GlobeNewswire Inc | Jan 6, 2021 05:00PM EST

January 06, 2021

Q2 and FY21 Highlights

-- Net sales of $42.4 million were up 7% from last years pre-COVID second quarter. -- Sales increased for PMG, Healthcare, and Semiconductor Wafer Fabrication equipment products in the second quarter of fiscal 2021 versus the second quarter of fiscal 2020. -- Gross margin improved to 33.8% of net sales for the second quarter of fiscal 2021 versus 32.0% of net sales in the prior years second quarter. -- Operating expenses increased $0.3 million to $13.5 million compared to the prior years second quarter. Legal expenses increased by $0.3 million. -- Operating income was $0.9 million compared to an operating loss of $0.5 million in last years second quarter. -- Earnings per common share (diluted) for the second quarter of fiscal 2021 was $0.05. -- Cash and investments were $46.0 million as of November 28, 2020 versus $42.5 million on August 29, 2020 and $46.1 million on November 30, 2019.

LAFOX, Ill., Jan. 06, 2021 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its second quarter ended November 28, 2020. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Second Quarter Results

Net sales for the second quarter of fiscal 2021 increased 7.0% to $42.4 million compared to net sales of $39.6 million in the prior years second quarter primarily due to higher net sales for PMT and Richardson Healthcare, partially offset by lower net sales for Canvys. Richardson Electronics is an essential business and continued operating its manufacturing and distribution businesses on a global basis throughout the pandemic under strict safety guidelines. PMT sales increased by 11.2% from last years second quarter as a result of higher sales of semiconductor wafer fab equipment specialty products as well as power conversion and RF and microwave components. Power grid tube sales continued to be negatively impacted by the pandemic, however sales of certain product lines increased from the second quarter of fiscal 2020. Richardson Healthcare sales increased $0.6 million or 28.2% primarily due to a significant increase in demand for the ALTA750Tubes, which was the highest quantity sold in any quarter. In addition, equipment sales increased in Latin America. Canvys sales decreased by $1.2 million or 14.7% due to temporary decreased customer demand globally related to COVID-19.

Gross margin improved to 33.8% of net sales during the second quarter of fiscal 2021 compared to 32.0% of net sales during the second quarter of fiscal 2020. PMT margin increased to 34.2% from 31.6% due to a favorable product mix and improved manufacturing efficiencies. Canvys margin as a percent of net sales increased to 35.5% from 32.9% as a result of its product mix. Healthcare margin as a percent of net sales was 25.6% in the second quarter of fiscal 2021 compared to 34.3% in the prior years second quarter primarily due to under absorbed manufacturing expenses related to tube development and manufacturing improvements.

Operating expenses were $13.5 million in the second quarter of fiscal 2021 compared to $13.2 million in the second quarter of fiscal 2020. The increase in operating expenses resulted from higher legal and employee compensation expenses, partially offset by lower travel and consulting expenses. Throughout the pandemic, the Company decided to support its employees through regular merit increases and incentive plans, and by avoiding layoffs or furloughs.

As a result, the Company reported an operating income of $0.9 million for the second quarter of fiscal 2021 compared to an operating loss of $0.5 million in the prior years second quarter. Other expense for the second quarter of fiscal 2021, including interest income and foreign exchange, was $0.1 million, the same as in the second quarter of fiscal 2020.

The income tax provision of $0.1 million for the second quarter of fiscal 2021 reflected a provision for foreign income taxes, which was lower than the prior years second quarter, and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. Net income for the second quarter of fiscal 2021 was $0.7 million compared to a net loss of $0.6 million in the second quarter of fiscal 2020. Earnings per common share (diluted) in the second quarter of fiscal 2021 was $0.05.

We were happy with the sales growth in Healthcare, PMG and semiconductor wafer fab equipment products despite the ongoing impact of the coronavirus around the world said Edward J. Richardson, Chairman, Chief Executive Officer, and President. We were also pleased with the significant free cash flow generated during the quarter reflecting our commitment to carefully control expenses and capital expenditures he concluded.

FINANCIAL SUMMARY SIX MONTHS ENDED NOVEMBER 28, 2020

-- Net sales for the first six months of fiscal 2021 were $81.2 million, an increase of 1.2%, compared to net sales of $80.3 million during the first six months of fiscal 2020. Sales increased by $3.0 million or 5.0% for PMT but decreased by $1.7 million or 11.4% for Canvys and $0.4 million or 7.0% for Richardson Healthcare. -- Gross margin increased to $26.7 million during the first six months of fiscal 2021, compared to $25.6 million during the first six months of fiscal 2020. As a percentage of net sales, gross margin increased to 32.9% of net sales during the first six months of fiscal 2021, compared to 31.9% of net sales during the first six months of fiscal 2020, primarily as a result of a favorable product mix in PMT and Canvys, and improved manufacturing efficiencies for PMT. -- Operating expenses increased to $26.5 million for the first six months of fiscal 2021, compared to $26.0 million for the first six months of fiscal 2020. The increase in operating expenses resulted from higher legal and employee compensation expenses, partially offset by lower travel and consulting expenses. -- Operating income during the first six months of fiscal 2021 was $0.2 million, compared to an operating loss of $0.4 million during the first six months of fiscal 2020. -- Other expense for the first six months of fiscal 2021, including interest income and foreign exchange, was $0.5 million, as compared to other income of $0.2 million in the first six months of fiscal 2020. -- The income tax provision of $0.2 million during the first six months of fiscal 2021 reflected a provision for foreign income taxes, which was lower than in the prior years first six months, and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. -- Net loss for the first six months of fiscal 2021 was $0.5 million, the same as during the first six months of fiscal 2020.

