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

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
November 28, May 30,
2015 2015
Assets
Current assets:
Cash and cash equivalents $ 67,863 $ 74,535
Accounts receivable, less allowance of $283 21,041 20,753
Inventories, net $ 43,126 $ 38,769
Prepaid expenses and other assets 2,111 1,696
Deferred income taxes $ 637 $ 804
Income tax receivable 265 929
Investments - current   3,719   23,692
Total current assets   138,762   161,178
Non-current assets:
Property, plant and equipment, net 10,893 10,081
Goodwill 6,271
Intangible assets, net 3,861 743
Non-current deferred income taxes 1,164 1,443
Investments - non-current   7,897   11,549
Total non-current assets   30,086   23,816
Total assets $ 168,848 $ 184,994
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable 13,583 15,768
Accrued liabilities   8,866   10,144

Total current liabilities

  22,449   25,912
Non-current liabilities:
Non-current deferred income tax liabilities 1,019 1,209
Other non-current liabilities   743   1,221
Total non-current liabilities   1,762   2,430
Total liabilities   24,211   28,342
Stockholders’ equity
Common stock, $0.05 par value; issued 10,698 shares at November 28, 2015, and 11,530 shares at May 30, 2015 535 577
Class B common stock, convertible, $0.05 par value; issued and outstanding 2,141 shares at November 28, 2015, and at May 30, 2015 107 107
Preferred stock, $1.00 par value, no shares issued
Additional paid-in-capital 58,715 63,252
Common stock in treasury, at cost, no shares at November 28, 2015, and at May 30, 2015
Retained earnings 83,889 89,141
Accumulated other comprehensive income   1,391   3,575
Total stockholders’ equity   144,637   156,652
Total liabilities and stockholders’ equity $ 168,848 $ 184,994
       
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Loss
(in thousands, except per share amounts)
 
Three Months Ended Six Months Ended
November 28, November 29, November 28, November 29,
2015 2014 2015 2014
Statements of Comprehensive Loss
Net sales $ 34,086 $ 33,841 $ 71,157 $ 68,540
Cost of sales   23,651     23,379     49,460     47,420  
Gross profit 10,435 10,462 21,697 21,120
Selling, general, and administrative expenses 13,200 12,621 25,467 23,803
(Gain) loss on disposal of assets   (243 )       (244 )   9  
Operating loss   (2,522 )   (2,159 )   (3,526 )   (2,692 )
Other (income) expense:
Investment/interest income (111 ) (249 ) (302 ) (505 )
Foreign exchange (gain) loss (339 ) 47 (157 ) (10 )
Other, net   (49 )   (14 )   (13 )   (16 )
Total other income   (499 )   (216 )   (472 )   (531 )
Loss from continuing operations before income taxes (2,023 ) (1,943 ) (3,054 ) (2,161 )
Income tax provision (benefit)   263     (799 )   631     (934 )
Loss from continuing operations (2,286 ) (1,144 ) (3,685 ) (1,227 )
Income from discontinued operations, net of tax       87         87  
Net loss   (2,286 )   (1,057 )   (3,685 )   (1,140 )
Foreign currency translation loss, net of tax (1,649 ) (2,993 ) (2,152 ) (3,961 )
Fair value adjustments on investments gain (loss)   28         (32 )   25  
Comprehensive loss $ (3,907 ) $ (4,050 ) $ (5,869 ) $ (5,076 )

Net income (loss) per Common share - Basic:

Loss from continuing operations $ (0.18 ) $ (0.08 ) $ (0.28 ) $ (0.09 )
Income from discontinued operations       0.01         0.01  
Total loss per Common share - Basic: $ (0.18 ) $ (0.07 ) $ (0.28 ) $ (0.08 )

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

Loss from continuing operations $ (0.16 ) $ (0.07 ) $ (0.25 ) $ (0.08 )
Income from discontinued operations       0.01         0.01  
Total loss per Class B common share - Basic: $ (0.16 ) $ (0.06 ) $ (0.25 ) $ (0.07 )

Net income (loss) per Common share - Diluted:

Loss from continuing operations $ (0.18 ) $ (0.08 ) $ (0.28 ) $ (0.09 )
Income from discontinued operations       0.01         0.01  
Total loss per Common share - Diluted: $ (0.18 ) $ (0.07 ) $ (0.28 ) $ (0.08 )

