19/07/2017 22:15:00

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

LAFOX, Ill., July 19, 2017 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ:RELL) today reported financial results for its fourth quarter and fiscal year ended May 27, 2017. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Fourth Quarter Results

Net sales for the fourth quarter of fiscal 2017 were $37.4 million compared to net sales of $39.6 million in the prior year’s fourth quarter. Sales decreased $1.3 million for PMT, primarily due to a large government sale in the fourth quarter of 2016. PMT sales were higher in power conversion and RF and microwave components as well as specialty products sold into the semiconductor capital equipment market. Sales decreased by $0.9 million for Richardson Healthcare and sales were flat for Canvys as compared to the fourth quarter of fiscal 2016.

Gross margin decreased to $12.0 million, or 32.1% of net sales during the fourth quarter of fiscal 2017, compared to $13.4 million, or 33.8% of net sales during the fourth quarter of fiscal 2016. Margin declined as a percent of net sales primarily due to an unfavorable product mix in both PMT and Richardson Healthcare.

Operating expenses decreased to $12.2 million for the fourth quarter of fiscal 2017, compared to $13.7 million for the fourth quarter of fiscal 2016. The decrease was due to reduced salaries, benefits and incentive compensation expenses relating to the reduction in force and changes to the incentive structure earlier in fiscal 2017. In addition, IT expenses were lower than in the fourth quarter of fiscal 2016. These reductions were partially offset by $0.2 million in higher research and development expenses for Richardson Healthcare.

In addition, there was a $0.2 million gain on the divestiture of the PACS Displays business completed in May 2017.

As a result, the company reported $39,000 of operating income for the fourth quarter of fiscal 2017, compared to an operating loss of $0.3 million in the prior year’s fourth quarter.

Other expense for the fourth quarter of fiscal 2017, primarily foreign exchange, was $0.2 million, compared to less than $0.1 million for the fourth quarter of fiscal 2016.

The income tax benefit of less than $0.1 million during the fourth quarter of fiscal 2017 reflected an adjustment to a tax reserve due to an expired statute of limitations, 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 fourth quarter of fiscal 2017 was $0.1 million, compared to a net loss of $0.2 million in the fourth quarter of 2016.

Fiscal 2017 Results

Net sales for fiscal 2017 were $136.9 million, a decrease of 3.6%, compared to net sales of $142.0 million for fiscal 2016.  Sales decreased by $2.9 million for Canvys, primarily due to declines in demand from key customers relating to market conditions.  Sales for PMT decreased by $1.3 million due to the large government sale in fiscal 2016 that was not repeated in fiscal 2017, partially offset by sales from new niche technology suppliers.  Sales for Richardson Healthcare decreased by $0.9 million as a result of lower sales in the PACS Displays business, which was divested on May 25, 2017. 

Gross profit decreased to $43.9 million, compared to $44.8 million for fiscal 2016. However, gross margin increased to 32.1% of net sales for fiscal 2017, compared to 31.6% of net sales for fiscal 2016, mostly as a result of an improved product mix.

Operating expenses decreased to $49.9 million for fiscal 2017, compared to $51.6 million for fiscal 2016.  Fiscal 2017 included $1.3 million in severance expense associated with the reduction in work force during the second quarter of fiscal 2017, which was more than offset by reduced salaries and incentive compensation expenses.  In addition, IT expenses were nearly $0.9 million lower than fiscal 2016.  These reductions were partially offset by $0.5 million in higher research and development expenses for Richardson Healthcare. 

Operating loss for fiscal 2017 was $5.8 million, compared to an operating loss of $6.6 million for fiscal 2016.  After excluding the severance expense of $1.3 million, the operating loss would have been $4.5 million for fiscal year 2017.

Other expense for fiscal 2017, including foreign exchange, was $0.4 million, compared to other income of $0.3 million for fiscal 2016.  

The income tax provision of $0.8 million for 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 fiscal 2017 was $6.9 million, compared to a net loss of $6.8 million for 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 August 24, 2017, to common stockholders of record on August 7, 2017.

Cash and investments at the end of the fourth quarter of fiscal 2017 were $64.2 million compared to $60.2 million at the end of the third quarter of fiscal 2017 and $70.5 million at the end of the fourth quarter of fiscal 2016. During the fourth 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 $20.0 million on acquisitions, approximately $20.0 million on dividends and $7.3 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

“I am pleased to report an operating profit for the fourth quarter of fiscal 2017 as compared to a $0.3 million operating loss in the fourth quarter of fiscal 2016,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “The improvement in overall financial results, including generating an additional $4.0 million in cash flow from operations, is a direct result of our ongoing initiatives aimed at growing revenue, permanently reducing expenses and improving cash flow. We will continue to operate conservatively and preserve cash for investments in areas that will help return the company to profitability,” Mr. Richardson concluded.

