Richardson Electronics Reports First Quarter Fiscal 2018 Results and Declares Quarterly Cash Dividend

LAFOX, Ill., Oct. 11, 2017 (GLOBE NEWSWIRE) — Richardson Electronics, Ltd. (NASDAQ:RELL) today reported financial results for its first quarter ended September 2, 2017. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

First Quarter Results

Net sales for the first quarter of fiscal 2018 were $37.0 million compared to net sales of $33.4 million in the prior year’s first quarter. There were 14 weeks in the first quarter of fiscal 2018 compared to 13 weeks last year. Sales increased $3.7 million for PMT and $1.1 million for Canvys, partially offset by a decrease of $1.2 million for Richardson Healthcare. PMT sales were higher in power conversion and RF and microwave components as well as specialty products sold into the semiconductor wafer fabrication capital equipment market. Sales increased for Canvys due to higher overall demand from key OEMs. Sales decreased for Richardson Healthcare due to the sale of the PACS Display business at the end of fiscal 2017, partially offset by higher equipment sales.

Gross margin increased to $12.1 million, or 32.8% of net sales during the first quarter of fiscal 2018, compared to $10.2 million, or 30.7% of net sales during the first quarter of fiscal 2017. Margin increased as a percent of net sales primarily due to a favorable product mix in PMT and Richardson Healthcare. These increases were partially offset by a lower Canvys gross margin that resulted from an unfavorable product mix.

Operating expenses were $12.3 million for the first quarter of fiscal 2018, which was the same compared to the first quarter of fiscal 2017. As a result, the company reported $15,000 of operating income for the first quarter of fiscal 2018, including a $0.2 million gain on the sale of a building in Florence, Italy, compared to an operating loss of $2.1 million in the prior year’s first quarter. Other expense for the first quarter of fiscal 2018, including foreign exchange loss and investment income, was $0.1 million, compared to $0.3 million for the first quarter of fiscal 2017.

The income tax provision of $0.1 million during the first quarter of fiscal 2018 reflected a provision for foreign income taxes based on the current quarter’s geographical distribution of income and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. The tax provision of $0.5 million in the first quarter of fiscal 2017 included a provision for foreign income taxes, additional tax due from an audit in France, adjustments from various tax returns filed in foreign tax jurisdictions and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.

Net loss for the first quarter of fiscal 2018 was $0.1 million, compared to a net loss of $2.9 million in the first quarter of 2017.

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 November 22, 2017, to common stockholders of record on November 7, 2017.

Cash and investments at the end of the first quarter of fiscal 2018 were $61.4 million compared to $64.2 million at the end of the fourth quarter of fiscal 2017 and $66.3 million at the end of the first quarter of fiscal 2017. During the first quarter of fiscal 2018, 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 $21.0 million on dividends and $7.8 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 first quarter of fiscal 2018 as compared to a $2.1 million operating loss in the first quarter of fiscal 2017,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “Our investment in RF and Microwave technologies is beginning to generate meaningful revenue growth and Canvys gained momentum during the quarter with increased backlog. Healthcare made significant progress in new CT tube development. We are off to a good start in fiscal 2018 and will continue to invest wisely and conservatively to ensure we capitalize on our existing infrastructure,” Mr. Richardson concluded.

CONFERENCE CALL INFORMATION

On Thursday, October 12, 2017, 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 first quarter results for fiscal year 2018. 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 51574534 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 12:00 a.m. CDT on October 13, 2017, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 45382202.

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 31, 2017. 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.
Consolidated Balance Sheets
(in thousands, except per share amounts)
 
    Unaudited   Audited  
    September 2,
2017
  May 27,
2017
 
Assets              
Current assets:              
Cash and cash equivalents   $ 56,429   $ 55,327  
Accounts receivable, less allowance of $381 and $398, respectively     19,260     20,782  
Inventories, net     46,136     42,749  
Prepaid expenses and other assets     3,373     3,070  
Investments – current     2,424     6,429  
Total current assets     127,622     128,357  
Non-current assets:              
Property, plant and equipment, net     16,178     15,813  
Goodwill     6,332     6,332  
Intangible assets, net     3,334     3,441  
Non-current deferred income taxes     1,141     1,102  
Investments – non-current     2,514     2,419  
Total non-current assets     29,499     29,107  
Total assets   $ 157,121   $ 157,464  
Liabilities and Stockholders’ Equity              
Current liabilities:              
Accounts payable   $ 13,382   $ 15,933  
Accrued liabilities     9,173     8,311  
Total current liabilities     22,555     24,244  
Non-current liabilities:              
Non-current deferred income tax liabilities     158     158  
Other non-current liabilities     743     735  
Total non-current liabilities     901     893  
Total liabilities     23,456     25,137  
Stockholders’ equity              
Common stock, $0.05 par value; issued and outstanding 10,712 shares at September 2, 2017, and at May 27, 2017     535     535  
Class B common stock, convertible, $0.05 par value; issued and outstanding 2,137 shares at September 2, 2017 and at May 27, 2017     107     107  
Preferred stock, $1.00 par value, no shares issued          
Additional paid-in-capital     59,537     59,436  
Common stock in treasury, at cost, no shares at September 2, 2017, and at May 27, 2017          
Retained earnings     68,463     69,333  
Accumulated other comprehensive income     5,023     2,916  
Total stockholders’ equity     133,665     132,327  
Total liabilities and stockholders’ equity   $ 157,121   $ 157,464  
               
