EX-99.1 5 ex99-1.htm PRESS RELEASE
 

RICHARDSON ELECTRONICS, LTD. 10-Q

 

Exhibit 99.1

 

Press Release

For Immediate Release

www.rell.com | info@rell.com
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) 208-2340 (630) 208-2203 (630) 208-2200 | Fax: (630) 208-2550

 

 

 

RICHARDSON ELECTRONICS REPORTS SECOND QUARTER FISCAL 2016 RESULTS AND DECLARES QUARTERLY CASH DIVIDEND

 

LaFox, IL, January 6, 2016: Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its second quarter ended November 28, 2015. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Net sales for the second quarter of fiscal 2016 were $34.1 million, a 0.7% increase, compared to net sales of $33.8 million in the prior year. The sales increase primarily reflects growth in the Healthcare business of 163.2%, which included the net sales for International Medical Equipment Systems (“IMES”), acquired in June of this year. Gross margin decreased to $10.4 million, or 30.6% of net sales during the second quarter of fiscal 2016, compared to $10.5 million, or 30.9% of net sales during the second quarter of fiscal 2015.

Operating expenses increased to $13.2 million for the second quarter of fiscal 2016, compared to $12.6 million for the second quarter of fiscal 2015. The $0.6 million increase in expenses is due to the expenses of IMES, investments in the Richardson Healthcare and PMT business units, partially offset by decreases in support function costs.

As a result, operating loss for the second quarter of fiscal 2016 was $2.5 million, compared to an operating loss for the second quarter of fiscal 2015 of $2.2 million.

Other income for the second quarter of fiscal 2016 was $0.5 million, compared to income of $0.2 million for the second quarter of fiscal 2015.

The income tax provision of $0.3 million during the second quarter of fiscal 2016 reflects the provision for estimated foreign taxes as well as the valuation allowance recorded against the net operating loss in the U.S.

Net loss for the second quarter of fiscal 2016 was $2.3 million, compared to net loss of $1.1 million during the second quarter of last year.

FINANCIAL SUMMARY – SIX MONTHS ENDED NOVEMBER 28, 2015

·Net sales for the first six months of fiscal 2016 were $71.2 million, an increase of 3.8%, compared to net sales of $68.5 million during the first six months of fiscal 2015.

 

 
 

 

·Gross margin decreased to 30.5% during the first six months of fiscal 2016, compared to 30.8% from the first six months of fiscal 2015.
·Selling, general, and administrative expenses increased to $25.5 million, or 35.8% of net sales for the first six months of fiscal 2016, compared to $23.8 million, or 34.7% of net sales, for the first six months of fiscal 2015.
·Operating loss during the first six months of fiscal 2016 was $3.5 million, compared to operating loss of $2.7 million during the first six months of fiscal 2015.
·Net loss for the first six months of fiscal 2016 was $3.7 million, compared to net loss of $1.1 million during the first six months of fiscal 2015.

 

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 February 24, 2016, to common stockholders of record on February 8, 2016.

Cash and investments at the end of our second quarter of fiscal 2016 were $79.5 million. During the second quarter of fiscal 2016, the Company repurchased 288,000 shares of its common stock. As of today, the Company has 10.7 million outstanding shares of common stock and 2.1 million outstanding shares of Class B common stock.

 

OUTLOOK

“With half of the fiscal year behind us and significant investments in our management team and growth initiatives, everyone is focused on sales growth,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “Since the end of second quarter of fiscal 2016, backlog has increased appreciably with several million dollar orders that will ship this fiscal year. In addition, we continue to explore acquisitions that are in line with our initiatives, but where we can’t find suitable targets, we will invest organically,” Mr. Richardson concluded.

 

CONFERENCE CALL INFORMATION

On Thursday, January 7, 2016, 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 second quarter results for fiscal 2016. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial (888) 339-2688 and enter passcode 10252773 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 January 8, 2016, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 20640822. 

