05/04/2017 22:00:00

Richardson Electronics Reports Third Quarter Fiscal 2017 Results and Declares Quarterly Cash Dividend

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LAFOX, Ill., April 05, 2017 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ:RELL) today reported financial results for its third quarter ended February 25, 2017. 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 2017 were $32.3 million, an increase of 3.3%, compared to net sales of $31.3 million in the prior year’s third quarter. Sales increased $1.8 million for PMT, primarily due to higher sales from new technology partners in power conversion and RF and microwave components as well as increased sales of specialty products sold into the semiconductor capital equipment market. This increase was partially offset by decreases of $0.4 million in Richardson Healthcare and $0.4 million in Canvys over the same period last year.

Gross margin increased to $10.7 million, or 33.1% of net sales during the third quarter of fiscal 2017, compared to $9.8 million, or 31.2% of net sales during the third quarter of fiscal 2016. Margin improved as a percent of net sales primarily due to higher PMT and Canvys margins as a result of an improved product mix.

Operating expenses decreased to $12.0 million for the third quarter of fiscal 2017, compared to $12.5 million for the third quarter of fiscal 2016. The decrease was due to reduced salaries, benefits and incentive compensation expenses. In addition, IT expenses were lower than in the third quarter of fiscal 2016.

As a result, operating loss for the third quarter of fiscal 2017 was $1.3 million, compared to an operating loss of $2.7 million in the prior year’s third quarter.

Other expense for the both the third quarter of fiscal 2017 and fiscal 2016, including foreign exchange, was $0.1 million.

The income tax benefit of less than $0.1 million during the third quarter of fiscal 2017 reflected an adjustment to the provision for foreign income taxes 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 2017 was $1.4 million, compared to a net loss of $2.9 million in the third quarter of 2016.

FINANCIAL SUMMARY – NINE MONTHS ENDED FEBRUARY 25, 2017

  • Net sales for the first nine months of fiscal 2017 were $99.5 million, a decrease of 2.9%, compared to net sales of $102.4 million during the first nine months of fiscal 2016. Sales decreased by $2.9 million for Canvys, primarily due to declines in demand from key customers relating to market conditions.
  • Gross margin increased to $31.9 million, or 32.1% of net sales during the first nine months of fiscal 2017, compared to $31.4 million, or 30.7% of net sales during the first nine months of fiscal 2016, mostly as a result of an improved product mix.
  • Operating expenses decreased to $37.7 million for the first nine months of fiscal 2017, compared to $37.9 million for the first nine months of fiscal 2016. The first nine months of fiscal 2017 included $1.3 million in severance expense associated with the reduction in work force during the second quarter of fiscal 2017, mostly offset by reduced salaries and incentive compensation expenses. In addition, IT expenses were nearly $0.8 million lower than the first nine months of fiscal 2016.
  • Operating loss during the first nine months of fiscal 2017 was $5.8 million, compared to an operating loss of $6.2 million during the first nine months of fiscal 2016. After excluding the severance expense of $1.3 million, the operating loss would have been $4.5 million for the first nine months of fiscal year 2017.
  • Other expense for the first nine months of fiscal 2017, including foreign exchange, was $0.2 million, compared to other income of $0.4 million for the first nine months of fiscal 2016.
  • The income tax provision of $0.8 million for the first nine months of fiscal 2017 reflected a provision for foreign income taxes and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.
  • Net loss for the first nine months of fiscal 2017 was $6.8 million, compared to a net loss of $6.6 million during the first nine months of fiscal 2016.

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 May 24, 2017, to common stockholders of record on May 9, 2017.

Cash and investments at the end of the third quarter of fiscal 2017 were $60.2 million compared to $70.5 million at the end of the fourth quarter of fiscal 2016. During the third quarter of fiscal 2017, the Company did not repurchase any shares of its common stock under the existing share repurchase authorization. Since the sale of RFPD, the Company has spent $65.6 million on share repurchases, nearly $20 million on acquisitions, nearly $19 million on dividends and $5.4 million on purchases of Richardson Healthcare equipment. Currently, there are 10.7 million outstanding shares of common stock and 2.1 million outstanding shares of Class B common stock.

   

OUTLOOK

“We are pleased with the increase in net sales and gross margin as well as a decrease in operating expenses in the third quarter of fiscal 2017 as compared to the third quarter of fiscal 2016,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “We continue to focus on initiatives to grow revenue in the healthcare and power and microwave technologies markets, permanently take cost out of the organization, improve cash flow, and return the Company to profitability,” Mr. Richardson concluded.

