Richardson Electronics Reports First Quarter Fiscal 2014 Results and Declares Quarterly Cash Dividend

Business Wire

LAFOX, Ill.--(BUSINESS WIRE)--

Richardson Electronics, Ltd. (RELL) today reported sales and earnings for its first quarter ended August 31, 2013. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Net sales for the first quarter of fiscal 2014 were $34.3 million, a 3.9% decrease compared to net sales of $35.7 million in the prior year. The sales decline primarily reflects a decline in demand for picture archive and communication systems (PAC) monitors as well as the conclusion of a significant North American based industrial Original Equipment Manufacturers ("OEM") monitor program. Gross margin declined to $10.2 million, or 29.8% of net sales during the first quarter of fiscal 2014, compared to $10.6 million, or 29.9% of net sales during fiscal 2013. Operating expenses remained flat for the first quarter of fiscal 2013 and 2014. Operating income for the first quarter of fiscal 2014 was $0.1 million, compared to operating income for the first quarter of fiscal 2013 of $0.5 million.

Income from continuing operations for the first quarter of fiscal 2014 was $2.0 million, or $0.14 per diluted common share, compared to income from continuing operations of $0.7 million, or $0.05 per diluted common share during the first quarter of last year.

“We were pleased to see our EDG business stabilize during the first quarter, and are strategically investing in niche areas of EDG where we have identified potential growth opportunities. EDG continues to strengthen its service capabilities which will drive incremental end user sales of both laser and industrial tubes. At the same time, sales in the healthcare market of Canvys continue to be challenged by uncertainty regarding healthcare reform. However, we remain optimistic that new display opportunities will arise for Canvys once healthcare reform is finalized and with our continued focus on custom solutions for OEMs,” said Edward J. Richardson, Chairman, Chief Executive Officer and President.

“We believe our second quarter sales should be in the range of $35 to $37 million. We remain focused on building our business to achieve sustainable growth over the long term,” said Mr. Richardson.

FINANCIAL SUMMARY ─ THREE MONTHS ENDED AUGUST 31, 2013

  • Net sales for the first quarter of fiscal 2014 were $34.3 million, down 3.9%, compared to net sales of $35.7 million during the first quarter of fiscal 2013.
  • Gross margin was relatively flat at 29.8% during the first quarter of fiscal 2014, compared to 29.9% during the first quarter of fiscal 2013.
  • Selling, general, and administrative expenses remained flat at $10.1 million for the first quarter of fiscal 2014 and fiscal 2013, or 29.4% and 28.5% of net sales, respectively.
  • Operating income during the first quarter of fiscal 2014 was $0.1 million, or 0.4% of net sales, compared to an operating income of $0.5 million, or 1.4% of net sales during the first quarter of fiscal 2013.
  • Income from continuing operations during the first quarter of fiscal 2014 was $2.0 million, or $0.14 per diluted common share, versus $0.7 million, or $0.05 per diluted common share, during the first quarter of fiscal 2013.
  • Loss from discontinued operations, net of tax, was less than $0.1 million, during the first quarters of fiscal 2014 and fiscal 2013.
  • Net income during the first quarter of fiscal 2014 was $2.0 million, compared to net income of $0.6 million during the first quarter of fiscal 2013, or $0.14 and $0.04 per diluted common share, respectively.

CASH DIVIDEND AND SHARE REPURCHASES

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 26, 2013, to common stockholders of record on November 8, 2013.

“Cash and investments at the end of our first quarter were $136.6 million. We used $6.7 million to repurchase 0.6 million shares during the first quarter. As of today, the Company currently has 11.9 million outstanding shares of common stock and 2.2 million outstanding shares of Class B common stock. With our strong balance sheet, we are committed to returning value to our shareholders,” said Mr. Richardson.

CONFERENCE CALL INFORMATION

On Thursday, October 10, 2013, at 9:00 a.m. CT, Edward J. Richardson, Chairman and Chief Executive Officer, and Kathleen S. Dvorak, Chief Financial Officer, will host a conference call to discuss the Company's first quarter results for fiscal 2014. 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 48241797 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:00 a.m. CT on October 10, 2013, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 85074836.

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 26, 2013. 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, and customized display solutions serving customers in the alternative energy, 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. More information is available online 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
  August 31,
2013
  June 1,
2013
Assets
Current assets:
Cash and cash equivalents $ 92,530 $ 102,002
Accounts receivable, less allowance of $1,078 and $1,092 19,499 18,268
Inventories 35,277 33,975
Prepaid expenses and other assets 1,011 1,155
Deferred income taxes 1,912 1,856
Income tax receivable 3,678 6,429
Investments—current 39,822 38,971
Discontinued operations—assets 338   303  

Total current assets

194,067   202,959  
Non-current assets:
Property, plant and equipment, net 5,600 5,073
Goodwill 1,567 1,519
Other intangibles 891 908
Non-current deferred income taxes 1,449 1,398
Investments—non-current 4,226   5,461  
Total non-current assets 13,733   14,359  
Total assets $ 207,800   $ 217,318  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 11,755 $ 14,255
Accrued liabilities 7,412 9,566
Discontinued operations—liabilities 541   245  
Total current liabilities 19,708   24,066  
Non-current liabilities:
Long-term income tax liabilities 6,484 6,726
Other non-current liabilities 1,337   1,287  
Total non-current liabilities 7,821   8,013  
Total liabilities 27,529   32,079  
Commitments and contingencies
Stockholders’ equity
Common stock, $0.05 par value; issued 12,006 shares at August 31, 2013, and 12,263 shares at June 1, 2013 600 613
Class B common stock, convertible, $0.05 par value; issued 2,191 shares at August 31, 2013 and 2,491 shares at June 1, 2013 110 125
Preferred stock, $1.00 par value, no shares issued
Additional paid-in-capital 67,607 73,979
Common stock in treasury, at cost, 19 shares at August 31, 2013, and 9 shares at June 1, 2013 (210 ) (105 )
Retained earnings 102,927 101,816
Accumulated other comprehensive income 9,237   8,811  
Total stockholders’ equity 180,271   185,239  
Total liabilities and stockholders’ equity $ 207,800   $ 217,318  
 
