Richardson Electronics Reports Third Quarter Fiscal 2020 Operating Profit and Declares Quarterly Cash Dividend
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Richardson Electronics Reports Third Quarter Fiscal 2020 Operating Profit and Declares Quarterly Cash Dividend

Canvys, PMG and CT Tube Revenues Grow Versus Q3 FY19

Q3 FY20 Highlights

LAFOX, Ill., April 08, 2020 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its third quarter ended February 29, 2020.  The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend. 

Third Quarter Results

Net sales for the third quarter of fiscal 2020 decreased 2.0% to $38.2 million compared to net sales of $39.0 million in the prior year’s third quarter. Canvys sales increased by $0.3 million or 3.5% due to higher demand in its North American market. Sales of semiconductor wafer fab equipment specialty products also increased from last year’s third quarter. Although PMT sales benefited from higher sales of power conversion and RF and microwave components, overall sales for PMT decreased $0.7 million or 2.5%. This was primarily due to economic softness in the power grid tube market and lower sales in China due to the coronavirus. We experienced delays in shipments to customers in China during mandatory shelter in place orders as well as delayed receipt of goods originating in China and destined for other locations.  Richardson Healthcare sales decreased $0.2 million or 11.9% as a result of lower sales of equipment in Latin America and non-core diagnostic imaging parts, partially offset by higher sales of our ALTA750™ CT tube.

Gross margin increased to $12.7 million, or 33.1% of net sales during the third quarter of fiscal 2020, compared to $12.3 million, or 31.5% of net sales during the third quarter of fiscal 2019.  Margin increased as a percent of net sales primarily due to a favorable product mix and improved manufacturing efficiencies in both PMT and Richardson Healthcare.

Operating expenses were $12.7 million for the third quarter of fiscal 2020 compared to $13.1 million in the third quarter of fiscal 2019.  The decrease in operating expenses resulted from lower severance, legal and professional services expenses, partially offset by higher research and development expenses for Richardson Healthcare as we invest in additional CT x-ray tube types. 

As a result, the Company reported an operating income of $11,000 for the third quarter of fiscal 2020 compared to an operating loss of $0.8 million in the prior year’s third quarter. Other income for the third quarter of fiscal 2020, including interest income and foreign exchange, was $0.1 million, compared to other income of less than $0.1 million in the third quarter of fiscal 2019.

The income tax provision of $0.2 million for the third quarter of fiscal 2020 reflected a provision for foreign income taxes, which was lower than the prior year’s third quarter provision and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. 

Net loss for the third quarter of fiscal 2020 was $0.1 million compared to a net loss of $1.1 million in the third quarter of fiscal 2019.  

“Despite the challenges caused by the coronavirus, we are pleased to see continued growth in Canvys and the power and microwave technologies group.  We also saw an increase in ALTA750™ CT tube sales,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “Given the fluid situation in the global economy, we will continue to protect our cash and closely manage operating expenses and cash flow in line with economic conditions. Currently, our manufacturing and distribution operations in LaFox, Illinois and our display operations in Marlborough, Massachusetts are considered ‘Essential Businesses’ under the states’ Shelter in Place directives. As such, we continue to operate while respecting guidelines for social distancing,” he concluded.

FINANCIAL SUMMARY – NINE MONTHS ENDED FEBRUARY 29, 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 May 27, 2020, to common stockholders of record as of May 6, 2020.

Cash and investments at the end of the third quarter of fiscal 2020 were $43.9 million compared to $46.1 million at the end of the second quarter of fiscal 2020 and $49.4 million at the end of the third quarter of fiscal 2019.  The Company spent $0.4 million during the quarter on capital expenditures primarily related to our IT System, Facilities and LaFox manufacturing business versus $1.0 million during the third quarter of fiscal 2019.  

CONFERENCE CALL INFORMATION

On Thursday, April 9, 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 third quarter 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) (866) 800-8648 or (International) (617) 614-2702 and enter passcode 95925021 approximately five minutes prior to the start of the call.  A replay of the call will be available beginning at 10:00 a.m. CDT on April 10, 2020, for seven days.  The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 69273455.

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)
 
   Unaudited  Audited
  February 29, 2020  June 1, 2019
Assets       
Current assets:       
Cash and cash equivalents $30,875  $42,019
Accounts receivable, less allowance of $194 and $339, respectively  23,074   24,296
Inventories, net  56,677   53,232
Prepaid expenses and other assets  2,910   3,067
Investments - current  13,000   8,000
Total current assets  126,536   130,614
Non-current assets:       
Property, plant and equipment, net  17,999   19,111
Intangible assets, net  2,572   2,763
Lease ROU asset  3,727   
Non-current deferred income taxes  574   529
Total non-current assets  24,872   22,403
Total assets $151,408  $153,017
Liabilities and Stockholders Equity       
Current liabilities:       
Accounts payable $14,675  $16,943
Accrued liabilities  11,002   11,273
Lease liability current  1,566   
Total current liabilities  27,243   28,216
Non-current liabilities:       
Non-current deferred income tax liabilities  314   212
Lease liability non-current  2,204   
Other non-current liabilities  742   832
Total non-current liabilities  3,260   1,044
Total liabilities  30,503   29,260
Stockholders equity       
Common stock, $0.05 par value; issued and outstanding 11,038 shares at
  February 29, 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 February 29, 2020 and June 1, 2019
  105   105
Preferred stock, $1.00 par value, no shares issued     
Additional paid-in-capital  61,593   61,012
Common stock in treasury, at cost, no shares at February 29, 2020 and
  June 1, 2019
     
Retained earnings  56,819   59,703
Accumulated other comprehensive income  1,836   2,390
Total stockholders equity  120,905   123,757
Total liabilities and stockholders equity $151,408  $153,017


Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Loss
(in thousands, except per share amounts)
 
  
  Three Months Ended  Nine Months Ended 
  February 29,
2020
  March 2,
2019
  February 29,
2020
  March 2,
2019
 
Statements of Comprehensive Loss                
Net sales $38,249  $39,018  $118,536  $124,489 
Cost of sales  25,579   26,719   80,235   85,266 
Gross profit  12,670   12,299   38,301   39,223 
Selling, general and administrative expenses  12,659   13,097   38,667   39,621 
Loss on disposal of assets        1    
Operating income (loss)  11   (798)  (367)  (398)
Other expense (income):                
Investment/interest income  (97)  (155)  (340)  (402)
Foreign exchange loss  28   130   117   205 
Other, net  (8)     (24)  (4)
Total other income  (77)  (25)  (247)  (201)
Income (loss)  before income taxes  88   (773)  (120)  (197)
Income tax provision  181   305   438   754 
Net loss  (93)  (1,078)  (558)  (951)
Foreign currency translation (loss) gain, net of tax  (60)  541   (554)  (1,240)
Comprehensive loss $(153) $(537) $(1,112) $(2,191)
Net loss per share                
Common shares - Basic $(0.01) $(0.08) $(0.04) $(0.07)
Class B common shares - Basic $(0.01) $(0.08) $(0.04) $(0.07)
Common shares - Diluted $(0.01) $(0.08) $(0.04) $(0.07)
Class B common shares - Diluted $(0.01) $(0.08) $(0.04) $(0.07)
Weighted average number of shares:                
Common shares – Basic  11,038   10,953   11,022   10,911 
Class B common shares – Basic  2,097   2,097   2,097   2,108 
Common shares – Diluted  11,038   10,953   11,022   10,911 
Class B common shares – Diluted  2,097   2,097   2,097   2,108 
Dividends per common share $0.060  $0.060  $0.180  $0.180 
Dividends per Class B common share $0.054  $0.054  $0.162  $0.162 
                 
                 


Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
 
  
  Three Months Ended  Nine Months Ended 
  February 29,
2020
  March 2,
2019
  February 29,
2020
  March 2,
2019
 
Operating activities:                
Net loss $(93) $(1,078) $(558) $(951)
Adjustments to reconcile net loss to cash used in operating activities:                
Depreciation and amortization  856   794   2,514   2,350 
Inventory provisions  221   203   502   568 
Loss on disposal of assets        1    
Share-based compensation expense  157   176   527   571 
Deferred income taxes  76   113   51   268 
Change in assets and liabilities:                
Accounts receivable  (760)  (478)  1,066   (576)
Inventories  (754)  (1,484)  (4,173)  (3,315)
Prepaid expenses and other assets  (56)  614   146   332 
Accounts payable  (726)  (1,561)  (2,091)  (5,442)
Accrued liabilities  152   309   (238)  880 
Other  2   (86)  (107)  88 
Net cash used in operating activities  (925)  (2,478)  (2,360)  (5,227)
Investing activities:                
Capital expenditures  (430)  (974)  (1,244)  (3,166)
Proceeds from maturity of investments     2,300   8,000   2,300 
Purchases of investments     (12,500)  (13,000)  (17,800)
Net cash used in investing activities  (430)  (11,174)  (6,244)  (18,666)
Financing activities:                
Proceeds from issuance of common stock     16   59   219 
Cash dividends paid  (776)  (771)  (2,326)  (2,305)
Payment of financing lease principal  (46)     (121)   
Net cash used in financing activities  (822)  (755)  (2,388)  (2,086)
Effect of exchange rate changes on cash and cash equivalents  (2)  417   (152)  (617)
Decrease in cash and cash equivalents  (2,179)  (13,990)  (11,144)  (26,596)
Cash and cash equivalents at beginning of period  33,054   47,859   42,019   60,465 
Cash and cash equivalents at end of period $30,875  $33,869  $30,875  $33,869 
                 
                 


Richardson Electronics, Ltd.
Net Sales and Gross Profit
For the Third Quarter and First Nine Months of Fiscal 2020 and Fiscal 2019
($ in thousands)
                
By Strategic Business Unit:               
                 
Net Sales                
  Q3 FY 2020      Q3 FY 2019  % Change 
PMT $28,988      $29,725   -2.5%
Canvys  7,200       6,954   3.5%
Healthcare  2,061       2,339   -11.9%
Total $38,249      $39,018   -2.0%
                 
  YTD FY 2020      YTD FY 2019  % Change 
PMT $89,158      $96,822   -7.9%
Canvys  22,333       20,625   8.3%
Healthcare  7,045       7,042   0.0%
Total $118,536      $124,489   -4.8%
                 
                 
                 
Gross Profit                
  Q3 FY 2020  % of Net Sales  Q3 FY 2019  % of Net Sales 
PMT $9,519   32.8% $9,406   31.6%
Canvys  2,362   32.8%  2,281   32.8%
Healthcare  789   38.3%  612   26.2%
Total $12,670   33.1% $12,299   31.5%
                 
  YTD FY 2020  % of Net Sales  YTD FY 2019  % of Net Sales 
PMT $28,547   32.0% $30,520   31.5%
Canvys  7,268   32.5%  6,726   32.6%
Healthcare  2,486   35.3%  1,977   28.1%
Total $38,301   32.3% $39,223   31.5%


For Details Contact: 40W267 Keslinger Road
Edward J. RichardsonRobert J. BenPO BOX 393
Chairman and CEOEVP & CFOLaFox, IL 60147-0393 USA
Phone: (630) 208-2205(630) 208-2203(630) 208-2200 | Fax: (630) 208-2550

 

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