GlobeNewswire Inc | Jul 22, 2020 05:00PM EDT

July 22, 2020

North America Display and Semiconductor Wafer Fab Revenues Grow Versus Q4 FY19

Q4 and FY20 Highlights

-- Net sales of $37.4 million were down 11.4% from last years fourth quarter, primarily due to the COVID-19 impact on all three of our strategic business units. -- Sales increased for Canvys display solutions in North America and Semiconductor Wafer Fabrication equipment products in the fourth quarter of fiscal 2020. -- Gross margin increased to 30.4% of net sales versus 29.7% of net sales in the prior years fourth quarter due to an improved product mix and manufacturing efficiencies for PMT. -- Operating expenses increased $0.1 million to $12.7 million compared to the prior years fourth quarter. -- Operating loss was $1.3 million compared to an operating loss of $6.4 million in last years fourth quarter, which included a non-cash goodwill impairment charge of $6.3 million. -- Net sales for fiscal 2020 were $155.9 million, compared to $166.7 million in fiscal 2019, or a decrease of 6.5%. -- Operating loss for fiscal 2020 was $1.7 million, as compared to $6.8 million, inclusive of the goodwill impairment charge, in fiscal 2019. -- Cash and investments were $46.5 million as of May 30, 2020 versus $43.9 million at the end of the third quarter of this fiscal year and $50.0 million as of June 1, 2019. The use of cash reflects an improvement in cash from operations and lower capital expenditures in fiscal 2020.

LAFOX, Ill., July 22, 2020 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its fourth quarter and fiscal year ended May 30, 2020. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Fourth Quarter Results

Net sales for the fourth quarter of fiscal 2020 decreased 11.4% to $37.4 million compared to net sales of $42.2 million in the prior years fourth quarter primarily due to COVID-19 and its impact on demand. 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 specialty products for semiconductor wafer fab equipment increased from last years fourth quarter, although overall PMT sales decreased $2.7 million or 8.6%. Canvys sales decreased by $0.8 million or 10.2% due to lower sales to medical OEMs in its European market, partially offset by higher North American sales. Richardson Healthcare sales decreased $1.3 million or 47.2% due to hospital closures, restrictions on non-emergency procedures, and many people postponing care during shelter in place orders to help stop the spread of the virus. Reduced sales of refurbished CT systems in Latin America also contributed to the revenue decline.

Gross margin increased to 30.4% of net sales during the fourth quarter of fiscal 2020 compared to 29.7% of net sales during the fourth quarter of fiscal 2019 due to a favorable product mix and improved manufacturing efficiencies in PMT. PMT margin increased to 33.2% from 30.3%. Canvys margin as a percent of net sales decreased from 32.1% to 31.0% and Healthcare margin as a percent of net sales was minus 28.6% in the fourth quarter of fiscal 2020 due to higher manufacturing under absorption, scrap and inventory reserve costs related to tube development and production improvements on significantly lower net sales.

Operating expenses were $12.7 million in the fourth quarter of fiscal 2020 compared to $12.5 million in the fourth quarter of fiscal 2019. The increase in operating expenses resulted from higher salaries and severance expenses, partially offset by lower travel and IT expenses.

As a result, the Company reported an operating loss of $1.3 million for the fourth quarter of fiscal 2020 compared to an operating loss of $6.4 million in the prior years fourth quarter, which included a non-cash goodwill impairment of $6.3 million. Other income for the fourth quarter of fiscal 2020, including interest income and foreign exchange, was $0.2 million, compared to other income of $0.3 million in the fourth quarter of fiscal 2019.

The income tax provision of $0.2 million for the fourth quarter of fiscal 2020 reflected a provision for foreign income taxes, which was lower than the prior years fourth quarter provision and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. Net loss for the fourth quarter of fiscal 2020 was $1.3 million compared to a net loss of $6.4 million in the fourth quarter of fiscal 2019.

While our overall results were negatively impacted by the coronavirus, the Richardson team demonstrated its resourcefulness and resilience through superior support to our customers and suppliers. We were pleased to see continued sales growth in Canvys North America and in semiconductor wafer fab equipment specialty products, said Edward J. Richardson, Chairman, Chief Executive Officer, and President. Given the ever changing situation in the global economy, we will continue to closely manage expenses and cash flow. It is difficult to predict what the new normal will look like, but I am convinced our business will be stronger with the ongoing investments we are making in our growth initiatives, he concluded.

Fiscal 2020 Results

Net sales for fiscal 2020 were $155.9 million, a decrease of 6.5% compared to net sales of $166.7 million for fiscal 2019. Sales decreased by $10.4 million or 8.1% for PMT, but increased by $0.9 million or 3.4% for Canvys. Sales for Richardson Healthcare decreased by $1.3 million or 13.2% due to lower sales in the fourth quarter of fiscal 2020 resulting from the impact of the coronavirus.