CASH DIVIDEND AND POSITION

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, 2021, to common stockholders of record as of February 5, 2021.

Cash and investments at the end of the second quarter of fiscal 2021 were $46.0 million compared to $42.5 million at the end of the first quarter of fiscal 2021 and $46.1 million at the end of the second quarter of fiscal 2020. The Company spent $0.6 million during the quarter on capital expenditures primarily related to its Healthcare business and IT System, versus $0.5 million during the second quarter of fiscal 2020.

CONFERENCE CALL INFORMATION

On Thursday, January 7, 2021, at 9:00 a.m. CST, Edward J. Richardson, Chairman and Chief Executive Officer, and Robert J. Ben, Chief Financial Officer, will host a conference call to discuss the Companys second quarter fiscal year 2021 results. A question and answer session will be included as part of the calls agenda.

Participant Instructions

To listen to the call, please dial (USA/CANADA) (866) 784-8065 or (International) (602) 563-8684 and enter Conference ID: 8960048 approximately five minutes before the start of the call. A replay of the call will be available beginning at 1:00 p.m. CST on January 7, 2021, for seven days. The telephone number for the replay is (855) 859-2056; Conference ID: 8960048.

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 Companys business that 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 Companys Annual Report on Form 10-K filed on August 3, 2020, and other reports we file with the Securities and Exchange Commission. 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 Companys 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 May 30, 28, 2020 2020Assets Current assets: Cash and cash equivalents $ 37,023 $ 30,535 Accounts receivable, less allowance of $256 and 21,077 20,197 $334, respectivelyInventories, net 59,538 57,492 Prepaid expenses and other assets 2,798 2,442 Investments - current 9,000 16,000 Total current assets 129,436 126,666 Non-current assets: Property, plant and equipment, net 17,358 17,674 Intangible assets, net 2,388 2,505 Lease ROU asset 2,857 3,419 Non-current deferred income taxes 529 456 Total non-current assets 23,132 24,054 Total assets $ 152,568 $ 150,720 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 15,089 $ 17,372 Accrued liabilities 13,998 10,324 Lease liability current 1,280 1,485 Total current liabilities 30,367 29,181 Non-current liabilities: Non-current deferred income tax liabilities 171 161 Lease liability non-current 1,512 1,941 Other non-current liabilities 884 777 Total non-current liabilities 2,567 2,879 Total liabilities 32,934 32,060 Stockholders? equity Common stock, $0.05 par value; issued andoutstanding 11,111 shares on 556 552 November 28, 2020 and 11,038 shares on May 30, 2020Class B common stock, convertible, $0.05 par value;issued and outstanding 105 105 2,097 shares on November 28, 2020 and May 30, 2020Preferred stock, $1.00 par value, no shares issued ? ? Additional paid-in-capital 62,124 61,749 Retained earnings 52,746 54,764 Accumulated other comprehensive income 4,103 1,490 Total stockholders? equity 119,634 118,660 Total liabilities and stockholders? equity $ 152,568 $ 150,720

Richardson Electronics, Ltd.Unaudited Consolidated Statements of Comprehensive Income (Loss)(in thousands, except per share amounts)

Three Months Ended Six Months Ended November November November November 28, 30, 28, 30, 2020 2019 2020 2019Statements of Comprehensive Income (Loss)Net sales $ 42,418 $ 39,634 $ 81,230 $ 80,287 Cost of sales 28,075 26,954 54,528 54,656 Gross profit 14,343 12,680 26,702 25,631 Selling, general and 13,491 13,161 26,467 26,008 administrative expensesLoss on disposal of assets ? ? ? 1 Operating income (loss) 852 (481 ) 235 (378 )Other expense (income): Investment/interest income (15 ) (123 ) (33 ) (243 )Foreign exchange loss 143 199 585 89 Other, net (18 ) (15 ) (36 ) (16 )Total other expense (income) 110 61 516 (170 )Income (loss) before income 742 (542 ) (281 ) (208 )taxesIncome tax provision 53 80 177 257 Net income (loss) 689 (622 ) (458 ) (465 )Foreign currency translation 477 222 2,613 (494 )gain (loss), net of taxComprehensive income (loss) $ 1,166 $ (400 ) $ 2,155 $ (959 )Net income (loss) per share Common shares - Basic $ 0.05 $ (0.05 ) $ (0.04 ) $ (0.04 )Class B common shares - Basic $ 0.05 $ (0.04 ) $ (0.03 ) $ (0.03 )Common shares - Diluted $ 0.05 $ (0.05 ) $ (0.04 ) $ (0.04 )Class B common shares - $ 0.05 $ (0.04 ) $ (0.03 ) $ (0.03 )DilutedWeighted average number of shares:Common shares ? Basic 11,111 11,038 11,090 11,014 Class B common shares ? Basic 2,097 2,097 2,097 2,097 Common shares ? Diluted 11,128 11,038 11,090 11,014 Class B common shares ? 2,097 2,097 2,097 2,097 DilutedDividends per common share $ 0.060 $ 0.060 $ 0.120 $ 0.120 Dividends per Class B common $ 0.054 $ 0.054 $ 0.108 $ 0.108 share

