RELL - Richardson Electronics Reports Second Quarter Fiscal 2021 Net Income and Declares Quarterly Cash Dividend
Q2 and FY21 Highlights
- Net sales of $42.4 million were up 7% from last year’s pre-COVID second quarter.
- Sales increased for PMG, Healthcare, and Semiconductor Wafer Fabrication equipment products in the second quarter of fiscal 2021 versus the second quarter of fiscal 2020.
- Gross margin improved to 33.8% of net sales for the second quarter of fiscal 2021 versus 32.0% of net sales in the prior year’s second quarter.
- Operating expenses increased $0.3 million to $13.5 million compared to the prior year’s second quarter. Legal expenses increased by $0.3 million.
- Operating income was $0.9 million compared to an operating loss of $0.5 million in last year’s second quarter.
- Earnings per common share (diluted) for the second quarter of fiscal 2021 was $0.05.
- Cash and investments were $46.0 million as of November 28, 2020 versus $42.5 million on August 29, 2020 and $46.1 million on November 30, 2019.
LAFOX, Ill., Jan. 06, 2021 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its second quarter ended November 28, 2020. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.
Second Quarter Results
Net sales for the second quarter of fiscal 2021 increased 7.0% to $42.4 million compared to net sales of $39.6 million in the prior year’s second quarter primarily due to higher net sales for PMT and Richardson Healthcare, partially offset by lower net sales for Canvys. Richardson Electronics is an “essential business” and continued operating its manufacturing and distribution businesses on a global basis throughout the pandemic under strict safety guidelines. PMT sales increased by 11.2% from last year’s second quarter as a result of higher sales of semiconductor wafer fab equipment specialty products as well as power conversion and RF and microwave components. Power grid tube sales continued to be negatively impacted by the pandemic, however sales of certain product lines increased from the second quarter of fiscal 2020. Richardson Healthcare sales increased $0.6 million or 28.2% primarily due to a significant increase in demand for the ALTA750 ™ Tubes, which was the highest quantity sold in any quarter. In addition, equipment sales increased in Latin America. Canvys sales decreased by $1.2 million or 14.7% due to temporary decreased customer demand globally related to COVID-19.
Gross margin improved to 33.8% of net sales during the second quarter of fiscal 2021 compared to 32.0% of net sales during the second quarter of fiscal 2020. PMT margin increased to 34.2% from 31.6% due to a favorable product mix and improved manufacturing efficiencies. Canvys margin as a percent of net sales increased to 35.5% from 32.9% as a result of its product mix. Healthcare margin as a percent of net sales was 25.6% in the second quarter of fiscal 2021 compared to 34.3% in the prior year’s second quarter primarily due to under absorbed manufacturing expenses related to tube development and manufacturing improvements.
Operating expenses were $13.5 million in the second quarter of fiscal 2021 compared to $13.2 million in the second quarter of fiscal 2020. The increase in operating expenses resulted from higher legal and employee compensation expenses, partially offset by lower travel and consulting expenses. Throughout the pandemic, the Company decided to support its employees through regular merit increases and incentive plans, and by avoiding layoffs or furloughs.
As a result, the Company reported an operating income of $0.9 million for the second quarter of fiscal 2021 compared to an operating loss of $0.5 million in the prior year’s second quarter. Other expense for the second quarter of fiscal 2021, including interest income and foreign exchange, was $0.1 million, the same as in the second quarter of fiscal 2020.
The income tax provision of $0.1 million for the second quarter of fiscal 2021 reflected a provision for foreign income taxes, which was lower than the prior year’s second quarter, and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. Net income for the second quarter of fiscal 2021 was $0.7 million compared to a net loss of $0.6 million in the second quarter of fiscal 2020. Earnings per common share (diluted) in the second quarter of fiscal 2021 was $0.05.
“We were happy with the sales growth in Healthcare, PMG and semiconductor wafer fab equipment products despite the ongoing impact of the coronavirus around the world” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “We were also pleased with the significant free cash flow generated during the quarter reflecting our commitment to carefully control expenses and capital expenditures” he concluded.
FINANCIAL SUMMARY – SIX MONTHS ENDED NOVEMBER 28, 2020
- Net sales for the first six months of fiscal 2021 were $81.2 million, an increase of 1.2%, compared to net sales of $80.3 million during the first six months of fiscal 2020. Sales increased by $3.0 million or 5.0% for PMT but decreased by $1.7 million or 11.4% for Canvys and $0.4 million or 7.0% for Richardson Healthcare.
- Gross margin increased to $26.7 million during the first six months of fiscal 2021, compared to $25.6 million during the first six months of fiscal 2020. As a percentage of net sales, gross margin increased to 32.9% of net sales during the first six months of fiscal 2021, compared to 31.9% of net sales during the first six months of fiscal 2020, primarily as a result of a favorable product mix in PMT and Canvys, and improved manufacturing efficiencies for PMT.