               

Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share amounts)
 
    Three Months Ended  
    September 2,
2017
  August 27,
2016
 
Statements of Comprehensive Income (Loss)              
Net sales   $ 36,995   $ 33,373  
Cost of sales     24,847     23,133  
Gross profit     12,148     10,240  
Selling, general, and administrative expenses     12,324     12,327  
Gain on disposal of assets     (191 )    
Operating income (loss)     15     (2,087 )
Other (income) expense:              
Investment/interest income     (134 )   (11 )
Foreign exchange loss     201     278  
Other, net     (4 )   (1 )
Total other expense     63     266  
Loss before income taxes     (48 )   (2,353 )
Income tax provision     64     497  
Net loss     (112 )   (2,850 )
Foreign currency translation gain, net of tax     2,121     379  
Fair value adjustments on investments (loss) gain     (14 )   7  
Comprehensive income (loss)   $ 1,995   $ (2,464 )
Loss per share:              
Common shares – Basic   $ (0.01 ) $ (0.23 )
Class B common shares – Basic   $ (0.01 ) $ (0.20 )
Common shares – Diluted   $ (0.01 ) $ (0.23 )
Class B common shares – Diluted   $ (0.01 ) $ (0.20 )
Weighted average number of shares:                
Common shares – Basic     10,712     10,703  
Class B common shares – Basic     2,137     2,141  
Common shares – Diluted     10,712     10,703  
Class B common shares – Diluted     2,137     2,141  
Dividends per common share   $ 0.060   $ 0.060  
Dividends per Class B common share   $ 0.054   $ 0.054  
               
               

Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
  
    Three Months Ended  
    September 2,
2017
    August 27,
2016
 
Operating activities:                
Net loss   $ (112 )   $ (2,850 )
Adjustments to reconcile net loss to cash used in operating activities:                
Depreciation and amortization     732       715  
Inventory provisions     162       43  
Gain on sale of investments     (25 )     (2 )
Gain on disposal of assets     (191 )      
Share-based compensation expense     101       103  
Deferred income taxes     (4 )     (158 )
Change in assets and liabilities:                
Accounts receivable     2,047       3,555  
Income tax receivable           (13 )
Inventories     (2,613 )     368  
Prepaid expenses and other assets     (258 )     41  
Accounts payable     (2,755 )     (2,338 )
Accrued liabilities     726       (1,144 )
Other     (267 )     5  
Net cash used in operating activities     (2,457 )     (1,675 )
Investing activities:                
Capital expenditures     (1,015 )     (2,064 )
Proceeds from sale of assets     276        
Proceeds from maturity of investments     4,000       1,465  
Proceeds from sales of available-for-sale securities     151       88  
Purchases of available-for-sale securities     (151 )     (88 )
Other     (3 )     (3 )
Net cash provided by (used in) investing activities     3,258       (602 )
Financing activities:                
Cash dividends paid     (758 )     (758 )
Net cash used in financing activities     (758 )     (758 )
Effect of exchange rate changes on cash and cash equivalents     1,059       69  
Increase (decrease) in cash and cash equivalents     1,102       (2,966 )
Cash and cash equivalents at beginning of period     55,327       60,454  
Cash and cash equivalents at end of period   $ 56,429     $ 57,488  
                 
                 

Richardson Electronics, Ltd.
Net Sales and Gross Profit
For the First Quarter and Fiscal 2018 and Fiscal 2017
(in thousands)

By Strategic Business Unit:

Net Sales

    Q1
FY 2018
    Q1
FY 2017
  % Change
PMT   $ 29,124       $ 25,381       14.7 %
Canvys     5,765         4,620       24.8 %
Healthcare     2,106         3,372       -37.5 %
Total   $ 36,995       $ 33,373       10.9 %

Gross Profit 

    Q1
FY 2018
  % of Net Sales   Q1
FY 2017
  % of Net Sales
PMT   $ 9,574       32.9 %   $ 7,455       29.4 %
Canvys     1,546       26.8 %     1,348       29.2 %
Healthcare     1,028       48.8 %     1,437       42.6 %
Total   $ 12,148       32.8 %   $ 10,240       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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