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RICHARDSON ELECTRONICS, LTD. - 10-Q
Exhibit 99.1
Press Release
For Immediate Release
| 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 FIRST QUARTER FISCAL 2016 RESULTS AND DECLARES QUARTERLY CASH DIVIDEND
LaFox, IL, October 7, 2015: Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its first quarter ended August 29, 2015. 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 2016 were $37.1 million, a 6.8% increase, compared to net sales of $34.7 million in the prior year. The sales increase primarily reflects growth in the Canvys business of 11.9% and Healthcare business of 147.1%, which included the net sales for International Medical Equipment Systems (“IMES”), acquired in June of this year. Gross margin increased to $11.3 million, or 30.4% of net sales during the first quarter of fiscal 2016, compared to $10.7 million, or 30.7% of net sales during fiscal 2015.
Operating expenses increased to $12.3 million for the first quarter of fiscal 2016, compared to $11.2 million for the first quarter of fiscal 2015. The $1.1 million increase in expenses is due to including the expenses of IMES and investments in the Richardson Healthcare and PMT business units in support of its growth objectives.
As a result, operating loss for the first quarter of fiscal 2016 was $1.0 million, compared to an operating loss for the first quarter of fiscal 2015 of $0.5 million.
Other expense for the first quarter of fiscal 2016 was less than $0.1 million, compared to income of $0.3 million for the first quarter of fiscal 2015.
Net loss for the first quarter of fiscal 2016 was $1.4 million, compared to net loss of $0.1 million during the first quarter of last year.
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 20, 2015, to common stockholders of record on November 6, 2015.
Cash and investments at the end of our first quarter of fiscal 2016 were $85.3 million. During the first quarter of fiscal 2016, the Company repurchased 567,000 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
“We are pleased with the IMES transaction that closed during the first quarter. The integration of IMES is going well, and our expanded management team is aggressively pursuing new business opportunities,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “Our multi-pronged growth strategy will enable us to increase our product offering, enhance our service capabilities, and expand our customer base while taking advantage of our existing global infrastructure. We will continue to evaluate acquisition targets and make prudent investments in our growth initiatives. We look forward to improving our operating performance, delivering enhanced customer service and returning value to our shareholders,” Mr. Richardson concluded.
CONFERENCE CALL INFORMATION
On Thursday, October 8, 2015, 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 first 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 20539434 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 October 9, 2015, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 60014595.
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 | |||||||
| August 29, 2015 | May 30, 2015 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 68,426 | $ | 74,535 | ||||
| Accounts receivable, less allowance of $283 | 23,989 | 20,753 | ||||||
| Inventories, net | 41,188 | 38,769 | ||||||
| Prepaid expenses and other assets | 2,289 | 1,696 | ||||||
| Deferred income taxes | 782 | 804 | ||||||
| Income tax receivable | 381 | 929 | ||||||
| Investments - current | 6,342 | 23,692 | ||||||
| Total current assets | 143,397 | 161,178 | ||||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | 10,832 | 10,081 | ||||||
| Goodwill | 3,746 | — | ||||||
| Intangible assets, net | 6,528 | 743 | ||||||
| Non-current deferred income taxes | 1,463 | 1,443 | ||||||
| Investments - non-current | 10,511 | 11,549 | ||||||
| Total non-current assets | 33,080 | 23,816 | ||||||
| Total assets | $ | 176,477 | $ | 184,994 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | 14,293 | 15,768 | ||||||
| Accrued liabilities | 9,348 | 10,144 | ||||||
| Total current liabilities | 23,641 | 25,912 | ||||||
| Non-current liabilities: | ||||||||
| Non-current deferred income tax liabilities | 1,179 | 1,209 | ||||||
| Other non-current liabilities | 995 | 1,221 | ||||||
| Total non-current liabilities | 2,174 | 2,430 | ||||||
| Total liabilities | 25,815 | 28,342 | ||||||
| Stockholders’ equity | ||||||||
| Common stock, $0.05 par value; issued and 11,357 shares at August 29, 2015, and 11,530 shares at May 30, 2015 | 568 | 577 | ||||||
| Class B common stock, convertible, $0.05 par value; issued and outstanding 2,141 shares at August 29, 2015 and at May 30, 2015 | 107 | 107 | ||||||
| Preferred stock, $1.00 par value, no shares issued | — | — | ||||||
| Additional paid-in-capital | 62,312 | 63,252 | ||||||
| Common stock in treasury, at cost, 394 shares at August 29, 2015, and no shares at May 30, 2015 | (2,269 | ) | — | |||||