Richardson Electronics, Ltd.Unaudited Consolidated Statements of Cash Flows(in thousands)

Three Months Ended Six Months Ended November November November November 28, 30, 28, 30, 2020 2019 2020 2019Operating activities: Net income (loss) $ 689 $ (622 ) $ (458 ) $ (465 )Adjustments to reconcilenet income (loss) to cash provided by (used in)operating activities:Depreciation and 873 825 1,746 1,658 amortizationInventory provisions 215 120 452 281 Loss on disposal of ? ? ? 1 assetsShare-based compensation 178 182 379 370 expenseDeferred income taxes (55 ) 23 (53 ) (25 )Change in assets and liabilities:Accounts receivable 687 (335 ) (167 ) 1,826 Inventories 613 (2,062 ) (1,008 ) (3,419 )Prepaid expenses and (381 ) (423 ) (272 ) 202 other assetsAccounts payable 211 2,590 (2,523 ) (1,365 )Accrued liabilities 1,633 486 3,412 (390 )Other (236 ) (165 ) (438 ) (109 )Net cash provided by(used in) operating 4,427 619 1,070 (1,435 )activitiesInvesting activities: Capital expenditures (562 ) (475 ) (1,280 ) (814 )Proceeds from maturity of ? ? 16,000 8,000 investmentsPurchases of investments ? (13,000 ) (9,000 ) (13,000 )Net cash (used in)provided by investing (562 ) (13,475 ) 5,720 (5,814 )activitiesFinancing activities: Proceeds from issuance of ? 59 ? 59 common stockCash dividends paid (780 ) (775 ) (1,560 ) (1,550 )Payment of financing (46 ) (45 ) (91 ) (75 )lease principalOther ? (4 ) ? ? Net cash used in (826 ) (765 ) (1,651 ) (1,566 )financing activitiesEffect of exchange ratechanges on cash and cash 489 218 1,349 (150 )equivalentsIncrease (decrease) in 3,528 (13,403 ) 6,488 (8,965 )cash and cash equivalentsCash and cash equivalents 33,495 46,457 30,535 42,019 at beginning of periodCash and cash equivalents $ 37,023 $ 33,054 $ 37,023 $ 33,054 at end of period

Richardson Electronics, Ltd.Net Sales and Gross ProfitFor the Second Quarter and First Six Months of Fiscal 2021 and Fiscal 2020($ in thousands)

By StrategicBusiness Unit: Net Sales Q2 FY Q2 FY % Change 2021 2020PMT $ 32,929 $ 29,603 11.2 %Canvys 6,701 7,856 -14.7 %Healthcare 2,788 2,175 28.2 %Total $ 42,418 $ 39,634 7.0 % YTD FY YTD FY % Change 2021 2020PMT $ 63,181 $ 60,170 5.0 %Canvys 13,413 15,133 -11.4 %Healthcare 4,636 4,984 -7.0 %Total $ 81,230 $ 80,287 1.2 % Gross Profit Q2 FY %ofNetSales Q2 FY % of Net Sales 2021 2020PMT $ 11,251 34.2 % $ 9,349 31.6 %Canvys 2,379 35.5 % 2,585 32.9 %Healthcare 713 25.6 % 746 34.3 %Total $ 14,343 33.8 % $ 12,680 32.0 % YTD FY %ofNetSales YTD FY %ofNetSales 2021 2020PMT $ 21,222 33.6 % $ 19,028 31.6 %Canvys 4,663 34.8 % 4,906 32.4 %Healthcare 817 17.6 % 1,697 34.0 %Total $ 26,702 32.9 % $ 25,631 31.9 %

For Details Contact: 40W267 Keslinger RoadEdward J. Richardson Robert J. Ben PO BOX 393Chairman and CEO EVP & CFO LaFox, IL 60147-0393 USAPhone: (630) 208-2205 (630) 208-2203 (630) 208-2200 | Fax: (630) 208-2550