Richardson Electronics Reports Second Quarter Fiscal 2016 Results and Declares Quarterly Cash Dividend

LAFOX, Ill. — (BUSINESS WIRE) — January 6, 2016 — Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its second quarter ended November 28, 2015. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Net sales for the second quarter of fiscal 2016 were $34.1 million, a 0.7% increase, compared to net sales of $33.8 million in the prior year. The sales increase primarily reflects growth in the Healthcare business of 163.2%, which included the net sales for International Medical Equipment Systems (“IMES”), acquired in June of this year. Gross margin decreased to $10.4 million, or 30.6% of net sales during the second quarter of fiscal 2016, compared to $10.5 million, or 30.9% of net sales during the second quarter of fiscal 2015.

Operating expenses increased to $13.2 million for the second quarter of fiscal 2016, compared to $12.6 million for the second quarter of fiscal 2015. The $0.6 million increase in expenses is due to the expenses of IMES, investments in the Richardson Healthcare and PMT business units, partially offset by decreases in support function costs.

As a result, operating loss for the second quarter of fiscal 2016 was $2.5 million, compared to an operating loss for the second quarter of fiscal 2015 of $2.2 million.

Other income for the second quarter of fiscal 2016 was $0.5 million, compared to income of $0.2 million for the second quarter of fiscal 2015.

The income tax provision of $0.3 million during the second quarter of fiscal 2016 reflects the provision for estimated foreign taxes as well as the valuation allowance recorded against the net operating loss in the U.S.

Net loss for the second quarter of fiscal 2016 was $2.3 million, compared to net loss of $1.1 million during the second quarter of last year.

FINANCIAL SUMMARY – SIX MONTHS ENDED NOVEMBER 28, 2015

  • Net sales for the first six months of fiscal 2016 were $71.2 million, an increase of 3.8%, compared to net sales of $68.5 million during the first six months of fiscal 2015.
  • Gross margin decreased to 30.5% during the first six months of fiscal 2016, compared to 30.8% from the first six months of fiscal 2015.
  • Selling, general, and administrative expenses increased to $25.5 million, or 35.8% of net sales for the first six months of fiscal 2016, compared to $23.8 million, or 34.7% of net sales, for the first six months of fiscal 2015.
  • Operating loss during the first six months of fiscal 2016 was $3.5 million, compared to operating loss of $2.7 million during the first six months of fiscal 2015.
  • Net loss for the first six months of fiscal 2016 was $3.7 million, compared to net loss of $1.1 million during the first six months of fiscal 2015.

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 February 24, 2016, to common stockholders of record on February 8, 2016.

Cash and investments at the end of our second quarter of fiscal 2016 were $79.5 million. During the second quarter of fiscal 2016, the Company repurchased 288,000 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

“With half of the fiscal year behind us and significant investments in our management team and growth initiatives, everyone is focused on sales growth,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “Since the end of second quarter of fiscal 2016, backlog has increased appreciably with several million dollar orders that will ship this fiscal year. In addition, we continue to explore acquisitions that are in line with our initiatives, but where we can’t find suitable targets, we will invest organically,” Mr. Richardson concluded.

CONFERENCE CALL INFORMATION

On Thursday, January 7, 2016, 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 second 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 10252773 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 January 8, 2016, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 20640822.

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