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

Loss from continuing operations $ (0.16 ) $ (0.07 ) $ (0.25 ) $ (0.08 )
Income from discontinued operations       0.01         0.01  
Total loss per Class B common share - Diluted: $ (0.16 ) $ (0.06 ) $ (0.25 ) $ (0.07 )
Weighted average number of shares:
Common shares - Basic   10,742     11,770     11,114     11,797  
Class B common shares - Basic   2,141     2,141     2,141     2,161  
Common shares - Diluted   10,742     11,770     11,114     11,797  
Class B common shares - Diluted   2,141     2,141     2,141     2,161  
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 28, November 29, November 28, November 29,
2015 2014 2015 2014
Operating activities:
Net loss $ (2,286 ) $ (1,057 ) $ (3,685 ) $ (1,140 )
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization 797 443 1,282 809
Gain on sale of investments (8 ) (6 ) (19 ) (9 )
Gain on disposal of assets (243 ) (26 ) (244 ) (26 )
Share-based compensation expense 225 266 315 386
Deferred income taxes 254 (88 ) 255 (167 )
Change in assets and liabilities, net of effect of acquired business:
Accounts receivable 2,554 78 29 (294 )
Income tax receivable 116 580 664 2,888
Inventories, net (2,879 ) (2,151 ) (3,472 ) (4,261 )
Prepaid expenses and other assets 137 (1,038 ) (444 ) (903 )
Accounts payable (469 ) 1,388 (1,990 ) 1,489
Accrued liabilities (396 ) (439 ) (1,200 ) (1,101 )
Non-current deferred income tax liabilities (228 )
Long-term liabilities-accrued pension (465 )
Other   96     42     131     (7 )
Net cash used in operating activities   (2,330 )   (2,008 )   (8,843 )   (2,336 )
Investing activities:
Cash consideration paid for acquired business (12,209 )
Capital expenditures (792 ) (1,102 ) (1,776 ) (1,936 )
Proceeds from sales of assets 402 402
Proceeds from maturity of investments 7,234 725 25,584 31,207
Purchases of investments (2,151 ) (981 ) (2,151 ) (33,343 )
Proceeds from sales of available-for-sale securities 44 37 144 74
Purchases of available-for-sale securities (44 ) (37 ) (144 ) (74 )
Other   (28 )   (2 )   32     (30 )
Net cash provided by (used in) investing activities   4,665     (1,360 )   9,882     (4,102 )
Financing activities:
Repurchase of common stock (1,707 ) (2,151 ) (5,015 ) (2,640 )
Proceeds from issuance of common stock 121 130 121 288
Cash dividends paid (757 ) (817 ) (1,563 ) (1,645 )
Other       (4 )   (4 )   (2 )
Net cash used in financing activities   (2,343 )   (2,842 )   (6,461 )   (3,999 )
Effect of exchange rate changes on cash and cash equivalents   (555 )   (1,988 )   (1,250 )   (2,429 )
Decrease in cash and cash equivalents (563 ) (8,198 ) (6,672 ) (12,866 )
Cash and cash equivalents at beginning of period   68,426     98,084     74,535     102,752  
Cash and cash equivalents at end of period $ 67,863   $ 89,886   $ 67,863   $ 89,886  
       
Richardson Electronics, Ltd.
Consolidated Balance Sheets
For the Second Quarter and First Six Months of Fiscal 2016 and Fiscal 2015
(in thousands)
 
By Strategic Business Unit:
 

Net Sales

Q2 Q2
FY 2016 FY 2015   % Change
PMT $ 25,162 $ 26,787 -6.1 %
Canvys 5,902 5,906 -0.1 %
Healthcare   3,022   1,148 163.2 %
Total $ 34,086 $ 33,841 0.7 %
 
YTD YTD
FY 2016 FY 2015   % Change
PMT $ 52,357 $ 54,225 -3.4 %
Canvys 12,583 11,874 6.0 %
Healthcare   6,217   2,441 154.7 %
Total $ 71,157 $ 68,540 3.8 %
 
 

Gross Profit

Q2

 

Q2
FY 2016  

% of Net Sales

  FY 2015   % of Net Sales
PMT $ 7,515 29.9 % $ 8,537 31.9 %
Canvys 1,526 25.9 % 1,653 28.0 %
Healthcare   1,394 46.1 %   272 23.7 %
Total $ 10,435 30.6 % $ 10,462 30.9 %
 
YTD YTD
FY 2016   % of Net Sales   FY 2015   % of Net Sales
PMT $ 15,653 29.9 % $ 17,223 31.8 %
Canvys 3,235 25.7 % 3,309 27.9 %
Healthcare   2,809 45.2 %   588 24.1 %
Total $ 21,697 30.5 % $ 21,120 30.8 %




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