Gross profit decreased to $49.7 million for fiscal 2020, compared to $51.7 million for fiscal 2019. As a percentage of net sales, gross margin increased to 31.9% of net sales for fiscal 2020, compared to 31.0% of net sales for fiscal 2019, primarily due to a favorable product mix and improved manufacturing efficiencies for PMT.

Operating expenses decreased to $51.3 million for fiscal 2020, compared to $52.2 million for fiscal 2019. The decrease was due to lower travel, severance, legal and IT expenses, partially offset by higher employee compensation expenses. Throughout the pandemic, the Company decided to support its employees through regular merit increases and incentive plans, and by avoiding layoffs or furloughs.

Operating loss for fiscal 2020 was $1.7 million, as compared to an operating loss of $6.8 million, inclusive of the non-cash goodwill impairment, in fiscal 2019. Other income in fiscal 2020, including interest income and foreign exchange, was $0.4 million, versus $0.5 million in fiscal 2019.

The income tax provision of $0.6 million for fiscal 2020 reflected a provision for foreign income taxes, which was lower than in the prior year and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. Net loss for fiscal 2020 was $1.8 million, compared to a net loss of $7.3 million for fiscal 2019.

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 August 27, 2020, to common stockholders of record as of August 6, 2020.

Cash and investments at the end of fiscal 2020 were $46.5 million compared to $43.9 million at the end of the third quarter of fiscal 2020 and $50.0 million at the end of fiscal 2019. The Company spent $0.5 million during the quarter on capital expenditures primarily related to our LaFox manufacturing and Healthcare businesses as well as our IT System, versus $0.7 million during the fourth quarter of fiscal 2019. Total capital expenditures in fiscal 2020 were $1.8 million compared to $3.9 million in fiscal 2019.

CONFERENCE CALL INFORMATION

On Thursday, July 23, 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 fourth quarter and fiscal year 2020 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: 2958443 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 1:00 p.m. CDT on July 23, 2020, for seven days. The telephone number for the replay is (800) 585-8367; Conference ID: 2958443.

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 5, 2019 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) May 30, June 1, 2020 2019Assets Current assets: Cash and cash equivalents $ 30,535 $ 42,019 Accounts receivable, less allowance of $334 and 20,197 24,296 $339, respectivelyInventories, net 57,492 53,232 Prepaid expenses and other assets 2,442 3,067 Investments - current 16,000 8,000 Total current assets 126,666 130,614 Non-current assets: Property, plant and equipment, net 17,674 19,111 Intangible assets, net 2,505 2,763 Lease ROU asset 3,419 ? Non-current deferred income taxes 456 529 Total non-current assets 24,054 22,403 Total assets $ 150,720 $ 153,017 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 17,372 $ 16,943 Accrued liabilities 10,324 11,273 Lease liability current 1,485 ? Total current liabilities 29,181 28,216 Non-current liabilities: Non-current deferred income tax liabilities 161 212 Lease liability non-current 1,941 ? Other non-current liabilities 777 832 Total non-current liabilities 2,879 1,044 Total liabilities 32,060 29,260 Commitments and Contingencies Stockholders? equity Common stock, $0.05 par value; issued andoutstanding 11,038 shares at May 30, 2020 and 552 547 10,957 shares at June 1, 2019Class B common stock, convertible, $0.05 par value;issued and outstanding 2,097 shares at May 30, 2020 105 105 and 2,097 shares at June 1, 2019Preferred stock, $1.00 par value, no shares issued ? ? Additional paid-in-capital 61,749 61,012 Retained earnings 54,764 59,703 Accumulated other comprehensive income 1,490 2,390 Total stockholders? equity 118,660 123,757 Total liabilities and stockholders? equity $ 150,720 $ 153,017