 

 
 

 

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 28, 2015. 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)

 

   Unaudited  Audited
   November 28,
2015		  May 30, 
 2015
Assets      
Current assets:      
Cash and cash equivalents  $67,863   $74,535 
Accounts receivable, less allowance of $283   21,041    20,753 
Inventories, net   43,126    38,769 
Prepaid expenses and other assets   2,111    1,696 
Deferred income taxes   637    804 
Income tax receivable   265    929 
Investments - current   3,719    23,692 
Total current assets   138,762    161,178 
Non-current assets:          
Property, plant and equipment, net   10,893    10,081 
Goodwill   6,271    —   
Intangible assets, net   3,861    743 
Non-current deferred income taxes   1,164    1,443 
Investments - non-current   7,897    11,549 
Total non-current assets   30,086    23,816 
Total assets  $168,848   $184,994 
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable   13,583    15,768 
Accrued liabilities   8,866    10,144 
Total current liabilities   22,449    25,912 
Non-current liabilities:          
Non-current deferred income tax liabilities   1,019    1,209 
Other non-current liabilities   743    1,221 
Total non-current liabilities   1,762    2,430 
Total liabilities   24,211    28,342 
Stockholders’ equity          
Common stock, $0.05 par value; issued 10,698 shares at November 28, 2015, and 11,530 shares at May 30, 2015   535    577 
Class B common stock, convertible, $0.05 par value; issued and outstanding 2,141 shares at November 28, 2015, and at May 30, 2015   107    107 
Preferred stock, $1.00 par value, no shares issued   —      —   
Additional paid-in-capital   58,715    63,252 
Common stock in treasury, at cost, no shares at November 28, 2015, and at May 30, 2015   —      —   
Retained earnings   83,889    89,141 
Accumulated other comprehensive income   1,391    3,575 
Total stockholders’ equity   144,637    156,652 
Total liabilities and stockholders’ equity  $168,848   $184,994 

 

 

 
 

 

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Comprehensive Loss

(in thousands, except per share amounts)

 

   Three Months Ended  Six Months Ended
   November 28,
2015		  November 29, 
2014		  November 28,
2015		  November 29, 
2014
Statements of Comprehensive Loss            
Net sales  $34,086   $33,841   $71,157   $68,540 
Cost of sales   23,651    23,379    49,460    47,420 
Gross profit   10,435    10,462    21,697    21,120 
Selling, general, and administrative expenses   13,200    12,621    25,467    23,803 
(Gain) loss on disposal of assets   (243)   —      (244)   9 
Operating loss   (2,522)   (2,159)   (3,526)   (2,692)
Other (income) expense:                    
Investment/interest income   (111)   (249)   (302)   (505)
Foreign exchange (gain) loss   (339)   47    (157)   (10)
Other, net   (49)   (14)   (13)   (16)
Total other income   (499)   (216)   (472)   (531)
Loss from continuing operations before income taxes   (2,023)   (1,943)   (3,054)   (2,161)
Income tax provision (benefit)   263    (799)   631    (934)
Loss from continuing operations   (2,286)   (1,144)   (3,685)   (1,227)
Income from discontinued operations, net of tax   —      87    —      87 
Net loss   (2,286)   (1,057)   (3,685)   (1,140)
Foreign currency translation loss, net of tax   (1,649)   (2,993)   (2,152)   (3,961)
Fair value adjustments on investments gain (loss)   28    —      (32)   25 
Comprehensive loss  $(3,907)  $(4,050)  $(5,869)  $(5,076)
Net income (loss) per Common share - Basic:                    
Loss from continuing operations  $(0.18)  $(0.08)  $(0.28)  $(0.09)
Income from discontinued operations   —      0.01    —      0.01 
Total loss per Common share - Basic:  $(0.18)  $(0.07)  $(0.28)  $(0.08)
Net income (loss) per Class B common share - Basic:                    
Loss from continuing operations  $(0.16)  $(0.07)  $(0.25)  $(0.08)
Income from discontinued operations   —      0.01    —      0.01 
Total loss per Class B common share - Basic:  $(0.16)  $(0.06)  $(0.25)  $(0.07)
Net income (loss) per Common share - Diluted:                    
Loss from continuing operations  $(0.18)  $(0.08)  $(0.28)  $(0.09)
Income from discontinued operations   —      0.01    —      0.01 
Total loss per Common share - Diluted:  $(0.18)  $(0.07)  $(0.28)  $(0.08)
Net income (loss) per Class B common share - Diluted:                    
Loss from continuing operations  $(0.16)  $(0.07)  $(0.25)  $(0.08)
Income from discontinued operations   —      0.01    —      0.01 
Total loss per Class B common share - Diluted:  $(0.16)  $(0.06)  $(0.25)  $(0.07)
Weighted average number of shares:                    
Common shares - Basic   10,742    11,770    11,114    11,797 
Class B common shares - Basic   2,141    2,141    2,141    2,161 
Common shares - Diluted   10,742    11,770    11,114    11,797 
Class B common shares - Diluted   2,141    2,141    2,141    2,161 
Dividends per common share  $0.060   $0.060   $0.120   $0.120 
Dividends per Class B common share  $0.054   $0.054   $0.108   $0.108 

 

 

 
 

 

Richardson Electronics, Ltd.