 
 

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts)

 
  Three Months Ended
  August 31,
2013
    September 1,
2012
Statements of Comprehensive Income
Net Sales $ 34,257 $ 35,650
Cost of Sales 24,065   25,004  
Gross profit 10,192 10,646
Selling, general, and administrative expenses 10,069 10,149
Gain (loss) on disposal of assets   (4 )
Operating income 123   501  
Other (income) expense:
Investment/interest income (265 ) (383 )
Foreign exchange (gain) loss 106 (37 )
Proceeds from legal settlement (2,115 )
Other, net (30 ) (23 )
Total other income (2,304 ) (443 )
Income from continuing operations before income taxes 2,427 944
Income tax provision 448   210  
Income from continuing operations 1,979 734
Loss from discontinued operations, net of tax (11 ) (87 )
Net income 1,968   647  
Foreign currency translation gain, net of tax 425 400
Fair value adjustments on investments 1   1  
Comprehensive income $ 2,394   $ 1,048  

Net income per Common share - Basic:

Income from continuing operations 0.14 0.05
Income (loss) from discontinued operations   (0.01 )
Total net income per Common share - Basic: 0.14   0.04  

Net income per Class B common share - Basic:

Income from continuing operations $ 0.13 $ 0.04
Income from discontinued operations    
Total net income per Class B common share - Basic: $ 0.13   $ 0.04  

Net income per Common share - Diluted:

Income from continuing operations $ 0.14 $ 0.05
Income (loss) from discontinued operations   (0.01 )
Total net income per Common share - Diluted: $ 0.14   $ 0.04  

Net income per Class B common share - Diluted:

Income from continuing operations $ 0.13 $ 0.04
Income from discontinued operations    
Total net income per Class B common share - Diluted: $ 0.13   $ 0.04  
Weighted average number of shares:
Common shares - Basic 12,127   12,772  
Class B common shares - Basic 2,428   2,913  
Common shares - Diluted 14,688   15,787  
Class B common shares - Diluted 2,428   2,913  
Dividends per common share $ 0.060   $ 0.060  
Dividends per Class B common share $ 0.054   $ 0.054  
 
 
 

Richardson Electronics, Ltd.

Consolidated Statements of Cash Flows

(in thousands)

 
  Three Months Ended
  August 31,
2013
    September 1,
2012
Operating activities:  
Net income $ 1,968 $ 647
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization 248 299
Gain on sale of investments (7 ) (20 )
Gain on disposal of assets (4 )
Share-based compensation expense 114 124
Deferred income taxes (59 ) (1 )
Inventory provisions 70 74
Change in assets and liabilities, net of effect of acquired businesses:
Accounts receivable (1,218 ) (646 )
Income tax receivable 2,751 155
Inventories (520 ) (624 )
Prepaid expenses and other assets 156 (622 )
Accounts payable (2,547 ) (1,430 )
Accrued liabilities (1,890 ) (1,006 )
Long-term income tax liabilities (242 ) (321 )
Other (9 ) 42  

Net cash used in operating activities

(1,185 ) (3,333 )
Investing activities:
Cash consideration paid for acquired businesses (973 )
Capital expenditures (441 ) (79 )
Proceeds from sale of assets 4
Proceeds from maturity of investments 40,488 57,747
Purchases of investments (40,094 ) (51,725 )
Proceeds from sales of available-for-sale securities 56 54
Purchases of available-for-sale securities (56 ) (54 )
Other 69   1  
Net cash provided by (used in) investing activities (951 ) 5,948  
Financing activities:
Repurchase of common stock (6,700 ) (5,552 )
Proceeds from issuance of common stock 71 11
Cash dividends paid (857 )
Other 1    
Net cash used in financing activities (7,485 ) (5,541 )
Effect of exchange rate changes on cash and cash equivalents 149   271  
Decrease in cash and cash equivalents (9,472 ) (2,655 )
Cash and cash equivalents at beginning of period 102,002   43,893  
Cash and cash equivalents at end of period $ 92,530   $ 41,238  
 
 
 

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the First Quarter of Fiscal 2014 and Fiscal 2013

(in thousands)

       

By Strategic Business Unit:

 

Net Sales

Q1 Q1
FY 2014 FY 2013 % Change
EDG $ 25,479 $ 25,627 (0.6)%
Canvys 8,778   10,023   (12.4)%
Total $ 34,257   $ 35,650   (3.9)%
 

Gross Profit

Q1 Q1
FY 2014 % of Net Sales FY 2013 % of Net Sales
EDG $ 7,859 30.8% $ 8,000 31.2%
Canvys 2,333   26.6% 2,646   26.4%
Total $ 10,192   29.8% $ 10,646   29.9%
 

Contact:
Richardson Electronics, Ltd.
Edward J. Richardson
Chairman and CEO
Phone: (630) 208-2340
or
Kathleen S. Dvorak
EVP & CFO
(630) 208-2208

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