GlobeNewswire Inc | Apr 7, 2021 05:00PM EDT

April 07, 2021

Healthcare, PMG and Semiconductor Wafer Fab Revenues Grow Versus Q3 FY20; HigherALTA750Tube Sales

Q3 and FY21 Highlights

-- Net sales of $45.2 million were up 18.3% from last years third quarter and up 6.6% over the second quarter of fiscal 2021. -- Sales increased for Healthcare, PMG and Semiconductor Wafer Fabrication Equipment products in the third quarter of fiscal 2021 versus the third quarter of fiscal 2020. -- Gross margin improved to 34.9% of net sales for the third quarter of fiscal 2021 versus 33.1% of net sales in the prior years third quarter due to a favorable product mix. -- Operating expenses increased $2.8 million to $15.5 million compared to the prior years third quarter. This increase included a one-time cost of $1.6 million for a legal settlement with Varex Imaging Corporation. Richardson did not admit liability, but wanted to move forward selling its ALTA750tubes and avoid further legal expenses. Employee incentive expense also increased due to the substantially improved performance and legal fees increased by $0.3 million. -- Operating income was $0.3 million and Non-GAAP operating income* was $1.9 million compared to an operating income of $11,000 in last years third quarter. -- Earnings per common share (diluted) was $0.02 and Non-GAAP earnings per common share (diluted)* was $0.14 for the third quarter of fiscal 2021. -- Cash and investments were $47.4 million as of February 27, 2021 versus $46.0 million on November 28, 2020 and $43.9 million on February 29, 2020.

LAFOX, Ill., April 07, 2021 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its third quarter ended February 27, 2021. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Third Quarter Results

Net sales for the third quarter of fiscal 2021 increased 18.3% to $45.2 million compared to net sales of $38.2 million in the prior years third quarter primarily due to higher net sales for Richardson Healthcare and PMT, 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 COVID-19 pandemic under strict safety guidelines. Richardson Healthcare sales increased $0.9 million or 41.7% primarily due to an increase in demand for the ALTA750Tubes, reflecting the highest quantity sold in any quarter. In addition, pre-owned CT scanner sales increased in Latin America. PMT sales increased $6.2 million or 21.6% from last years third quarter because 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 third quarter of fiscal 2020. Canvys sales decreased by $0.1 million or 1.7% due to temporary decreased customer demand in Europe related to COVID-19, partially offset by an increase in North American sales. No customers were lost.

Gross margin improved to 34.9% of net sales during the third quarter of fiscal 2021 compared to 33.1% of net sales during the third quarter of fiscal 2020. PMT margin increased to 34.9% from 32.8% due to a favorable product mix. Canvys margin as a percent of net sales increased to 35.2% from 32.8% also because of its product mix. Healthcare margin as a percent of net sales was 33.0% in the third quarter of fiscal 2021 compared to 38.3% in the prior years third quarter primarily due to a smaller percentage of replacement parts sales.

Operating expenses were $15.5 million and Non-GAAP operating expenses* were $13.9 million in the third quarter of fiscal 2021 compared to $12.7 million in the third quarter of fiscal 2020. The increase in Non-GAAP operating expenses resulted from higher employee compensation expense and legal fees, 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 income of $0.3 million and Non-GAAP operating income* of $1.9 million for the third quarter of fiscal 2021 compared to an operating income of $11,000 in the prior years third quarter. Other expense for the third quarter of fiscal 2021, including interest income and foreign exchange, was less than $0.1 million, compared to other income of $0.1 million in the third quarter of fiscal 2020.

The income tax provision of $0.1 million for the third quarter of fiscal 2021 reflected a provision for foreign income taxes, which was lower than the prior years third quarter, and the offset of a U.S. tax provision against the valuation allowance. Net income for the third quarter of fiscal 2021 was $0.2 million and Non-GAAP net income was $1.8 million* compared to a net loss of $0.1 million in the third quarter of fiscal 2020. Earnings per common share (diluted) was $0.02 and Non-GAAP earnings per common share (diluted)* was $0.14 in the third quarter of fiscal 2021.