- Operating expenses increased to $26.5 million for the first six months of fiscal 2021, compared to $26.0 million for the first six months of fiscal 2020. The increase in operating expenses resulted from higher legal and employee compensation expenses, partially offset by lower travel and consulting expenses.
- Operating income during the first six months of fiscal 2021 was $0.2 million, compared to an operating loss of $0.4 million during the first six months of fiscal 2020.
- Other expense for the first six months of fiscal 2021, including interest income and foreign exchange, was $0.5 million, as compared to other income of $0.2 million in the first six months of fiscal 2020.
- The income tax provision of $0.2 million during the first six months of fiscal 2021 reflected a provision for foreign income taxes, which was lower than in the prior year’s first six months, and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.
- Net loss for the first six months of fiscal 2021 was $0.5 million, the same as during the first six months of fiscal 2020.
CASH DIVIDEND AND POSITION
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, 2021, to common stockholders of record as of February 5, 2021.
Cash and investments at the end of the second quarter of fiscal 2021 were $46.0 million compared to $42.5 million at the end of the first quarter of fiscal 2021 and $46.1 million at the end of the second quarter of fiscal 2020. The Company spent $0.6 million during the quarter on capital expenditures primarily related to its Healthcare business and IT System, versus $0.5 million during the second quarter of fiscal 2020.
CONFERENCE CALL INFORMATION
On Thursday, January 7, 2021, at 9:00 a.m. CST, 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 fiscal year 2021 results. A question and answer session will be included as part of the call’s agenda.
Participant Instructions
To listen to the call, please dial (USA/CANADA) (866) 784-8065 or (International) (602) 563-8684 and enter Conference ID: 8960048 approximately five minutes before the start of the call. A replay of the call will be available beginning at 1:00 p.m. CST on January 7, 2021, for seven days. The telephone number for the replay is (855) 859-2056; Conference ID: 8960048.
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 August 3, 2020, 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 provider of engineered solutions, power grid and microwave tubes and related consumables; power conversion and RF and microwave components; high- value flat panel detector solutions, replacement parts, tubes, and service training 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, 2020 |
| May 30, 2020 |
| Assets |
| Current assets: |
| Cash and cash equivalents |
| $ |
| 37,023 |
| $ |
| 30,535 |
| Accounts receivable, less allowance of $256 and $334, respectively |
| 21,077 |
| 20,197 |
| Inventories, net |
| 59,538 |
| 57,492 |
| Prepaid expenses and other assets |
| 2,798 |
| 2,442 |
| Investments - current |
| 9,000 |
| 16,000 |
| Total current assets |
| 129,436 |
| 126,666 |
| Non-current assets: |
| Property, plant and equipment, net |
| 17,358 |
| 17,674 |
| Intangible assets, net |
| 2,388 |
| 2,505 |
| Lease ROU asset |
| 2,857 |
| 3,419 |
| Non-current deferred income taxes |
| 529 |
| 456 |
| Total non-current assets |
| 23,132 |
| 24,054 |
| Total assets |
| $ |
| 152,568 |
| $ |
| 150,720 |
| Liabilities and Stockholders’ Equity |
| Current liabilities: |
| Accounts payable |
| $ |
| 15,089 |
| $ |
| 17,372 |
| Accrued liabilities |
| 13,998 |
| 10,324 |
| Lease liability current |
| 1,280 |
| 1,485 |
| Total current liabilities |
| 30,367 |
