GlobeNewswire Inc | Jul 21, 2021 05:00PM EDT

July 21, 2021

Healthcare, PMG, Canvys and Semiconductor Wafer Fab Revenues Grow Versus Q4 FY20;Higher ALTA750Tube Sales

Q4 and FY21 Highlights

-- Net sales of $50.5 million were up 35.1% from last years fourth quarter and up 11.6% over the third quarter of fiscal 2021. -- Sales increased for Healthcare, PMG, Canvys and Semiconductor Wafer Fabrication Equipment products in the fourth quarter of fiscal 2021 versus the fourth quarter of fiscal 2020. -- Gross margin improved to 32.4% of net sales for the fourth quarter of fiscal 2021 versus 30.4% of net sales in the prior years fourth quarter due to a favorable product mix and improved manufacturing performance for Richardson Healthcare. -- Operating expenses increased $1.3 million to $14.0 million compared to the prior years fourth quarter. Employee incentive expense increased due to the substantially improved performance, which was partially offset by decreased legal fees of $0.2 million. -- Operating income was $2.3 million for the fourth quarter of fiscal 2021. -- Earnings per common share (diluted) were $0.14 for the fourth quarter of fiscal 2021. -- For fiscal year 2021, net sales increased 13.5% to $176.9 million. -- Operating income was $2.9 million for fiscal year 2021, and Non-GAAP operating income* was $4.5 million for fiscal year 2021. -- Earnings per common share (diluted) were $0.13 for fiscal year 2021, and Non-GAAP earnings per common share (diluted)* were $0.25 for fiscal year 2021. -- Cash and investments were $43.3 million as of May 29, 2021 versus $47.4 million on February 27, 2021 and $46.5 million on May 30, 2020.

LAFOX, Ill., July 21, 2021 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its fourth quarter and fiscal year ended May 29, 2021. 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 2021 increased 35.1% to $50.5 million compared to net sales of $37.4 million in the prior years fourth quarter primarily due to higher net sales across all three business units. Richardson Healthcare sales increased $1.3 million or 92.3% primarily due to an increase in demand for the ALTA750 TM Tubes, reflecting the highest quantity sold in any quarter. In addition, parts sales increased, partially offset by lower sales of pre-owned CT scanners in Latin America. PMT sales increased $9.6 million or 32.5% from last years fourth quarter because of higher sales of semiconductor wafer fab equipment specialty products as well as power conversion and RF and microwave components. In addition, power grid tube sales increased from the fourth quarter of fiscal 2020. Canvys sales increased by $2.2 million or 33.9% due to increased customer demand in both Europe and North America.

Gross margin improved to 32.4% of net sales during the fourth quarter of fiscal 2021 compared to 30.4% of net sales during the fourth quarter of fiscal 2020. Canvys margin as a percent of net sales increased to 35.3% from 31.0% because of its product mix and foreign currency effects. Healthcare margin as a percent of net sales was 29.4% in the fourth quarter of fiscal 2021 compared to minus 28.6% in the prior years fourth quarter primarily due to improved manufacturing absorption and lower scrap and inventory reserve expense. PMT margin decreased to 32.0% from 33.2% due to a higher percentage of lower margin PMG sales.

Operating expenses were $14.0 million compared to $12.7 million in the fourth quarter of fiscal 2020. The increase in operating expenses resulted from higher employee compensation expense, partially offset by lower legal 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 $2.3 million for the fourth quarter of fiscal 2021 compared to an operating loss of $1.3 million in the prior years fourth quarter. Other expense for the fourth quarter of fiscal 2021, including interest income and foreign exchange, was less than $0.1 million, compared to other income of $0.2 million in the fourth quarter of fiscal 2020.

The income tax provision of $0.4 million for the fourth quarter of fiscal 2021 reflected a provision for foreign income taxes, which was higher than the prior years fourth quarter, and the offset of a U.S. tax provision against the valuation allowance. Net income for the fourth quarter of fiscal 2021 was $1.9 million compared to a net loss of $1.3 million in the fourth quarter of fiscal 2020. Earnings per common share (diluted) were $0.14 in the fourth quarter of fiscal 2021.

