
Selling, general and
administrative expenses |
|
|
12,847 |
|
|
|
13,099 |
|
Loss on disposal of
assets |
|
|
1 |
|
|
|
— |
|
Operating income |
|
|
103 |
|
|
|
854 |
|
Other (income) expense: |
|
|
|
|
|
|
|
|
Investment/interest income |
|
|
(120 |
) |
|
|
(126 |
) |
Foreign exchange loss |
|
|
(110 |
) |
|
|
286 |
|
Other, net |
|
|
(1 |
) |
|
|
(8 |
) |
Total other (income) expense |
|
|
(231 |
) |
|
|
152 |
|
Income before income
taxes |
|
|
334 |
|
|
|
702 |
|
Income tax provision |
|
|
177 |
|
|
|
271 |
|
Net income |
|
|
157 |
|
|
|
431 |
|
Foreign currency translation
loss, net of tax |
|
|
(716 |
) |
|
|
(740 |
) |
Comprehensive loss |
|
$ |
(559 |
) |
|
$ |
(309 |
) |
Net income per share |
|
|
|
|
|
|
|
|
Common shares - Basic |
|
$ |
0.01 |
|
|
$ |
0.03 |
|
Class B common shares -
Basic |
|
$ |
0.01 |
|
|
$ |
0.03 |
|
Common shares - Diluted |
|
$ |
0.01 |
|
|
$ |
0.03 |
|
Class B common shares -
Diluted |
|
$ |
0.01 |
|
|
$ |
0.03 |
|
Weighted average
number of shares: |
|
|
|
|
|
|
|
|
Common shares – Basic |
|
|
10,990 |
|
|
|
10,829 |
|
Class B common shares –
Basic |
|
|
2,097 |
|
|
|
2,132 |
|
Common shares – Diluted |
|
|
10,990 |
|
|
|
10,982 |
|
Class B common shares –
Diluted |
|
|
2,097 |
|
|
|
2,132 |
|
Dividends per common
share |
|
$ |
0.060 |
|
|
$ |
0.060 |
|
Dividends per Class B
common share |
|
$ |
0.054 |
|
|
$ |
0.054 |
|
|
|
|
|
|
|
|
|
|
Richardson Electronics, Ltd. |
|
Unaudited Consolidated Statements of Cash
Flows |
|
(in thousands) |
|
|
|
Three Months Ended |
|
|
|
August 31, 2019 |
|
|
September 1, 2018 |
|
Operating activities: |
|
|
|
|
|
|
|
|
Net
income |
|
$ |
157 |
|
|
$ |
431 |
|
Adjustments to reconcile net
income to cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
833 |
|
|
|
764 |
|
Inventory provisions |
|
|
161 |
|
|
|
215 |
|
Loss on disposal of assets |
|
|
1 |
|
|
|
— |
|
Share-based compensation expense |
|
|
188 |
|
|
|
165 |
|
Deferred income taxes |
|
|
(48 |
) |
|
|
58 |
|
Change in assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
2,161 |
|
|
|
(198 |
) |
Inventories |
|
|
(1,357 |
) |
|
|
77 |
|
Prepaid expenses and other assets |
|
|
625 |
|
|
|
37 |
|
Accounts payable |
|
|
(3,955 |
) |
|
|
(5,419 |
) |
Accrued liabilities |
|
|
(876 |
) |
|
|
227 |
|
Other |
|
|
56 |
|
|
|
13 |
|
Net cash used in operating activities |
|
|
(2,054 |
) |
|
|
(3,630 |
) |
Investing
activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(339 |
) |
|
|
(1,072 |
) |
Proceeds from maturity of investments |
|
|
8,000 |
|
|
|
— |
|
Purchases of investments |
|
|
— |
|
|
|
(2,300 |
) |
Net cash provided by (used in) investing
activities |
|
|
7,661 |
|
|
|
(3,372 |
) |
Financing
activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
|
— |
|
|
|
192 |
|
Cash dividends paid |
|
|
(775 |
) |
|
|
(764 |
) |
Payment of financing lease principal |
|
|
(30 |
) |
|
|
— |
|
Other |
|
|
4 |
|
|
|
— |
|
Net cash used in financing activities |
|
|
(801 |
) |
|
|
(572 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(368 |
) |
|
|
(413 |
) |
Increase (decrease) in cash and cash
equivalents |
|
|
4,438 |
|
|
|
(7,987 |
) |
Cash and cash equivalents at beginning of period |
|
|
42,019 |
|
|
|
60,465 |
|
Cash and cash equivalents at end of period |
|
$ |
46,457 |
|
|
$ |
52,478 |
|
|
|
|
|
|
|
|
|
|
Richardson Electronics, Ltd. |
Net Sales and Gross Profit |
For the First Quarter of Fiscal 2020 and Fiscal
2019 |
($ in thousands) |
By Strategic Business Unit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 FY 2020 |
|
|
|
|
|
|
Q1 FY 2019 |
|
|
% Change |
|
PMT |
|
$ |
30,567 |
|
|
|
|
|
|
$ |
34,769 |
|
|
|
-12.1 |
% |
Canvys |
|
|
7,277 |
|
|
|
|
|
|
|
7,173 |
|
|
|
1.4 |
% |
Healthcare |
|
|
2,809 |
|
|
|
|
|
|
|
2,215 |
|
|
|
26.8 |
% |
Total |
|
$ |
40,653 |
|
|
|
|
|
|
$ |
44,157 |
|
|
|
-7.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 FY 2020 |
|
|
% of Net Sales |
|
|
Q1 FY 2019 |
|
|
% of Net Sales |
|
PMT |
|
$ |
9,679 |
|
|
|
31.7 |
% |
|
$ |
11,007 |
|
|
|
31.7 |
% |
Canvys |
|
|
2,321 |
|
|
|
31.9 |
% |
|
|
2,313 |
|
|
|
32.2 |
% |
Healthcare |
|
|
951 |
|
|
|
33.9 |
% |
|
|
633 |
|
|
|
28.6 |
% |
Total |
|
$ |
12,951 |
|
|
|
31.9 |
% |
|
$ |
13,953 |
|
|
|
31.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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