| Retained earnings | 86,932 | 89,141 | ||||||
| Accumulated other comprehensive income | 3,012 | 3,575 | ||||||
| Total stockholders’ equity | 150,662 | 156,652 | ||||||
| Total liabilities and stockholders’ equity | $ | 176,477 | $ | 184,994 | ||||
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Loss
(in thousands, except per share amounts)
| Three Months Ended | ||||||||
| August 29, 2015 | August 30, 2014 | |||||||
| Statements of Comprehensive Loss | ||||||||
| Net sales | $ | 37,071 | $ | 34,699 | ||||
| Cost of sales | 25,809 | 24,041 | ||||||
| Gross profit | 11,262 | 10,658 | ||||||
| Selling, general, and administrative expenses | 12,267 | 11,182 | ||||||
| (Gain) loss on disposal of assets | (1 | ) | 9 | |||||
| Operating loss | (1,004 | ) | (533 | ) | ||||
| Other (income) expense: | ||||||||
| Investment/interest income | (191 | ) | (256 | ) | ||||
| Foreign exchange (gain) loss | 182 | (57 | ) | |||||
| Other, net | 36 | (2 | ) | |||||
| Total other income | 27 | (315 | ) | |||||
| Loss before income taxes | (1,031 | ) | (218 | ) | ||||
| Income tax provision (benefit) | 368 | (135 | ) | |||||
| Net loss | (1,399 | ) | (83 | ) | ||||
| Foreign currency translation loss, net of tax | (503 | ) | (968 | ) | ||||
| Fair value adjustments on investments gain (loss) | (60 | ) | 25 | |||||
| Comprehensive loss | $ | (1,962 | ) | $ | (1,026 | ) | ||
| Loss per share: | ||||||||
| Common shares - Basic | $ | (0.10 | ) | $ | (0.01 | ) | ||
| Class B common shares - Basic | $ | (0.10 | ) | $ | (0.01 | ) | ||
| Common shares - Diluted | $ | (0.10 | ) | $ | (0.01 | ) | ||
| Class B common shares - Diluted | $ | (0.10 | ) | $ | (0.01 | ) | ||
| Weighted average number of shares: | ||||||||
| Common shares - Basic | 11,486 | 11,822 | ||||||
| Class B common shares - Basic | 2,141 | 2,182 | ||||||
| Common shares - Diluted | 11,486 | 11,822 | ||||||
| Class B common shares - Diluted | 2,141 | 2,182 | ||||||
| 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 29, 2015 | August 30, 2014 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | (1,399 | ) | $ | (83 | ) | ||
| Adjustments to reconcile net loss to cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 485 | 366 | ||||||
| Gain on sale of investments | (11 | ) | (3 | ) | ||||
| Gain on disposal of assets | (1 | ) | — | |||||
| Share-based compensation expense | 90 | 120 | ||||||
| Deferred income taxes | 1 | (79 | ) | |||||
| Change in assets and liabilities, net of effect of acquired business: | ||||||||
| Accounts receivable | (2,525 | ) | (372 | ) | ||||
| Income tax receivable | 548 | 2,308 | ||||||
| Inventories, net | (593 | ) | (2,110 | ) | ||||
| Prepaid expenses and other assets | (581 | ) | 135 | |||||
| Accounts payable | (1,521 | ) | 101 | |||||
| Accrued liabilities | (804 | ) | (662 | ) | ||||
| Non-current deferred income tax liabilities | 228 | — | ||||||
| Long-term liabilities-accrued pension | (465 | ) | — | |||||
| Other | 35 | (49 | ) | |||||
| Net cash used in operating activities | (6,513 | ) | (328 | ) | ||||
| Investing activities: | ||||||||
| Cash consideration paid for acquired business | (12,209 | ) | — | |||||
| Capital expenditures | (984 | ) | (834 | ) | ||||
| Proceeds from maturity of investments | 18,350 | 30,482 | ||||||
| Purchases of investments | — | (32,362 | ) | |||||
| Proceeds from sales of available-for-sale securities | 100 | 37 | ||||||
| Purchases of available-for-sale securities | (100 | ) | (37 | ) | ||||
| Other | 60 | (28 | ) | |||||
| Net cash provided by (used in) investing activities | 5,217 | (2,742 | ) | |||||
| Financing activities: | ||||||||
| Repurchase of common stock | (3,308 | ) | (488 | ) | ||||
| Proceeds from issuance of common stock | — | 158 | ||||||
| Cash dividends paid | (806 | ) | (828 | ) | ||||
| Other | (4 | ) | 1 | |||||
| Net cash used in financing activities | (4,118 | ) | (1,157 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (695 | ) | (441 | ) | ||||
| Decrease in cash and cash equivalents | (6,109 | ) | (4,668 | ) | ||||
| Cash and cash equivalents at beginning of period | 74,535 | 102,752 | ||||||
| Cash and cash equivalents at end of period | $ | 68,426 | $ | 98,084 | ||||
Richardson Electronics, Ltd.
Net Sales and Gross Profit
For the First Quarter of Fiscal 2016 and Fiscal 2015
(in thousands)
By Strategic Business Unit:
| Net Sales | ||||||||||||
| Q1 FY 2016 | Q1 FY 2015 | % Change | ||||||||||
| PMT | $ | 27,195 | $ | 27,438 | (0.9 | )% | ||||||
| Canvys | 6,681 | 5,968 | 11.9 | % | ||||||||
| Healthcare | 3,195 | $ | 1,293 | 147.1 | % | |||||||
| Total | $ | 37,071 | $ | 34,699 | 6.8 | % | ||||||
| Gross Profit | ||||||||||||||||
| Q1 FY 2016 | % of Net Sales | Q1 FY 2015 | % of Net Sales | |||||||||||||
| PMT | $ | 8,138 | 29.9 | % | $ | 8,686 | 31.7 | % | ||||||||
| Canvys | 1,709 | 25.6 | % | 1,656 | 27.7 | % | ||||||||||
| Healthcare | 1,415 | 44.3 | % | 316 | 24.4 | % | ||||||||||
| Total | $ | 11,262 | 30.4 | % | $ | 10,658 | 30.7 | % | ||||||||