GlobeNewswire Inc | Oct 7, 2020 05:00PM EDT

October 07, 2020

PMG, North America Display and Semiconductor Wafer Fab Revenues Grow Versus Q1 FY20; All SBUs Grow Versus Q4 FY20

Q1 and FY21 Highlights

-- Net sales of $38.8 million were down less than 5% from last years first quarter despite the COVID-19 impact on all three of our strategic business units. -- Sales increased for PMG, Canvys display solutions in North America and Semiconductor Wafer Fabrication equipment products in the first quarter of fiscal 2021 versus the first quarter of fiscal 2020. -- Gross margin was 31.8% of net sales for the first quarter of fiscal 2021 versus 31.9% of net sales in the prior years first quarter. -- Operating expenses increased $0.2 million to $13.0 million compared to the prior years first quarter. Legal expenses increased by $0.4 million. -- Operating loss was $0.6 million compared to an operating income of $0.1 million in last years first quarter. -- Cash and investments were $42.5 million as of August 29, 2020 versus $46.5 million at both May 30, 2020 and August 31, 2019.

LAFOX, Ill., Oct. 07, 2020 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its first quarter ended August 29, 2020. 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 2021 decreased 4.5% to $38.8 million compared to net sales of $40.7 million in the prior years first quarter primarily due to the impact on demand from COVID-19. 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. Sales of semiconductor wafer fab equipment specialty products as well as power conversion and RF and microwave components increased from last years first quarter, although overall PMT sales decreased $0.3 million or 1.0%. Power grid tube sales were negatively impacted by the pandemic and economic softness. Canvys sales decreased by $0.6 million or 7.8% due to COVID-related pushouts from its European medical OEMs, partially offset by higher North American sales. Richardson Healthcare sales decreased $1.0 million or 34.2% due to reduced or frozen capital expenditure budgets, difficulty reaching hospital staff and a slow ramp-up of patients returning to hospitals for non-COVID-related care. Decreased sales of refurbished CT systems in Latin America also contributed to the revenue decline. Healthcare sales increased 27.7% versus the fourth quarter of 2020.

Gross margin was 31.8% of net sales during the first quarter of fiscal 2021 compared to 31.9% of net sales during the first quarter of fiscal 2020. PMT margin increased to 33.0% from 31.7% due to a favorable product mix and improved manufacturing efficiencies. Also, Canvys margin as a percent of net sales increased to 34.0% from 31.9% as a result of its product mix. Healthcare margin as a percent of net sales was 5.6% in the first quarter of fiscal 2021 due to manufacturing under absorption and inventory reserve costs related to tube development and production improvements on significantly lower net sales.

Operating expenses were $13.0 million in the first quarter of fiscal 2021 compared to $12.8 million in the first quarter of fiscal 2020. The increase in operating expenses resulted from higher legal and employee compensation expenses, partially offset by lower travel 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 loss of $0.6 million for the first quarter of fiscal 2021 compared to an operating income of $0.1 million in the prior years first quarter. Other expense for the first quarter of fiscal 2021, including interest income and foreign exchange, was $0.4 million, compared to other income of $0.2 million in the first quarter of fiscal 2020.

The income tax provision of $0.1 million for the first quarter of fiscal 2021 reflected a provision for foreign income taxes, which was lower than the prior years first quarter and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. Net loss for the first quarter of fiscal 2021 was $1.1 million compared to a net income of $0.2 million in the first quarter of fiscal 2020.

While our overall results continued to be negatively impacted by the coronavirus, we were pleased with the sales growth in PMG, Canvys North America and in semiconductor wafer fab equipment products as well as higher sales overall compared to the fourth quarter of Fiscal 2020, said Edward J. Richardson, Chairman, Chief Executive Officer, and President. We continue to capitalize on all revenue opportunities as well as manage expenses and cash flow appropriately given the ongoing uncertainty in the global economy, he concluded.

CASH DIVIDENDAND 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 November 24, 2020, to common stockholders of record as of November 6, 2020.

Cash and investments at the end of the first quarter of fiscal 2021 were $42.5 million compared to $46.5 million at both the end of fiscal 2020 and at the end of the first quarter of fiscal 2020. The Company spent $0.7 million during the quarter on capital expenditures primarily related to its Healthcare business and IT System, versus $0.3 million during the first quarter of fiscal 2020.

CONFERENCE CALL INFORMATION

On Thursday, October 8, 2020, 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 Companys first 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: 2286803 approximately five minutes before the start of the call. A replay of the call will be available beginning at 1:00 p.m. CDT on October 8, 2020, for seven days. The telephone number for the replay is (800) 585-8367; Conference ID: 2286803.