Consolidated Statements of Cash Flows

(in thousands)

 

   Three Months Ended  Six Months Ended
   November 28,
2015		  November 29, 
2014		  November 28,
2015		  November 29, 
2014
Operating activities:            
Net loss  $(2,286)  $(1,057)  $(3,685)  $(1,140)
Adjustments to reconcile net loss to cash used in operating activities:                    
Depreciation and amortization   797    443    1,282    809 
Gain on sale of investments   (8)   (6)   (19)   (9)
Gain on disposal of assets   (243)   (26)   (244)   (26)
Share-based compensation expense   225    266    315    386 
Deferred income taxes   254    (88)   255    (167)
Change in assets and liabilities, net of effect of acquired business:                    
Accounts receivable   2,554    78    29    (294)
Income tax receivable   116    580    664    2,888 
Inventories, net   (2,879)   (2,151)   (3,472)   (4,261)
Prepaid expenses and other assets   137    (1,038)   (444)   (903)
Accounts payable   (469)   1,388    (1,990)   1,489 
Accrued liabilities   (396)   (439)   (1,200)   (1,101)
Non-current deferred income tax liabilities   (228)   —      —      —   
Long-term liabilities-accrued pension   —      —      (465)   —   
Other   96    42    131    (7)
Net cash used in operating activities   (2,330)   (2,008)   (8,843)   (2,336)
Investing activities:                    
Cash consideration paid for acquired business   —      —      (12,209)   —   
Capital expenditures   (792)   (1,102)   (1,776)   (1,936)
Proceeds from sales of assets   402    —      402    —   
Proceeds from maturity of investments   7,234    725    25,584    31,207 
Purchases of investments   (2,151)   (981)   (2,151)   (33,343)
Proceeds from sales of available-for-sale securities   44    37    144    74 
Purchases of available-for-sale securities   (44)   (37)   (144)   (74)
Other   (28)   (2)   32    (30)
Net cash provided by (used in) investing activities   4,665    (1,360)   9,882    (4,102)
Financing activities:                    
Repurchase of common stock   (1,707)   (2,151)   (5,015)   (2,640)
Proceeds from issuance of common stock   121    130    121    288 
Cash dividends paid   (757)   (817)   (1,563)   (1,645)
Other   —      (4)   (4)   (2)
Net cash used in financing activities   (2,343)   (2,842)   (6,461)   (3,999)
Effect of exchange rate changes on cash and cash equivalents   (555)   (1,988)   (1,250)   (2,429)
Decrease in cash and cash equivalents   (563)   (8,198)   (6,672)   (12,866)
Cash and cash equivalents at beginning of period   68,426    98,084    74,535    102,752 
Cash and cash equivalents at end of period  $67,863   $89,886   $67,863   $89,886 

 

 

 
 

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Second Quarter and First Six Months of Fiscal 2016 and Fiscal 2015

(in thousands)

 

By Strategic Business Unit:

 

 

Net Sales  Q2
FY 2016		          Q2
FY 2015		  % Change
PMT  $25,162           $26,787    -6.1%
Canvys   5,902            5,906    -0.1%
Healthcare   3,022            1,148    163.2%
Total  $34,086           $33,841    0.7%
                        
   YTD
FY 2016		          YTD
FY 2015		   % Change 
PMT  $52,357           $54,225    -3.4%
Canvys   12,583            11,874    6.0%
Healthcare   6,217            2,441    154.7%
Total  $71,157           $68,540    3.8%
                        
Gross Profit  Q2
FY 2016		     % of Net Sales     Q2
FY 2015		     % of Net Sales
PMT  $7,515    29.9%  $8,537    31.9%
Canvys   1,526    25.9%   1,653    28.0%
Healthcare   1,394    46.1%   272    23.7%
Total  $10,435    30.6%  $10,462    30.9%
                     
   YTD
FY 2016		   % of Net Sales  YTD
FY 2015		  % of Net Sales
PMT  $15,653    29.9%  $17,223    31.8%
Canvys   3,235    25.7%   3,309    27.9%
Healthcare   2,809    45.2%   588    24.1%
Total  $21,697    30.5%  $21,120    30.8%