| 29,181 |
| Non-current liabilities: |
| Non-current deferred income tax liabilities |
| 171 |
| 161 |
| Lease liability non-current |
| 1,512 |
| 1,941 |
| Other non-current liabilities |
| 884 |
| 777 |
| Total non-current liabilities |
| 2,567 |
| 2,879 |
| Total liabilities |
| 32,934 |
| 32,060 |
| Stockholders’ equity |
| Common stock, $0.05 par value; issued and outstanding 11,111 shares on November 28, 2020 and 11,038 shares on May 30, 2020 |
| 556 |
| 552 |
| Class B common stock, convertible, $0.05 par value; issued and outstanding 2,097 shares on November 28, 2020 and May 30, 2020 |
| 105 |
| 105 |
| Preferred stock, $1.00 par value, no shares issued |
| — |
| — |
| Additional paid-in-capital |
| 62,124 |
| 61,749 |
| Retained earnings |
| 52,746 |
| 54,764 |
| Accumulated other comprehensive income |
| 4,103 |
| 1,490 |
| Total stockholders’ equity |
| 119,634 |
| 118,660 |
| Total liabilities and stockholders’ equity |
| $ |
| 152,568 |
| $ |
| 150,720 |
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share amounts)
| Three Months Ended |
| Six Months Ended |
| November 28, 2020 |
| November 30, 2019 |
| November 28, 2020 |
| November 30, 2019 |
| Statements of Comprehensive Income (Loss) |
| Net sales |
| $ |
| 42,418 |
| $ |
| 39,634 |
| $ |
| 81,230 |
| $ |
| 80,287 |
| Cost of sales |
| 28,075 |
| 26,954 |
| 54,528 |
| 54,656 |
| Gross profit |
| 14,343 |
| 12,680 |
| 26,702 |
| 25,631 |
| Selling, general and administrative expenses |
| 13,491 |
| 13,161 |
| 26,467 |
| 26,008 |
| Loss on disposal of assets |
| — |
| — |
| — |
| 1 |
| Operating income (loss) |
| 852 |
| (481 |
| ) |
| 235 |
| (378 |
| ) |
| Other expense (income): |
| Investment/interest income |
| (15 |
| ) |
| (123 |
| ) |
| (33 |
| ) |
| (243 |
| ) |
| Foreign exchange loss |
| 143 |
| 199 |
| 585 |
| 89 |
| Other, net |
| (18 |
| ) |
| (15 |
| ) |
| (36 |
| ) |
| (16 |
| ) |
| Total other expense (income) |
| 110 |
| 61 |
| 516 |
| (170 |
| ) |
| Income (loss) before income taxes |
| 742 |
| (542 |
| ) |
| (281 |
| ) |
| (208 |
| ) |
| Income tax provision |
| 53 |
| 80 |
| 177 |
| 257 |
| Net income (loss) |
| 689 |
| (622 |
| ) |
| (458 |
| ) |
| (465 |
| ) |
| Foreign currency translation gain (loss), net of tax |
| 477 |
| 222 |
| 2,613 |
| (494 |
| ) |
| Comprehensive income (loss) |
| $ |
| 1,166 |
| $ |
| (400 |
| ) |
| $ |
| 2,155 |
| $ |
| (959 |
| ) |
| Net income (loss) per share |
| Common shares - Basic |
| $ |
| 0.05 |
| $ |
| (0.05 |
| ) |
| $ |
| (0.04 |
| ) |
| $ |
| (0.04 |
| ) |
| Class B common shares - Basic |
| $ |
| 0.05 |
| $ |
| (0.04 |
| ) |
| $ |
| (0.03 |
| ) |
| $ |
| (0.03 |
| ) |
| Common shares - Diluted |
| $ |
| 0.05 |
| $ |
| (0.05 |
| ) |
| $ |
| (0.04 |
| ) |
| $ |
| (0.04 |
| ) |
| Class B common shares - Diluted |
| $ |
| 0.05 |
| $ |
| (0.04 |
| ) |
| $ |
| (0.03 |
| ) |
| $ |
| (0.03 |
| ) |
| Weighted average number of shares: |
| Common shares – Basic |
| 11,111 |
| 11,038 |
| 11,090 |
| 11,014 |
| Class B common shares – Basic |
| 2,097 |
| 2,097 |
| 2,097 |
| 2,097 |
| Common shares – Diluted |
| 11,128 |
| 11,038 |
| 11,090 |
| 11,014 |
| Class B common shares – Diluted |
| 2,097 |
| 2,097 |
| 2,097 |
| 2,097 |
| 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.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
| Three Months Ended |
| Six Months Ended |
| November 28, 2020 |
| November 30, 2019 |
| November 28, 2020 |
| November 30, 2019 |
| Operating activities: |
| Net income (loss) |
| $ |
| 689 |
| $ |
| (622 |
| ) |
| $ |
| (458 |
| ) |
| $ |
| (465 |
| ) |
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: |
| Depreciation and amortization |
