Richardson Electronics Reports Second Quarter Fiscal 2015 Results and Declares Quarterly Cash Dividend

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 February 20, 2015, to common stockholders of record on February 6, 2015.

“Cash and investments at the end of our second quarter were $125.3 million. We used $2.2 million to repurchase 0.2 million shares during the second quarter. As of today, the Company currently has 11.7 million outstanding shares of common stock and 2.1 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, January 8, 2015, 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 second quarter results for fiscal 2015. 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 33009289 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 January 8, 2015, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 69945400.

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 25, 2014. 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
November 29,   May 31,
2014 2014
Assets
Current assets:
Cash and cash equivalents $ 89,886 $ 102,752
Accounts receivable, less allowance of $488 and $581 17,625 18,354
Inventories 37,122 33,869
Prepaid expenses and other assets 1,914 1,089
Deferred income taxes 1,604 1,537
Income tax receivable 2,888
Investments—current 23,395 31,732
Discontinued operations—assets   18  
Total current assets 171,546   192,239  
Non-current assets:
Property, plant and equipment, net 8,352 7,223
Other intangibles 790 843
Non-current deferred income taxes 1,570 1,724
Investments—non-current 12,028   1,516  
Total non-current assets 22,740   11,306  
Total assets $ 194,286   $ 203,545  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 13,523 $ 12,337
Accrued liabilities 7,862 9,220
Discontinued operations—liabilities   7  
Total current liabilities 21,385   21,564  
Non-current liabilities:
Long-term income tax liabilities 5,572 5,691
Other non-current liabilities 1,174 1,315
Discontinued operations—non-current liabilities   130  
Total non-current liabilities 6,746   7,136  
Total liabilities 28,131   28,700  
Commitments and contingencies
Stockholders’ equity
Common stock, $0.05 par value; issued 11,667 shares at November 29, 2014, and 11,835 shares at May 31, 2014 583 592
Class B common stock, convertible, $0.05 par value; issued 2,141 shares at November 29, 2014 and 2,191 shares at May 31, 2014 107 110
Preferred stock, $1.00 par value, no shares issued
Additional paid-in capital 64,228 66,141
Common stock in treasury, at cost, 6 shares at November 29, 2014, and 1 share at May 31, 2014 (57 ) (14 )
Retained earnings 95,174 97,959
Accumulated other comprehensive income 6,120   10,057  
Total stockholders’ equity 166,155   174,845  
Total liabilities and stockholders’ equity $ 194,286   $ 203,545  
 

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(in thousands, except per share amounts)

 
  Three Months Ended   Six Months Ended
November 29,   November 30, November 29,   November 30,
2014 2013 2014 2013
Net Sales $ 33,841 $ 35,436 $ 68,540 $ 69,693
Cost of Sales 23,379   24,429   47,420   48,494  
Gross profit 10,462 11,007 21,120 21,199
Selling, general, and administrative expenses 12,621 10,473 23,803 20,542
(Gain) loss on disposal of assets     9    
Operating income (loss) (2,159 ) 534   (2,692 ) 657  
Other (income) expense:
Investment/interest income (249 ) (255 ) (505 ) (520 )
Foreign exchange (gain) loss 47 (14 ) (10 ) 92
Proceeds from legal settlement (2,115 )
Other, net (14 ) 15   (16 ) (15 )
Total other income (216 ) (254 ) (531 ) (2,558 )
Income (loss) from continuing operations before income taxes (1,943 ) 788 (2,161 ) 3,215
Income tax provision (benefit) (799 ) 157   (934 ) 605  
Income (loss) from continuing operations (1,144 ) 631 (1,227 ) 2,610
Income (loss) from discontinued operations, net of tax 87   (107 ) 87   (118 )
Net income (loss) (1,057 ) 524   (1,140 ) 2,492  
Foreign currency translation gain (loss), net of tax (2,993 ) 1,196 (3,961 ) 1,621
Fair value adjustments on investments   22   25   23  
Comprehensive income (loss) $ (4,050 ) $ 1,742   $ (5,076 ) $ 4,136  

Net income (loss) per Common share - Basic:

Income (loss) from continuing operations $ (0.08 ) $ 0.05 $ (0.09 ) $ 0.19
Income (loss) from discontinued operations 0.01   (0.01 ) 0.01   (0.01 )
Total net income (loss) per Common share - Basic $ (0.07 ) $ 0.04   $ (0.08 ) $ 0.18  

Net income (loss) per Class B common share - Basic:

Income (loss) from continuing operations $ (0.07 ) $ 0.04 $ (0.08 ) $ 0.17
Income (loss) from discontinued operations 0.01   (0.01 ) 0.01   (0.01 )
Total net income (loss) per Class B common share - Basic $ (0.06 ) $ 0.03   $ (0.07 ) $ 0.16  

Net income (loss) per Common share - Diluted:

Income (loss) from continuing operations $ (0.08 ) $ 0.04 $ (0.09 ) $ 0.18
Income (loss) from discontinued operations 0.01   (0.01 ) 0.01   (0.01 )
Total net income (loss) per Common share - Diluted $ (0.07 ) $ 0.03   $ (0.08 ) $ 0.17  

Net income (loss) per Class B common share - Diluted:

Income (loss) from continuing operations $ (0.07 ) $ 0.04 $ (0.08 ) $ 0.17
Income (loss) from discontinued operations 0.01   (0.01 ) 0.01   (0.01 )
Total net income (loss) per Class B common share - Diluted $ (0.06 ) $ 0.03   $ (0.07 ) $ 0.16  
Weighted average number of shares:
Common shares - Basic 11,770   11,871   11,797   11,997  
Class B common shares - Basic 2,141   2,191   2,161   2,309  
Common shares - Diluted 11,770   14,185   11,797   14,433  
Class B common shares - Diluted 2,141   2,191   2,161   2,309  
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 29,   November 30, November 29,   November 30,
2014 2013 2014 2013
Operating activities:
Net income (loss) (1,057 ) 524 (1,140 ) 2,492
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization 443 273 809 521
Gain on sale of investments (6 ) (12 ) (9 ) (19 )
(Gain) loss on disposal of assets (26 ) (26 )
Share-based compensation expense 266 270 386 384
Deferred income taxes (88 ) (108 ) (167 ) (167 )
Change in assets and liabilities, net of effect of acquired businesses:
Accounts receivable 78 (508 ) (294 ) (1,726 )
Income tax receivable 580 357 2,888 3,108
Inventories (2,151 ) 310 (4,261 ) (140 )
Prepaid expenses and other assets (1,038 ) (430 ) (903 ) (274 )
Accounts payable 1,388 317 1,489 (2,230 )
Accrued liabilities (439 ) (565 ) (1,101 ) (2,455 )
Long-term income tax liabilities (235 ) (477 )
Other 42   56   (7 ) 47  
Net cash provided by (used in) operating activities (2,008 ) 249   (2,336 ) (936 )
Investing activities:
Cash consideration paid for acquired businesses (973 )
Capital expenditures (1,102 ) (540 ) (1,936 ) (981 )
Proceeds from maturity of investments 725 14,044 31,207 54,532
Purchases of investments (981 ) (11,458 ) (33,343 ) (51,552 )
Proceeds from sales of available-for-sale securities 37 20 74 76
Purchases of available-for-sale securities (37 ) (20 ) (74 ) (76 )
Other (2 ) 22   (30 ) 91  
Net cash provided by (used in) investing activities (1,360 ) 2,068   (4,102 ) 1,117  
Financing activities:
Repurchase of common stock (2,151 ) (2,025 ) (2,640 ) (8,725 )
Proceeds from issuance of common stock 130 100 288 171
Cash dividends paid (817 ) (828 ) (1,645 ) (1,685 )
Other (4 )   (2 ) 1  
Net cash used in financing activities (2,842 ) (2,753 ) (3,999 ) (10,238 )
Effect of exchange rate changes on cash and cash equivalents (1,988 ) 552   (2,429 ) 701  
Increase/ (decrease) in cash and cash equivalents (8,198 ) 116 (12,866 ) (9,356 )
Cash and cash equivalents at beginning of period 98,084   92,530   102,752   102,002  
Cash and cash equivalents at end of period $ 89,886   $ 92,646   $ 89,886   $ 92,646  
 

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Second Quarter and First Six Months of Fiscal 2015 and Fiscal 2014

(in thousands)

 

By Strategic Business Segment:

 
       

Net Sales

    QTD     QTD  
FY 2015 FY 2014 % Change
EDG $ 26,787 $ 26,163 2.4%
Canvys 5,906 7,591 (22.2)%
Healthcare $ 1,148   $ 1,682   (31.7)%
Total $ 33,841   $ 35,436   (4.5)%
 
YTD YTD
FY 2015 FY 2014 % Change
EDG $ 54,225 $ 51,642 5.0%
Canvys 11,874 15,037 (21.0)%
Healthcare $ 2,441   $ 3,014   (19.0)%
Total $ 68,540   $ 69,693   (1.7)%
 

Gross Profit

QTD QTD
FY 2015 % of Net Sales FY 2014 % of Net Sales
EDG $ 8,537 31.9% $ 8,507 32.5%
Canvys 1,653 28.0% 2,053 27.0%
Healthcare $ 272   23.7% $ 447   26.6%
Total $ 10,462   30.9% $ 11,007   31.1%
 
YTD YTD
FY 2015 % of Net Sales FY 2014 % of Net Sales
EDG $ 17,223 31.8% $ 16,366 31.7%
Canvys 3,309 27.9% 4,025 26.8%
Healthcare $ 588   24.1% $ 808   26.8%
Total $ 21,120   30.8% $ 21,199   30.4%
 




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