We are pleased with the double digit sales growth in Healthcare, PMG and semiconductor wafer fab equipment products, particularly considering the current global business environment and ongoing impact of COVID-19, said Edward J. Richardson, Chairman, Chief Executive Officer, and President. The Richardson team deserves a lot of credit for delivering our best quarter since the fourth quarter of fiscal 2018 after adjusting for the one-time settlement cost, he concluded.

FINANCIAL SUMMARY NINE MONTHS ENDED FEBRUARY 27, 2021

-- Net sales for the first nine months of fiscal 2021 were $126.5 million, an increase of 6.7%, compared to net sales of $118.5 million during the first nine months of fiscal 2020. Sales increased by $9.3 million or 10.4% for PMT and $0.5 million or 7.3% for Richardson Healthcare, but decreased by $1.8 million or 8.2% for Canvys. -- Gross margin increased to $42.5 million during the first nine months of fiscal 2021, compared to $38.3 million during the first nine months of fiscal 2020. As a percentage of net sales, gross margin increased to 33.6% of net sales during the first nine months of fiscal 2021, compared to 32.3% of net sales during the first nine months of fiscal 2020, primarily because of a favorable product mix in PMT and Canvys, as well as improved manufacturing efficiencies for PMT. -- Operating expenses increased to $41.9 million and Non-GAAP operating expenses* to $40.3 million for the first nine months of fiscal 2021, compared to $38.7 million for the first nine months of fiscal 2020. The increase in Non-GAAP operating expenses resulted from higher employee compensation expense and legal fees, partially offset by lower travel and consulting expenses. -- Operating income was $0.6 million and Non-GAAP operating income* was $2.2 million during the first nine months of fiscal 2021, compared to an operating loss of $0.4 million during the first nine months of fiscal 2020. -- Other expense for the first nine 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 nine months of fiscal 2020. -- The income tax provision of $0.2 million during the first nine months of fiscal 2021 reflected a provision for foreign income taxes, which was lower than in the prior years first nine months, and the offset of a U.S. tax benefit against the valuation allowance. -- Net loss for the first nine months of fiscal 2021 was $0.2 million and Non-GAAP net income* was $1.4 million, compared to a net loss of $0.6 million during the first nine months of fiscal 2020. Loss per common share (diluted) for the first nine months of fiscal 2021 was $0.02 and Non-GAAP earnings per common share (diluted)* was $0.11.

*Please refer to Unaudited Reconciliation between GAAP and Non-GAAP Financial Measures below for a reconciliation of Non-GAAP items to the comparable GAAP measures.

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 May 26, 2021, to common stockholders of record as of May 5, 2021.

Cash and investments at the end of the third quarter of fiscal 2021 were $47.4 million compared to $46.0 million at the end of the second quarter of fiscal 2021 and $43.9 million at the end of the third 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 $0.4 million during the third quarter of fiscal 2020.

NON-GAAP FINANCIAL MEASURES

In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP) included throughout this press release, the Company has provided information regarding Non-GAAP net income, Non-GAAP operating income, Non-GAAP earnings per common share (diluted) and Non-GAAP operating expenses (each, a Non-GAAP financial measure). These Non-GAAP financial measures exclude a one-time cost in connection with a legal settlement from the most directly comparable financial measures calculated and presented in accordance with GAAP.

Management believes that the disclosure of these Non-GAAP financial measures provides useful information to investors because the Non-GAAP financial measures are useful measures in assessing the Companys financial performance by excluding a special item that is not indicative of the Companys core operating performance or that may obscure trends useful in evaluating the Companys continuing operating activities. Our management uses these Non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating our operating performance. The Non-GAAP financial measures presented herein, as determined and presented by the Company, may not be comparable to related or similarly titled measures reported by other companies.

CONFERENCE CALL INFORMATION

On Thursday, April 8, 2021, 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 third 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: 5986675 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 April 8, 2021, for seven days. The telephone number for the replay is (800) 585-8367; Conference ID: 5986675.

