Richardson Electronics Reports Third Quarter Fiscal 2024 Results and Declares Quarterly Cash Dividend
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Richardson Electronics Reports Third Quarter Fiscal 2024 Results and Declares Quarterly Cash Dividend

Sales increased 18.7% sequentially, reflecting improving business conditions.

Inventory decreased $4.0 million sequentially, reflecting focus on improving working capital levels.

LAFOX, Ill., April 10, 2024 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its third quarter ended March 2, 2024. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

"The sequential increase in sales and profitability is encouraging, reflecting the benefits of our diversification strategies as well as our team’s focus on enhancing profitability and strengthening our balance sheet. Sales growth at GES is even more impressive, considering last year’s third quarter benefited from a large order to an EV rail customer. Overall, our net sales continue to reflect the cyclical nature of sales to semiconductor wafer fab customers that had an $11.5 million negative impact on sales during the quarter. As we navigate this period, the success of our GES business demonstrates the importance of our diversification strategies as well as our focus on providing more engineered solutions to our growing global customer base,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President.

Throughout fiscal 2024 we have focused on decreasing inventory levels to better align with expected demand across our markets after a period of inventory growth, caused by supply chain constraints over the past several years. I am pleased with the progress our global teams are making as this quarter marks the first time we’ve seen a decline in inventory in more than two years. Overall, we continue to pursue significant long-term growth strategies that take advantage of opportunities created by recent government stimulus programs as well as global energy transition trends. Over the near-term, recent customer discussions indicate expected demand growth in the semiconductor and GES markets. As a result, we anticipate sequential sales growth in our fiscal 2024 fourth quarter, as well as further improvements in profitability,” concluded Mr. Richardson.  

Third Quarter Results

Net sales for the third quarter of fiscal 2024 decreased 25.6% to $52.4 million compared to net sales of $70.4 million in the prior year’s third quarter due to lower net sales in PMT and Canvys. PMT sales decreased $15.7 million from last year’s third quarter primarily due to lower sales of manufactured products for the Company’s semiconductor wafer fabrication equipment customers. GES sales increased $0.1 million from last year’s third quarter, which included a large sale of EV locomotive battery modules that did not recur in fiscal 2024. Canvys sales decreased by $3.1 million, primarily due to short-term customer pushouts in North America. Richardson Healthcare sales increased $0.7 million from the third quarter of fiscal 2023 as higher CT tube and parts demand offset lower system sales.

Backlog totaled $147.7 million at the end of the third quarter of fiscal 2024 versus $150.7 million at the end of the second quarter of fiscal 2024. The sequential decline was in PMT and Canvys. GES backlog of $36.8 million increased from the second quarter of fiscal 2024 by $1.1 million.

Gross margin was 29.5% of net sales during the third quarter of fiscal 2024, compared to 31.8% during the third quarter of fiscal 2023. Without the under absorption of the Company’s manufacturing facility, management estimates that the Company’s consolidated gross margin for the fiscal 2024 third quarter would have been 31.0%. PMT gross margin decreased to 28.3% from 32.9% due to product mix and $0.8 million of manufacturing under absorption. GES’ gross margin increased to 26.6% from 25.7% due to product mix. Healthcare gross margin increased to 41.6% in the third quarter of fiscal 2024 compared to 39.8% in the prior year’s third quarter as a result of an improved product mix. Canvys’ gross margin increased to 34.4% from 32.0% because of product mix.

Operating expenses were $14.4 million compared to $14.8 million in the third quarter of fiscal 2023. The decrease in operating expenses resulted from lower incentive expenses, partially offset by higher R&D expenses in support of the Company’s growth initiatives.

The Company reported an operating income of $1.0 million for the third quarter of fiscal 2024 compared to operating income of $7.6 million in the prior year’s third quarter. Other expense for the third quarter of fiscal 2024, including interest income and foreign exchange, was less than $0.1 million, compared to other income of $0.4 million in the third quarter of fiscal 2023.

Income tax provision was $0.2 million or a 23.4% effective tax rate versus an income tax provision of $1.7 million or a 20.7% effective tax rate in the prior year’s third quarter.

Net income for the third quarter of fiscal 2024 was $0.8 million, or $0.05 per diluted share, compared to net income of $6.3 million, or $0.44 per diluted share in the third quarter of fiscal 2023.

Cash and investments were $18.9 million as of March 2, 2024, versus $22.8 million on December 2, 2023. The use of cash during the third quarter of fiscal 2024 primarily resulted from a $5.3 million increase in accounts receivable, a $4.1 million decrease in accounts payable, and $0.4 million of capital expenditures related to the Company’s IT system, partially offset by a $4.0 million decrease in inventory.