CONFERENCE CALL INFORMATION

On Thursday, July 20, 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 fourth quarter and fiscal year 2017 results. 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 85102131 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 12:00 a.m. CST on July 21, 2017, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 33573773.

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; 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.

Audited Consolidated Balance Sheets

(in thousands, except per share amounts)

 
 

 

May 27, 2017

 

May 28, 2016

Assets

    

Current assets:

    
Cash and cash equivalents $55,327  $60,454 
Accounts receivable, less allowance of $398 and $364, respectively  20,782   24,928 
Inventories, net  42,749   45,422 
Prepaid expenses and other assets  3,070   1,758 
Deferred income taxes     1,078 
Income tax receivable     17 
Investments - current  6,429   2,268 

Total current assets

 

 

128,357

 

 

 

135,925

 

Non-current assets:

        
Property, plant and equipment, net  15,813   12,986 
Goodwill  6,332   6,332 
Intangible assets, net  3,441   3,818 
Non-current deferred income taxes  1,102   1,270 
Investments - non-current  2,419   7,799 

Total non-current assets

 

 

29,107

 

 

 

32,205

 

Total assets

 

$

157,464

 

 

$

168,130

 

Liabilities and Stockholders’ Equity

        

Current liabilities:

        
Accounts payable $15,933  $14,896 
Accrued liabilities  8,311   9,135 

Total current liabilities

 

 

24,244

 

 

 

24,031

 

Non-current liabilities:

        
Non-current deferred income tax liabilities  158   1,457 
Other non-current liabilities  735   967 

Total non-current liabilities

 

 

893

 

 

 

2,424

 

Total liabilities

 

 

25,137

 

 

 

26,455

 

Stockholders’ equity

        
Common stock, $0.05 par value; issued and outstanding 10,712 shares at May 27, 2017, and 10,703 shares at May 28, 2016  535   535 
Class B common stock, convertible, $0.05 par value; issued and outstanding 2,137 shares at May 27, 2017, and 2,141 shares at May 28, 2016  107   107 
Preferred stock, $1.00 par value, no shares issued      
Additional paid-in-capital  59,436   58,969 
Common stock in treasury, at cost, no shares at May 27, 2017, and at May 28, 2016      
Retained earnings  69,333   79,292 
Accumulated other comprehensive income  2,916   2,772 

Total stockholders’ equity

 

 

132,327

 

 

 

141,675

 

Total liabilities and stockholders’ equity

 

$

157,464

 

 

$

168,130

 

Richardson Electronics, Ltd.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands, except per share amounts)

     
 

 

Three Months Ended

 

Twelve Months Ended

 

 

May 27,

2017

 

May 28,

2016

 

May 27,

2017

 

May 28,

2016

Statements of Comprehensive Loss

        
Net sales $37,359  $39,568  $136,872  $142,016 
Cost of sales  25,372   26,180   92,989   97,181 

Gross profit

 

 

11,987

 

 

 

13,388

 

 

 

43,883

 

 

 

44,835

 

Selling, general, and administrative expenses  12,157   13,694   49,854   51,632 
Gain on disposal of business  (209)     (209)   
Gain on disposal of assets           (244)

Operating income (loss)

 

 

39

 

 

 

(306

)

 

 

(5,762

)

 

 

(6,553

)

Other (income) expense:                
Investment/interest income  (105)  (129)  (234)  (562)
Foreign exchange loss  301   104   612   212 
Other, net  (24  70   (24  17 
Total other (income) expense  172   45   354   (333)
Loss from continuing operations before income taxes  (133)  (351)  (6,116)  (6,220)
Income tax provision (benefit)  (8)  (196)  812   546 

Net loss

 

 

(125

)

 

 

(155

)

 

 

(6,928

)

 

 

(6,766

)

Foreign currency translation gain (loss), net of tax  1,826   1,153   90   (759)
Fair value adjustments on investments gain (loss)  14   35   54   (44

Comprehensive income (loss)

 

$

1,715

 

 

$

1,033

 

 

$

(6,784

)

 

$

(7,569

)

Loss per Common share - Basic:

                
Loss from continuing operations $(0.01) $(0.01) $(0.55) $(0.53)
Loss from discontinued operations            

Total loss per Common share - Basic:

 

$

(0.01

)

 

$

(0.01

)

 

$

(0.55

)

 

$

(0.53

)

Loss per Class B common share - Basic:

                
Loss from continuing operations $(0.01) $(0.01) $(0.49) $(0.47)
Loss from discontinued operations            

Total loss per Class B common share - Basic:

 

$

(0.01

)

 

$

(0.01

)

 

$

(0.49

)

 

$

(0.47

)

Loss per Common share - Diluted:

                
Loss from continuing operations $(0.01) $(0.01) $(0.55) $(0.53)
Loss from discontinued operations            

Total loss per Common share - Diluted:

 