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 Ltd. 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 February May 30, 27, 2021 2020Assets Current assets: Cash and cash equivalents $ 38,407 $ 30,535 Accounts receivable, less allowance of $270 and 21,880 20,197 $334, respectivelyInventories, net 59,425 57,492 Prepaid expenses and other assets 2,334 2,442 Investments - current 9,000 16,000 Total current assets 131,046 126,666 Non-current assets: Property, plant and equipment, net 17,098 17,674 Intangible assets, net 2,330 2,505 Lease ROU asset 2,971 3,419 Non-current deferred income taxes 522 456 Total non-current assets 22,921 24,054 Total assets $ 153,967 $ 150,720 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 15,572 $ 17,372 Accrued liabilities 14,846 10,324 Lease liability current 1,239 1,485 Total current liabilities 31,657 29,181 Non-current liabilities: Non-current deferred income tax liabilities 173 161 Lease liability non-current 1,629 1,941 Other non-current liabilities 923 777 Total non-current liabilities 2,725 2,879 Total liabilities 34,382 32,060 Stockholders? equity Common stock, $0.05 par value; issued andoutstanding 11,111 shares on February 27, 2021 and 556 552 11,038 shares on May 30, 2020Class B common stock, convertible, $0.05 par value;issued and outstanding 2,097 shares on February 27, 105 105 2021 and May 30, 2020Preferred stock, $1.00 par value, no shares issued ? ? Additional paid-in-capital 62,274 61,749 Retained earnings 52,194 54,764 Accumulated other comprehensive income 4,456 1,490 Total stockholders? equity 119,585 118,660 Total liabilities and stockholders? equity $ 153,967 $ 150,720

Richardson Electronics, Ltd.Unaudited Consolidated Statements of Comprehensive Income (Loss)(in thousands, except per share amounts) Three Months Ended Nine Months Ended February February February February 27, 29, 27, 29, 2021 2020 2021 2020Statements of Comprehensive Income (Loss)Net sales $ 45,235 $ 38,249 $ 126,465 $ 118,536 Cost of sales 29,469 25,579 83,997 80,235 Gross profit 15,766 12,670 42,468 38,301 Selling, general and 15,457 12,659 41,924 38,667 administrative expenses(Gain) loss on disposal of (6 ) ? (6 ) 1 assetsOperating income (loss) 315 11 550 (367 )Other expense (income): Investment/interest income (15 ) (97 ) (48 ) (340 )Foreign exchange loss 65 28 650 117 Other, net (25 ) (8 ) (61 ) (24 )Total other expense (income) 25 (77 ) 541 (247 )Income (loss) before income 290 88 9 (120 )taxesIncome tax provision 62 181 239 438 Net income (loss) 228 (93 ) (230 ) (558 )Foreign currency translation 353 (60 ) 2,966 (554 )gain (loss), net of taxComprehensive income (loss) $ 581 $ (153 ) $ 2,736 $ (1,112 )Net income (loss) per share Common shares - Basic $ 0.02 $ (0.01 ) $ (0.02 ) $ (0.04 )Class B common shares - $ 0.02 $ (0.01 ) $ (0.02 ) $ (0.04 )BasicCommon shares - Diluted $ 0.02 $ (0.01 ) $ (0.02 ) $ (0.04 )Class B common shares - $ 0.02 $ (0.01 ) $ (0.02 ) $ (0.04 )DilutedWeighted average number of shares:Common shares ? Basic 11,111 11,038 11,097 11,022 Class B common shares ? 2,097 2,097 2,097 2,097 BasicCommon shares ? Diluted 11,183 11,038 11,097 11,022 Class B common shares ? 2,097 2,097 2,097 2,097 DilutedDividends per common share $ 0.060 $ 0.060 $ 0.180 $ 0.180 Dividends per Class B common $ 0.054 $ 0.054 $ 0.162 $ 0.162 share