Financial Summary for the Nine Months Ended March 2, 2024

CASH DIVIDEND DECLARED

The Board of Directors of Richardson Electronics declared a $0.06 quarterly cash 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 29, 2024, to common stockholders of record as of May 10, 2024.

CONFERENCE CALL INFORMATION

The Company will host a conference call on Thursday, April 11, 2024, at 9:00 a.m. Central Time, to discuss its third quarter fiscal 2024 results.  A question-and-answer session will be included as part of the call’s agenda.

Participant Instructions

Participants may register for the call here. While not required, it is recommended you join 10 minutes prior to the event start. A replay of the call will be available beginning at 1:00 p.m. Central Time on April 11, 2024, for seven days. Registration instructions are also on our website at www.rell.com.

In addition, the webcast link is available here.

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 July 31, 2023, 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 manufacturer of engineered solutions, green energy products, power grid and microwave tubes, and related consumables; power conversion and RF and microwave components including green energy solutions; high-value replacement parts, tubes, and service training for diagnostic imaging equipment; and customized display solutions. Nearly 55% of our products are manufactured in LaFox, Illinois, Marlborough, Massachusetts, or Donaueschingen, Germany, or by one of our manufacturing partners throughout the world. All our partners manufacture to our strict specifications and per our supplier code of conduct.  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 
  March 2, 2024  May 27, 2023 
Assets      
Current assets:      
Cash and cash equivalents $18,880  $24,981 
Accounts receivable, less allowance of $233 and $191, respectively  29,131   30,067 
Inventories, net  112,635   110,402 
Prepaid expenses and other assets  2,741   2,633 
Total current assets  163,387   168,083 
Non-current assets:      
Property, plant and equipment, net  20,723   20,823 
Intangible assets, net  1,704   1,892 
Right of use lease asset  3,120   2,457 
Deferred income taxes  4,471   4,526 
Other non-current assets  200   267 
Total non-current assets  30,218   29,965 
Total assets $193,605  $198,048 
Liabilities      
Current liabilities:      
Accounts payable $18,393  $23,535 
Accrued liabilities  12,660   12,026 
Lease liability current  1,234   1,028 
Total current liabilities  32,287   36,589 
Non-current liabilities:      
Non-current deferred income tax liabilities  96   98 
Lease liability non-current  1,886   1,429 
Other non-current liabilities  715   612 
Total non-current liabilities  2,697   2,139 
Total liabilities  34,984   38,728 
Stockholders’ Equity      
Common stock, $0.05 par value; 12,227 shares issued and outstanding on
March 2, 2024 and 12,140 shares issued and outstanding on May 27, 2023
  611   607 
Class B common stock, convertible, $0.05 par value; 2,052 shares issued
and outstanding on March 2, 2024 and 2,052 shares issued and
outstanding on May 27, 2023
  103   103 
Preferred stock, $1.00 par value, no shares issued      
Additional paid-in-capital  72,215   70,951 
Retained earnings  84,692   87,044 
Accumulated other comprehensive income  1,000   615 
Total stockholders' equity  158,621   159,320 
Total liabilities and stockholders’ equity $193,605  $198,048 


  
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
 
  
  Three Months Ended  Nine Months Ended 
  March 2, 2024  February 25, 2023  March 2, 2024  February 25, 2023 
Net sales $52,375  $70,364  $149,086  $203,826 
Cost of sales  36,939   47,959   103,844   136,543 
Gross profit  15,436   22,405   45,242   67,283 
Selling, general and administrative expenses  14,430   14,779   44,710   43,704 
Loss (gain) on disposal of assets     13   70   (12)
Operating income  1,006   7,613   462   23,591 
Other expense (income):            
Investment/interest income  (67)  (76)  (224)  (179)
Foreign exchange loss (gain)  101   (292)  347   305 
Other, net  (7)  (14)  43   (29)
Total other expense (income)  27   (382)  166   97 
Income before income taxes  979   7,995   296   23,494 
Income tax provision  229   1,655   116   5,281 
Net income  750   6,340   180   18,213 
Foreign currency translation (loss) gain, net of tax  (205)  629   385   (710)
Comprehensive income $545  $6,969  $565  $17,503 
             
Net income per share:            
Common shares - Basic $0.05  $0.46  $0.01  $1.33 
Class B common shares - Basic  0.05   0.41   0.01   1.19 
Common shares - Diluted  0.05   0.44   0.01   1.27 
Class B common shares - Diluted  0.05   0.40   0.01   1.15 
             
