Market Overview

Richardson Electronics Reports First Quarter Fiscal 2019 Profit and Declares Quarterly Cash Dividend

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LAFOX, Ill., Oct. 10, 2018 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ:RELL) today reported financial results for its first quarter ended September 1, 2018. 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 2019 increased 19.4% to $44.2 million compared to net sales of $37.0 million in the prior year's first quarter. There were 13 weeks in the first quarter of fiscal 2019 compared to 14 weeks in last year's first quarter. Sales increased $5.7 million for PMT and $1.4 million for Canvys. PMT sales were higher in power conversion and RF and microwave components, RF and microwave tubes and specialty products sold into the semiconductor wafer fabrication capital equipment market. Sales increased for Canvys due to new program wins and higher overall demand across both the U.S. and Europe. Sales also increased for Richardson Healthcare by $0.1 million due to higher equipment and CT Tube sales, partially offset by lower sales of diagnostic imaging parts.

Gross margin increased to $14.0 million, or 31.6% of net sales during the first quarter of fiscal 2019, compared to $12.1 million, or 32.8% of net sales during the first quarter of fiscal 2018. Margin decreased as a percent of net sales primarily due to a less favorable product mix in both PMT and Richardson Healthcare. Canvys margin as a percent of net sales increased primarily due to an improved product mix and lower costs on selected products sold.

Operating expenses increased to $13.1 million for the first quarter of fiscal 2019, compared to $12.3 million for the first quarter of fiscal 2018. This increase was a result of additional compensation and other expenses primarily related to the increase in net sales. Operating expenses as a percent of net sales decreased to 29.7% in the current quarter from 33.3% in last year's first quarter.

The Company reported $0.9 million of operating income for the first quarter of fiscal 2019 compared to operating income of $15,000 in the prior year's first quarter, which included a $0.2 million gain on the disposal of a building.

Other expense for the first quarter of fiscal 2019, primarily foreign exchange, was $0.2 million, compared to other expense of $0.1 million for the first quarter of fiscal 2018.

The income tax provision of $0.3 million for the first quarter of fiscal 2019 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. 

Net income for the first quarter of fiscal 2019 was $0.4 million, compared to a net loss of $0.1 million in the first quarter of fiscal 2018. Earnings per common share (diluted) in the first quarter of fiscal 2019 were $0.03.

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 21, 2018, to common stockholders of record as of November 7, 2018.

Cash and investments at the end of the first quarter of fiscal 2019 were $54.8 million compared to $60.5 million at the end of fiscal 2018 and $61.4 million at the end of the first quarter of fiscal 2018. The use of cash in the first quarter of 2019 was primarily due to payments for accounts payable transactions from the fourth quarter of fiscal 2018. During the first quarter of fiscal 2019, the Company did not repurchase any shares of its common stock under the existing share repurchase authorization. Currently, there are 11.0 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 income of $0.9 million for the first quarter of fiscal 2019 as compared to a $15,000 operating income in the first quarter of fiscal 2018," said Edward J. Richardson, Chairman, Chief Executive Officer, and President. "Achieving a 19.4% increase in revenue over the prior year is a good start. We will need to stay focused on our key initiatives as we face a temporary slowdown in the semiconductor wafer fab market. We continue to be excited about the growth in PMT associated with our investments in new power and microwave technologies, as well as the introduction of our new ALTA750TM CT Tube," Mr. Richardson concluded.

CONFERENCE CALL INFORMATION

On Thursday, October 11, 2018, 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 2019. 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 30310391 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 12, 2018, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 75478104. 

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 August 2, 2018. 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
    September 1,
2018
    June 2, 2018
Assets              
Current assets:              
Cash and cash equivalents   $ 52,478     $ 60,465
Accounts receivable, less allowance of $315 and $309, respectively     22,885       22,892
Inventories, net     50,267       50,720
Prepaid expenses and other assets     3,691       3,747
Investments - current     2,300      
Total current assets     131,621       137,824
Non-current assets:              
Property, plant and equipment, net     18,975       18,232
Goodwill     6,332       6,332
Intangible assets, net     2,949       3,014
Non-current deferred income taxes     855       927
Total non-current assets     29,111       28,505
Total assets   $ 160,732     $ 166,329
Liabilities and Stockholders' Equity              
Current liabilities:              
Accounts payable   $ 14,145     $ 19,603
Accrued liabilities     10,917       10,343
Total current liabilities     25,062       29,946
Non-current liabilities:              
Non-current deferred income tax liabilities     281       281
Other non-current liabilities     924       921
Total non-current liabilities     1,205       1,202
Total liabilities     26,267       31,148
Stockholders' equity              
Common stock, $0.05 par value; issued and outstanding 10,951 shares at September 1, 2018 and 10,806 shares at June 2, 2018     547       540
Class B common stock, convertible, $0.05 par value; issued and outstanding 2,097 shares at September 1, 2018 and 2,137 shares at June 2, 2018     105       107
Preferred stock, $1.00 par value, no shares issued          
Additional paid-in-capital     60,413       60,061
Common stock in treasury, at cost, no shares at September 1, 2018 and June 2, 2018          
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