Richardson Electronics, Ltd.Unaudited Consolidated Statements of Cash Flows(in thousands) Three Months Ended Nine Months Ended February February February February 27, 29, 27, 29, 2021 2020 2021 2020Operating activities: Net income (loss) $ 228 $ (93 ) $ (230 ) $ (558 )Adjustments to reconcilenet income (loss) to cash provided by (used in)operating activities:Depreciation and 849 856 2,595 2,514 amortizationInventory provisions 265 221 717 502 (Gain) loss on disposal of (6 ) ? (6 ) 1 assetsShare-based compensation 150 157 529 527 expenseDeferred income taxes 3 76 (50 ) 51 Change in assets and liabilities:Accounts receivable (837 ) (760 ) (1,004 ) 1,066 Inventories 133 (754 ) (875 ) (4,173 )Prepaid expenses and other 428 (56 ) 156 146 assetsAccounts payable 496 (726 ) (2,027 ) (2,091 )Accrued liabilities 873 152 4,285 (238 )Other 216 2 (222 ) (107 )Net cash provided by (used 2,798 (925 ) 3,868 (2,360 )in) operating activitiesInvesting activities: Capital expenditures (555 ) (430 ) (1,835 ) (1,244 )Proceeds from maturity of ? ? 16,000 8,000 investmentsPurchases of investments ? ? (9,000 ) (13,000 )Net cash (used in)provided by investing (555 ) (430 ) 5,165 (6,244 )activitiesFinancing activities: Proceeds from issuance of ? ? ? 59 common stockCash dividends paid (780 ) (776 ) (2,340 ) (2,326 )Payment of financing lease (45 ) (46 ) (136 ) (121 )principalNet cash used in financing (825 ) (822 ) (2,476 ) (2,388 )activitiesEffect of exchange ratechanges on cash and cash (34 ) (2 ) 1,315 (152 )equivalentsIncrease (decrease) in 1,384 (2,179 ) 7,872 (11,144 )cash and cash equivalentsCash and cash equivalents 37,023 33,054 30,535 42,019 at beginning of periodCash and cash equivalents $ 38,407 $ 30,875 $ 38,407 $ 30,875 at end of period

Richardson Electronics, Ltd.Unaudited Net Sales and Gross ProfitFor the Third Quarter and First Nine Months of Fiscal 2021 and Fiscal 2020($ in thousands) By Strategic Business Unit: Net Sales Q3 FY 2021 Q3 FY 2020 % Change PMT $ 35,237 $ 28,988 21.6 %Canvys 7,078 7,200 -1.7 %Healthcare 2,920 2,061 41.7 %Total $ 45,235 $ 38,249 18.3 % YTD FY YTD FY % Change 2021 2020PMT $ 98,418 $ 89,158 10.4 %Canvys 20,491 22,333 -8.2 %Healthcare 7,556 7,045 7.3 %Total $ 126,465 $ 118,536 6.7 % Gross Profit Q3 FY 2021 %ofNetSales Q3 FY 2020 % of Net Sales PMT $ 12,308 34.9 % $ 9,519 32.8 %Canvys 2,493 35.2 % 2,362 32.8 %Healthcare 965 33.0 % 789 38.3 %Total $ 15,766 34.9 % $ 12,670 33.1 % YTD FY %ofNetSales YTD FY %ofNetSales 2021 2020PMT $ 33,530 34.1 % $ 28,547 32.0 %Canvys 7,156 34.9 % 7,268 32.5 %Healthcare 1,782 23.6 % 2,486 35.3 %Total $ 42,468 33.6 % $ 38,301 32.3 %

Richardson Electronics, Ltd.Unaudited Reconciliation between GAAP and Non-GAAP Financial Measures(in thousands, except per share amounts) Three Months Ended Nine Months Ended February February February February 27, 29, 27, 29, 2021 2020 2021 2020Selling, general andadministrative expenses reconciliationSelling, general and $ 15,457 $ 12,659 $ 41,924 $ 38,667 administrative expensesLegal settlement (1,600 ) ? (1,600 ) ? Non-GAAP selling, general and $ 13,857 $ 12,659 $ 40,324 $ 38,667 administrative expenses Operating income (loss) reconciliationOperating income (loss) $ 315 $ 11 $ 550 $ (367 )Legal settlement 1,600 ? 1,600 ? Non-GAAP operating income $ 1,915 $ 11 $ 2,150 $ (367 )(loss) reconciliation Net income (loss) reconciliationNet income (loss) $ 228 $ (93 ) $ (230 ) $ (558 )Legal settlement 1,600 ? 1,600 ? Non-GAAP net income (loss) $ 1,828 $ (93 ) $ 1,370 $ (558 )reconciliation Net income (loss) per share (diluted) reconciliationNet income (loss) per share $ 0.02 $ (0.01 ) $ (0.02 ) $ (0.04 )(diluted)Legal settlement 0.12 ? 0.13 ? Non-GAAP net income (loss) per $ 0.14 $ (0.01 ) $ 0.11 $ (0.04 )share (diluted) reconciliation

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