CONFERENCE CALL INFORMATION

On Thursday, April 6, 2017, at 9:00 a.m. CT, 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 results for fiscal 2017. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial (888) 419-5570 and enter passcode 94661906 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 12:00 a.m. CT on April 7, 2017, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 69435224.

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 July 29, 2016. 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 displays, flat panel detector solutions and replacement parts 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)

 

 

 

 

 

 

 

 

 

 

February 25, 

 2017

 

 

May 28, 

 2016

 

Assets

 

(Unaudited) 

     

Current assets:

        
Cash and cash equivalents $51,386  $60,454 
Accounts receivable, less allowance of $375 and $364  21,240   24,928 
Inventories, net  42,860   45,422 
Prepaid expenses and other assets  2,647   1,758 
Deferred income taxes     1,078 
Income tax receivable  22   17 
Investments - current  6,399   2,268 

Total current assets

 

 

124,554

 

 

 

135,925

 

Non-current assets:

        
Property, plant and equipment, net  15,208   12,986 
Goodwill  6,332   6,332 
Intangible assets, net  3,528   3,818 
Non-current deferred income taxes  1,305   1,270 
Investments - non-current  2,395   7,799 

Total non-current assets

 

 

28,768

 

 

 

32,205

 

Total assets

 

$

153,322

 

 

$

168,130

 

Liabilities and Stockholders’ Equity

        

Current liabilities:

        
Accounts payable $12,328  $14,896 
Accrued liabilities  8,736   9,135 

Total current liabilities

 

 

21,064

 

 

 

24,031

 

Non-current liabilities:

        
Non-current deferred income tax liabilities  275   1,457 
Other non-current liabilities  696   967 

Total non-current liabilities

 

 

971

 

 

 

2,424

 

Total liabilities

 

 

22,035

 

 

 

26,455

 

Stockholders’ equity

        
Common stock, $0.05 par value; issued and outstanding 10,708 shares at February 25, 2017, and 10,703 shares at May 28, 2016  535   535 
Class B common stock, convertible, $0.05 par value; issued and outstanding 2,141 shares at February 25, 2017, and at May 28, 2016  107   107 
Preferred stock, $1.00 par value, no shares issued      
Additional paid-in-capital  59,353   58,969 
Common stock in treasury, at cost, no shares at February 25, 2017, and at May 28, 2016      
Retained earnings  70,216   79,292 
Accumulated other comprehensive income  1,076   2,772 

Total stockholders’ equity

 

 

131,287

 

 

 

141,675

 

Total liabilities and stockholders’ equity

 

$

153,322

 

 

$

168,130

 

         

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Comprehensive Loss

(in thousands, except per share amounts)

         
 

 

Three Months Ended

 

 

Nine Months Ended

 
 

 

February 25,

2017

 

 

February 27,

2016

 

 

February 25,

2017

 

 

February 27,

2016

 

Statements of Comprehensive Loss

                
Net sales $32,313  $31,291  $99,513  $102,448 
Cost of sales  21,621   21,541   67,617   71,001 

Gross profit

 

 

10,692

 

 

 

9,750

 

 

 

31,896

 

 

 

31,447

 

Selling, general, and administrative expenses  12,002   12,471   37,697   37,938 
Gain on disposal of assets           (244)

Operating loss

  

(1,310

)

 

 

(2,721

)

 

 

(5,801

)

 

 

(6,247

)

Other (income) expense:                
Investment/interest income  (67)  (131)  (129)  (433)
Foreign exchange loss  214   265   311   108 
Other, net  (16)  (40)     (53)
Total other (income) expense  131   94   182   (378)
Loss before income taxes  (1,441)  (2,815)  (5,983)  (5,869)
Income tax provision (benefit)  (10)  111   820   742 

Net loss

 

 

(1,431

)

 

 

(2,926

)

 

 

(6,803

)

 

 

(6,611

)

Foreign currency translation gain (loss), net of tax  508   240   (1,736)  (1,912)
Fair value adjustments on investments gain (loss)  27   (47)  40   (79)

Comprehensive loss

 

$

(896

)

 

$

(2,733

)

 

$

(8,499

)

 

$

(8,602

)

Loss per share:

                
Common shares - Basic $(0.11) $(0.23) $(0.54) $(0.51)
Class B common shares - Basic $(0.10) $(0.21) $(0.48) $(0.46)
Common shares - Diluted $(0.11) $(0.23) $(0.54) $(0.51)
Class B common shares - Diluted $(0.10) $(0.21) $(0.48) $(0.46)

Weighted average number of shares:

                
Common shares - Basic  10,706   10,701   10,704   10,976 
Class B common shares - Basic  2,141   2,141   2,141   2,141 
Common shares - Diluted  10,706   10,701   10,704   10,976 
Class B common shares - Diluted  2,141   2,141   2,141   2,141 

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 25,

2017

 

 

February 27,

2016

 

 

February 25,

2017

 

 

February 27,

2016

 

Operating activities:

                

Net loss

 $(1,431) $(2,926) $(6,803) $(6,611)
Adjustments to reconcile net loss to cash used in operating activities:                
Depreciation and amortization  703   583   2,020   1,865 
(Gain) loss on sale of investments  (8)  21   (2)  2 
Gain on disposal of assets           (244)
Share-based compensation expense  75   119   354   434 
Deferred income taxes  121   (82)  (188)  173 
Change in assets and liabilities, net of effect of acquired business:                
Accounts receivable  (717)  282   3,217   311 
Income tax receivable     187   (5)  851 
Inventories  306   (2,164)  1,898   (5,636)
Prepaid expenses and other assets  80   1   (961)  (443)
Accounts payable  849   (986)  (2,372)  (2,976)
Accrued liabilities  (1,118)  (871)  (256)  (2,071)
Long-term liabilities-accrued pension           (465)
Other  (125)  125   (107)  256 

Net cash used in operating activities

 

 

(1,265

)

 

 

(5,711

)

 

 

(3,205

)

 

 

(14,554

)

Investing activities:

                
Cash consideration paid for acquired business           (12,209)
Capital expenditures  (764)  (1,267)  (4,063)  (3,043)
Proceeds from sale of assets           402 
Proceeds from maturity of investments        3,582   25,584 
Purchases of investments        (2,136)  (2,151)
Proceeds from sales of available-for-sale securities  78   106   225   250 
Purchases of available-for-sale securities  (78)  (106)  (225)  (250)
Other  (3)  (49)  (9)  (17)

Net cash (used in) provided by investing activities

 

 

(767

)

 

 

(1,316

)

 

 

(2,626

)

 

 

8,566

 

Financing activities:

                
Repurchase of common stock           (5,015)
Proceeds from issuance of common stock  30   21   30   142 
Cash dividends paid  (758)  (758)  (2,273)  (2,321)
Other           (4)

Net cash used in financing activities

 

 

(728

)

 

 

(737

)

 

 

(2,243

)

 

 

(7,198

)

Effect of exchange rate changes on cash and cash equivalents  35   106   (994)  (1,144)

Decrease in cash and cash equivalents

 

 

(2,725

)

 

 

(7,658

)

 

 

(9,068

)

 

 

(14,330

)

Cash and cash equivalents at beginning of period  54,111   67,863   60,454   74,535 

Cash and cash equivalents at end of period

 

$

51,386

 

 

$

60,205

 

 

$

51,386

 

 

$

60,205

 

                 

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Third Quarter and First Nine Months of Fiscal 2017 and Fiscal 2016

(in thousands)

              
              

By Strategic Business Unit: 

 

             
              

Net Sales

 

Q3

      

Q3

    
  

FY 2017

      

FY 2016

  

% Change

 
PMT $24,763      $23,008  7.6%
Canvys  4,824       5,190  -7.1%
Healthcare  2,726       3,093  -11.9%
Total $32,313      $31,291  3.3%
              
  

YTD

      

YTD

    
  

FY 2017

      

FY 2016

  

% Change

 
PMT $75,373      $75,365  0.0%
Canvys  14,883       17,773  -16.3%
Healthcare  9,257       9,310  -0.6%
Total $99,513      $102,448  -2.9%
              

Gross Profit

 

Q3

  

% of Net

   

Q3

  

% of Net

 
  

FY 2017

  

Sales

   

FY 2016

  

Sales

 
PMT $8,075  32.6%  $7,140  31.0%
Canvys  1,331  27.6%   1,204  23.2%
Healthcare  1,286  47.2%   1,406  45.5%
Total $10,692  33.1%  $9,750  31.2%
              

Gross Profit

 

YTD

  

% of Net

   

YTD

  

% of Net

 
  

FY 2017

  

 Sales

   

FY 2016

  

Sales

 
PMT $23,803  31.6%  $22,793  30.2%
Canvys  4,222  28.4%   4,439  25.0%
Healthcare  3,871  41.8%   4,215  45.3%
Total $31,896  32.1%  $31,447  30.7%
              

For Details Contact:

Edward J. Richardson

Chairman and CEO

Phone: (630) 208-2205

Robert J. Ben

EVP & CFO

(630) 208-2203

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