Richardson Electronics, Ltd.Consolidated Statements of Comprehensive Loss(in thousands, except per share amounts) Three Months Ended Twelve Months Ended May 30, June 1, May 30, June 1, 2020 2019 2020 2019Statements of Comprehensive LossNet sales $ 37,362 $ 42,163 $ 155,898 $ 166,652 Cost of sales 25,990 29,651 106,225 114,917 Gross profit 11,372 12,512 49,673 51,735 Selling, general and 12,660 12,535 51,327 52,156 administrative expensesImpairment of goodwill ? 6,332 ? 6,332 Loss on disposal of assets 2 23 3 23 Operating loss (1,290 ) (6,378 ) (1,657 ) (6,776 )Other (income) expense: Investment/interest income (37 ) (138 ) (377 ) (540 )Foreign exchange (gain) loss (132 ) (121 ) (15 ) 84 Other, net (27 ) (5 ) (51 ) (9 )Total other income (196 ) (264 ) (443 ) (465 )Loss before income taxes (1,094 ) (6,114 ) (1,214 ) (6,311 )Income tax provision 186 263 624 1,017 Net loss (1,280 ) (6,377 ) (1,838 ) (7,328 )Foreign currency translation (346 ) (736 ) (900 ) (1,976 )loss, net of taxComprehensive loss $ (1,626 ) $ (7,113 ) $ (2,738 ) $ (9,304 )Net loss per share Common shares - Basic $ (0.10 ) $ (0.50 ) $ (0.14 ) $ (0.57 )Class B common shares - $ (0.09 ) $ (0.44 ) $ (0.13 ) $ (0.51 )Basic:Common shares - Diluted $ (0.10 ) $ (0.50 ) $ (0.14 ) $ (0.57 )Class B common shares - $ (0.09 ) $ (0.44 ) $ (0.13 ) $ (0.51 )Diluted:Weighted average number of shares:Common shares - Basic 11,038 10,957 11,026 10,923 Class B common shares - 2,097 2,097 2,097 2,106 BasicCommon shares - Diluted 11,038 10,957 11,026 10,923 Class B common shares - 2,097 2,097 2,097 2,106 DilutedDividends per common share $ 0.060 $ 0.060 $ 0.240 $ 0.240 Dividends per Class B common $ 0.054 $ 0.054 $ 0.220 $ 0.220 share

Richardson Electronics, Ltd.Consolidated Statements of Cash Flows(in thousands) Fiscal Year Ended May 30, June 1, 2020 2019Operating activities: Net loss $ (1,838 ) $ (7,328 )Adjustments to reconcile net loss to cash provided by (used in) operating activities:Depreciation and amortization 3,386 3,173 Inventory provisions 1,013 1,076 Loss on disposal of assets 3 23 Share-based compensation expense 683 697 Deferred income taxes (7 ) 315 Impairment of goodwill ? 6,332 Change in assets and liabilities: Accounts receivable 3,895 (2,030 )Inventories (5,452 ) (4,242 )Prepaid expenses and other assets 620 622 Accounts payable 631 (2,424 )Accrued liabilities (889 ) 1,097 Other (122 ) 126 Net cash provided by (used in) operating activities 1,923 (2,563 )Investing activities: Capital expenditures (1,776 ) (3,874 )Proceeds from maturity of investments 21,000 9,800 Purchases of investments (29,000 ) (17,800 )Net cash used in investing activities (9,776 ) (11,874 )Financing activities: Payment of financing lease principal (166 ) ? Proceeds from issuance of common stock 59 259 Cash dividends paid on Common and Class B Common (3,101 ) (3,076 )sharesNet cash used in financing activities (3,208 ) (2,817 )Effect of exchange rate changes on cash and cash (423 ) (1,192 )equivalentsDecrease in cash and cash equivalents (11,484 ) (18,446 )Cash and cash equivalents at beginning of period 42,019 60,465 Cash and cash equivalents at end of period $ 30,535 $ 42,019

Richardson Electronics, Ltd.Net Sales and Gross ProfitFor the Fourth Quarter and Fiscal 2020 and Fiscal 2019($ in thousands) By Strategic Business Unit: Net Sales Q4 FY 2020 Q4 FY 2019 % Change PMT $ 29,322 $ 32,080 -8.6 %Canvys 6,593 7,343 -10.2 %Healthcare 1,447 2,740 -47.2 %Total $ 37,362 $ 42,163 -11.4 % YTD FY YTD FY % Change 2020 2019PMT $ 118,480 $ 128,902 -8.1 %Canvys 28,926 27,968 3.4 %Healthcare 8,492 9,782 -13.2 %Total $ 155,898 $ 166,652 -6.5 % Gross Profit Q4 FY 2020 %ofNetSales Q4 FY 2019 % of Net Sales PMT $ 9,741 33.2 % $ 9,734 30.3 %Canvys 2,045 31.0 % 2,359 32.1 %Healthcare (414 ) -28.6 % 419 15.3 %Total $ 11,372 30.4 % $ 12,512 29.7 % YTD FY %ofNetSales YTD FY %ofNetSales 2020 2019PMT $ 38,288 32.3 % $ 40,254 31.2 %Canvys 9,313 32.2 % 9,085 32.5 %Healthcare 2,072 24.4 % 2,396 24.5 %Total $ 49,673 31.9 % $ 51,735 31.0 %

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