Weighted average number of shares:            
Common shares – Basic  12,227   12,047   12,208   11,893 
Class B common shares – Basic  2,052   2,052   2,052   2,053 
Common shares – Diluted  12,445   12,666   12,480   12,524 
Class B common shares – Diluted  2,052   2,052   2,052   2,053 
             
Dividends per share:            
Common share $0.060  $0.060  $0.180  $0.180 
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 
  March 2, 2024  February 25, 2023  March 2, 2024  February 25, 2023 
Operating activities:            
Net income $750  $6,340  $180  $18,213 
Adjustments to reconcile net income to cash used in operating activities:            
Depreciation and amortization  1,104   912   3,218   2,688 
Inventory provisions  173   115   450   310 
Share-based compensation expense  279   206   1,045   730 
Loss (gain) on disposal of assets     13   70   (12)
Deferred income taxes  (4)  (1)  42   27 
Change in assets and liabilities:            
Accounts receivable  (5,254)  (7,189)  998   (12,694)
Inventories  3,974   (3,638)  (2,246)  (21,764)
Prepaid expenses and other assets  151   (153)  (58)  (578)
Accounts payable  (4,072)  (12)  (5,204)  784 
Accrued liabilities  247   (661)  625   486 
Other  121   (192)  164   397 
Net cash used in operating activities  (2,531)  (4,260)  (716)  (11,413)
Investing activities:            
Capital expenditures  (401)  (2,230)  (3,057)  (4,973)
Proceeds from maturity of investments     5,000      5,000 
Proceeds from sale of property, plant & equipment           193 
Net cash (used in) provided by investing activities  (401)  2,770   (3,057)  220 
Financing activities:            
Proceeds from issuance of common stock     511   342   3,413 
Cash dividends paid on Common and Class B Common shares  (844)  (834)  (2,532)  (2,484)
Proceeds from short-term borrowing  3,744      3,744    
Repayment of short-term borrowing  (3,744)     (3,744)   
Other        (119)  (69)
Net cash (used in) provided by financing activities  (844)  (323)  (2,309)  860 
Effect of exchange rate changes on cash and cash equivalents  (113)  352   (19)  (517)
Decrease in cash and cash equivalents  (3,889)  (1,461)  (6,101)  (10,850)
Cash and cash equivalents at beginning of period  22,769   26,106   24,981   35,495 
Cash and cash equivalents at end of period $18,880  $24,645  $18,880  $24,645 


 
Richardson Electronics, Ltd.
Unaudited Net Sales and Gross Profit
For the Third Quarter and First Nine Months of Fiscal 2024 and 2023
($ in thousands)
 
By Strategic Business Unit

Net Sales Three Months Ended  FY24 vs. FY23
% Change
 
  March 2, 2024  February 25, 2023   
PMT $31,163  $46,822   -33.4%
GES  11,531   11,471   0.5%
Canvys  6,590   9,685   -32.0%
Healthcare  3,091   2,386   29.5%
Total $52,375  $70,364   -25.6%


  Nine Months Ended  FY24 vs. FY23
% Change
 
  March 2, 2024  February 25, 2023   
PMT $98,199  $132,761   -26.0%
GES  18,534   32,275   -42.6%
Canvys  23,770   30,177   -21.2%
Healthcare  8,583   8,613   -0.3%
Total $149,086  $203,826   -26.9%


Gross Profit Three Months Ended 
  March 2, 2024  % of Net Sales  February 25, 2023  % of Net Sales 
PMT $8,815   28.3% $15,404   32.9%
GES  3,070   26.6%  2,948   25.7%
Canvys  2,265   34.4%  3,103   32.0%
Healthcare  1,286   41.6%  950   39.8%
Total $15,436   29.5% $22,405   31.8%


  Nine Months Ended 
  March 2, 2024  % of Net Sales  February 25, 2023  % of Net Sales 
PMT $29,231   29.8% $44,950   33.9%
GES  5,411   29.2%  10,132   31.4%
Canvys  8,070   34.0%  9,364   31.0%
Healthcare  2,530   29.5%  2,837   32.9%
Total $45,242   30.3% $67,283   33.0%


   
For Details Contact: 40W267 Keslinger Road
Edward J. RichardsonRobert J. BenPO BOX 393
Chairman and CEOEVP & CFOLaFox, IL 60147-0393 USA
Phone: (630) 208-2320(630) 208-2203(630) 208-2200 | Fax: (630) 208-2550
   

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