| 873 |
| 825 |
| 1,746 |
| 1,658 |
| Inventory provisions |
| 215 |
| 120 |
| 452 |
| 281 |
| Loss on disposal of assets |
| — |
| — |
| — |
| 1 |
| Share-based compensation expense |
| 178 |
| 182 |
| 379 |
| 370 |
| Deferred income taxes |
| (55 |
| ) |
| 23 |
| (53 |
| ) |
| (25 |
| ) |
| Change in assets and liabilities: |
| Accounts receivable |
| 687 |
| (335 |
| ) |
| (167 |
| ) |
| 1,826 |
| Inventories |
| 613 |
| (2,062 |
| ) |
| (1,008 |
| ) |
| (3,419 |
| ) |
| Prepaid expenses and other assets |
| (381 |
| ) |
| (423 |
| ) |
| (272 |
| ) |
| 202 |
| Accounts payable |
| 211 |
| 2,590 |
| (2,523 |
| ) |
| (1,365 |
| ) |
| Accrued liabilities |
| 1,633 |
| 486 |
| 3,412 |
| (390 |
| ) |
| Other |
| (236 |
| ) |
| (165 |
| ) |
| (438 |
| ) |
| (109 |
| ) |
| Net cash provided by (used in) operating activities |
| 4,427 |
| 619 |
| 1,070 |
| (1,435 |
| ) |
| Investing activities: |
| Capital expenditures |
| (562 |
| ) |
| (475 |
| ) |
| (1,280 |
| ) |
| (814 |
| ) |
| Proceeds from maturity of investments |
| — |
| — |
| 16,000 |
| 8,000 |
| Purchases of investments |
| — |
| (13,000 |
| ) |
| (9,000 |
| ) |
| (13,000 |
| ) |
| Net cash (used in) provided by investing activities |
| (562 |
| ) |
| (13,475 |
| ) |
| 5,720 |
| (5,814 |
| ) |
| Financing activities: |
| Proceeds from issuance of common stock |
| — |
| 59 |
| — |
| 59 |
| Cash dividends paid |
| (780 |
| ) |
| (775 |
| ) |
| (1,560 |
| ) |
| (1,550 |
| ) |
| Payment of financing lease principal |
| (46 |
| ) |
| (45 |
| ) |
| (91 |
| ) |
| (75 |
| ) |
| Other |
| — |
| (4 |
| ) |
| — |
| — |
| Net cash used in financing activities |
| (826 |
| ) |
| (765 |
| ) |
| (1,651 |
| ) |
| (1,566 |
| ) |
| Effect of exchange rate changes on cash and cash equivalents |
| 489 |
| 218 |
| 1,349 |
| (150 |
| ) |
| Increase (decrease) in cash and cash equivalents |
| 3,528 |
| (13,403 |
| ) |
| 6,488 |
| (8,965 |
| ) |
| Cash and cash equivalents at beginning of period |
| 33,495 |
| 46,457 |
| 30,535 |
| 42,019 |
| Cash and cash equivalents at end of period |
| $ |
| 37,023 |
| $ |
| 33,054 |
| $ |
| 37,023 |
| $ |
| 33,054 |
Richardson Electronics, Ltd.
Net Sales and Gross Profit
For the Second Quarter and First Six Months of Fiscal 2021 and Fiscal 2020
($ in thousands)
| By Strategic Business Unit: |
| Net Sales |
| Q2 FY 2021 |
| Q2 FY 2020 |
| % Change |
| PMT |
| $ |
| 32,929 |
| $ |
| 29,603 |
| 11.2 |
| % |
| Canvys |
| 6,701 |
| 7,856 |
| -14.7 |
| % |
| Healthcare |
| 2,788 |
| 2,175 |
| 28.2 |
| % |
| Total |
| $ |
| 42,418 |
| $ |
| 39,634 |
| 7.0 |
| % |
| YTD FY 2021 |
| YTD FY 2020 |
| % Change |
| PMT |
| $ |
| 63,181 |
| $ |
| 60,170 |
| 5.0 |
| % |
| Canvys |
| 13,413 |
| 15,133 |
| -11.4 |
| % |
| Healthcare |
| 4,636 |
| 4,984 |
| -7.0 |
| % |
| Total |
| $ |
| 81,230 |
| $ |
| 80,287 |
| 1.2 |
| % |
| Gross Profit |
| Q2 FY 2021 |
| % of Net Sales |
| Q2 FY 2020 |
| % of Net Sales |
| PMT |
| $ |
| 11,251 |
| 34.2 |
| % |
| $ |
| 9,349 |
| 31.6 |
| % |
| Canvys |
| 2,379 |
| 35.5 |
| % |
| 2,585 |
| 32.9 |
| % |
| Healthcare |
| 713 |
| 25.6 |
| % |
| 746 |
| 34.3 |
| % |
| Total |
| $ |
| 14,343 |
| 33.8 |
| % |
| $ |
| 12,680 |
| 32.0 |
| % |
| YTD FY 2021 |
| % of Net Sales |
| YTD FY 2020 |
| % of Net Sales |
| PMT |
| $ |
| 21,222 |
| 33.6 |
| % |
| $ |
| 19,028 |
| 31.6 |
| % |
| Canvys |
| 4,663 |
| 34.8 |
| % |
| 4,906 |
| 32.4 |
| % |
| Healthcare |
| 817 |
| 17.6 |
| % |
| 1,697 |
| 34.0 |
| % |
| Total |
| $ |
| 26,702 |
| 32.9 |
| % |
| $ |
| 25,631 |
| 31.9 |
| % |
| 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) 208-2205 |
| (630) 208-2203 |
| (630) 208-2200 | Fax: (630) 208-2550 |