$

(0.01

)

 

$

(0.01

)

 

$

(0.55

)

 

$

(0.53

)

Loss per Class B common share - Diluted:

                
Loss from continuing operations $(0.01) $(0.01) $(0.49) $(0.47)
Loss from discontinued operations            

Total loss per Class B common share - Diluted:

 

$

(0.01

)

 

$

(0.01

)

 

$

(0.49

)

 

$

(0.47

)

Weighted average number of shares:

                
Common shares – Basic  10,709   10,703   10,705   10,908 
Class B common shares – Basic  2,140   2,141   2,140   2,141 
Common shares – Diluted  10,709   10,703   10,705   10,908 
Class B common shares – Diluted  2,140   2,141   2,140   2,141 

Dividends per common share

 

$

0.060

 

 

$

0.060

 

 

$

0.240

 

 

$

0.240

 

Dividends per Class B common share

 

$

0.054

 

 

$

0.054

 

 

$

0.220

 

 

$

0.220

 

                                                                                                                                                     

Richardson Electronics, Ltd.

Audited Consolidated Statements of Cash Flows

(in thousands)

   
  

Fiscal Year 

Ended

 

 

May 27, 2017

 

May 28, 2016

Operating activities:

        

Net loss

 $(6,928) $(6,766)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:        
Depreciation and amortization  2,740   2,381 
Inventory provisions  456   690 
Loss (gain) on sale of investments  (6  1 
Gain on disposal of business  (209)   
Gain on disposal of assets     (244)
Share-based compensation expense  437   548 
Deferred income taxes  (55  201 
Change in assets and liabilities, net of effect of acquired business:        
Accounts receivable  4,167   (3,521)
Income tax receivable  17   912 
Inventories  2,408   (5,865)
Prepaid expenses and other assets  (1,318)  (16)
Accounts payable  1,037   (899
Accrued liabilities  (699)  (1,027
Long-term liabilities-accrued pension  (249)  (465
Other  11   486 

Net cash provided by (used in) operating activities

 

 

1,809

 

 

 

(13,584

)

Investing activities:

        
Cash consideration paid for acquired business     (12,209
Capital expenditures  (5,221)  (4,813)
Proceeds from sales of assets     402 
Proceeds from maturity of investments  3,582   27,026 
Purchases of investments  (2,136)  (2,151)
Proceeds from sales of available-for-sale securities  306   268 
Purchases of available-for-sale securities  (306)  (268)
Other  (12)  (20)

Net cash (used in) provided by investing activities

 

 

(3,787

 

 

8,235

 

Financing activities:

        
Repurchase of common stock     (5,015)
Proceeds from issuance of common stock  30   142 
Cash dividends paid  (3,031)  (3,079)
Other     (4

Net cash used in financing activities

 

 

(3,001

)

 

 

(7,956

)

Effect of exchange rate changes on cash and cash equivalents  (148)  (776)

Decrease in cash and cash equivalents

 

 

(5,127

)

 

 

(14,081

)

Cash and cash equivalents at beginning of period  60,454   74,535 

Cash and cash equivalents at end of period

 

$

55,327

 

 

$

60,454

 

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Fourth Quarter and Fiscal 2017 and Fiscal 2016 

(in thousands)

By Strategic Business Unit:

Net Sales

 

 

Q4

FY 2017

  

 

Q4

FY 2016

 

% Change

PMT $28,853      $30,189   -4.4%
Canvys  5,651       5,680   -0.5%
Healthcare  2,855       3,699   -22.8%
Total $37,359      $39,568   -5.6%

 

 

YTD

FY 2017

  

 

YTD

FY 2016

 

% Change

PMT $104,226      $105,554   -1.3%
Canvys  20,534       23,453   -12.4%
Healthcare  12,112       13,009   -6.9%
Total $136,872      $142,016   -3.6%

Gross Profit

 

 

 

Q4

FY 2017

 

% of Net Sales

 

Q4

FY 2016

 

% of Net Sales

PMT $9,579   33.2% $10,295   34.1%
Canvys  1,530   27.1%  1,578   27.8%
Healthcare  878   30.8%  1,515   41.0%
Total $11,987   32.1% $13,388   33.8%

 

 

YTD

FY 2017

 

% of Net Sales

 

YTD

FY 2016

 

% of Net Sales

PMT $33,382   32.0% $33,088   31.3%
Canvys  5,752   28.0%  6,017   25.7%
Healthcare  4,749   39.2%  5,730   44.0%
Total $43,883   32.1% $44,835   31.6%

 

For Details Contact:

Edward J. Richardson

Chairman and CEO

Phone: (630) 208-2205

Robert J. Ben

EVP & CFO

(630) 208-2203

40W267 Keslinger Road

PO BOX 393

LaFox, IL 60147-0393 USA

(630) 208-2200 | Fax: (630) 208-2550

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