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 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 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 August 29, May 30, 2020 2020Assets Current assets: Cash and cash equivalents $ 33,495 $ 30,535 Accounts receivable, less allowance of $254 and 21,591 20,197 $334, respectivelyInventories, net 60,160 57,492 Prepaid expenses and other assets 2,390 2,442 Investments - current 9,000 16,000 Total current assets 126,636 126,666 Non-current assets: Property, plant and equipment, net 17,611 17,674 Intangible assets, net 2,450 2,505 Lease ROU asset 3,151 3,419 Non-current deferred income taxes 468 456 Total non-current assets 23,680 24,054 Total assets $ 150,316 $ 150,720 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 14,809 $ 17,372 Accrued liabilities 12,302 10,324 Lease liability current 1,423 1,485 Total current liabilities 28,534 29,181 Non-current liabilities: Non-current deferred income tax liabilities 170 161 Lease liability non-current 1,701 1,941 Other non-current liabilities 841 777 Total non-current liabilities 2,712 2,879 Total liabilities 31,246 32,060 Stockholders? equity Common stock, $0.05 par value; issued andoutstanding 11,111 shares at 556 552 August 29, 2020 and 11,038 shares at May 30, 2020Class B common stock, convertible, $0.05 par value;issued and outstanding 105 105 2,097 shares at August 29, 2020 and May 30, 2020Preferred stock, $1.00 par value, no shares issued ? ? Additional paid-in-capital 61,946 61,749 Retained earnings 52,837 54,764 Accumulated other comprehensive income 3,626 1,490 Total stockholders? equity 119,070 118,660 Total liabilities and stockholders? equity $ 150,316 $ 150,720

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

Three Months Ended August 29, August 31, 2020 2019Statements of Comprehensive Income (Loss) Net sales $ 38,812 $ 40,653 Cost of sales 26,453 27,702 Gross profit 12,359 12,951 Selling, general and administrative expenses 12,976 12,847 Loss on disposal of assets ? 1 Operating (loss) income (617 ) 103 Other expense (income): Investment/interest income (18 ) (120 )Foreign exchange loss (income) 442 (110 )Other, net (18 ) (1 )Total other expense (income) 406 (231 )(Loss) income before income taxes (1,023 ) 334 Income tax provision 124 177 Net (loss) income (1,147 ) 157 Foreign currency translation gain (loss), 2,136 (716 )net of taxComprehensive income (loss) $ 989 $ (559 )Net (loss) income per share Common shares - Basic $ (0.09 ) $ 0.01 Class B common shares - Basic $ (0.08 ) $ 0.01 Common shares - Diluted $ (0.09 ) $ 0.01 Class B common shares - Diluted $ (0.08 ) $ 0.01 Weighted average number of shares: Common shares ? Basic 11,070 10,990 Class B common shares ? Basic 2,097 2,097 Common shares ? Diluted 11,070 10,990 Class B common shares ? Diluted 2,097 2,097 Dividends per common share $ 0.060 $ 0.060 Dividends per Class B common share $ 0.054 $ 0.054

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

Three Months Ended August August 29, 2020 31, 2019Operating activities: Net (loss) income $ (1,147 ) $ 157 Adjustments to reconcile net (loss) income to cash used in operating activities:Depreciation and amortization 873 833 Inventory provisions 237 161 Loss on disposal of assets ? 1 Share-based compensation expense 201 188 Deferred income taxes 2 (48 )Change in assets and liabilities: Accounts receivable (854 ) 2,161 Inventories (1,621 ) (1,357 )Prepaid expenses and other assets 109 625 Accounts payable (2,734 ) (3,955 )Accrued liabilities 1,779 (876 )Other (202 ) 56 Net cash used in operating activities (3,357 ) (2,054 )Investing activities: Capital expenditures (718 ) (339 )Proceeds from maturity of investments 16,000 8,000 Purchases of investments (9,000 ) ? Net cash provided by investing activities 6,282 7,661 Financing activities: Cash dividends paid (780 ) (775 )Payment of financing lease principal (45 ) (30 )Other ? 4 Net cash used in financing activities (825 ) (801 )Effect of exchange rate changes on cash and cash 860 (368 )equivalentsIncrease in cash and cash equivalents 2,960 4,438 Cash and cash equivalents at beginning of period 30,535 42,019 Cash and cash equivalents at end of period $ 33,495 $ 46,457

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

By StrategicBusiness Unit: Net Sales Q1 FY Q1 FY % Change 2021 2020PMT $ 30,252 $ 30,567 -1.0 %Canvys 6,712 7,277 -7.8 %Healthcare 1,848 2,809 -34.2 %Total $ 38,812 $ 40,653 -4.5 % Gross Profit Q1 FY %ofNetSales Q1 FY % of Net 2021 2020 SalesPMT $ 9,971 33.0 % $ 9,679 31.7 %Canvys 2,284 34.0 % 2,321 31.9 %Healthcare 104 5.6 % 951 33.9 %Total $ 12,359 31.8 % $ 12,951 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