We are pleased with more than 30% sales growth in each of our strategic business units during an unprecedented pandemic, resulting in our strongest quarterly financial performance in nearly 10 years said Edward J. Richardson, Chairman, Chief Executive Officer, and President. We are also excited about the outlook for all of our businesses in fiscal year 2022, including our patent pending ultracapacitor modules for wind turbines and related LED battery replacements, he concluded.

Fiscal 2021 Results

Net sales for fiscal 2021 were $176.9 million, an increase of 13.5%, compared to net sales of $155.9 million for fiscal 2020. Sales increased $18.8 million or 15.9% for PMT, $1.8 million or 21.7% for Richardson Healthcare and $0.4 million or 1.4% for Canvys.

Gross margin increased to $58.8 million for fiscal 2021, compared to $49.7 million for fiscal 2020. As a percentage of net sales, gross margin increased to 33.2% of net sales for fiscal 2021, compared to 31.9% of net sales for 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 $55.9 million and Non-GAAP operating expenses* to $54.3 million for fiscal 2021, compared to $51.3 million for fiscal 2020. This increase included a one-time cost of $1.6 million for a legal settlement with Varex Imaging Corporation in the third quarter of fiscal 2021. In addition, the increase resulted from higher employee compensation expense and legal fees, partially offset by lower travel and consulting expenses.

Operating income was $2.9 million and Non-GAAP operating income* was $4.5 million for fiscal 2021, compared to an operating loss of $1.7 million for fiscal 2020. Other expense for fiscal 2021, including interest income and foreign exchange, was $0.6 million, compared to other income of $0.4 million for fiscal 2020.

The income tax provision of $0.7 million for fiscal 2021 reflected a provision for foreign income taxes, which was higher than in the prior year, and the offset of a U.S. tax provision against the valuation allowance. Net income for fiscal 2021 was $1.7 million and Non-GAAP net income* was $3.3 million, compared to a net loss of $1.8 million for fiscal 2020. Earnings per common share (diluted) for fiscal 2021 were $0.13 and Non-GAAP earnings per common share (diluted)* were $0.25.

*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 August 25, 2021, to common stockholders of record as of August 6, 2021.

Cash and investments at the end of fiscal 2021 were $43.3 million compared to $47.4 million at the end of the third quarter of fiscal 2021 and $46.5 million at the end of fiscal 2020. The Company spent $0.8 million during the quarter on capital expenditures primarily related to its Healthcare business and IT System, versus $0.5 million during the fourth quarter of fiscal 2020. Total capital expenditures in fiscal 2021 were $2.6 million compared to $1.8 million in 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, July 22, 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 fourth quarter and 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: 8618936 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 July 22, 2021, for seven days. The telephone number for the replay is (855) 859-2056; Conference ID: 8618936.

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) May 29, May 30, 2021 2020Assets Current assets: Cash and cash equivalents $ 43,316 $ 30,535 Accounts receivable, less allowance of $202 and 24,451 20,197 $334, respectivelyInventories, net 63,508 57,492 Prepaid expenses and other assets 2,385 2,442 Investments - current ? 16,000 Total current assets 133,660 126,666 Non-current assets: Property, plant and equipment, net 17,067 17,674 Intangible assets, net 2,270 2,505 Lease ROU asset 2,570 3,419 Non-current deferred income taxes 541 456 Total non-current assets 22,448 24,054 Total assets $ 156,108 $ 150,720 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 16,334 $ 17,372 Accrued liabilities 14,626 10,324 Lease liability current 1,066 1,485 Total current liabilities 32,026 29,181 Non-current liabilities: Non-current deferred income tax liabilities 242 161 Lease liability non-current 1,358 1,941 Other non-current liabilities 922 777 Total non-current liabilities 2,522 2,879 Total liabilities 34,548 32,060 Stockholders? equity Common stock, $0.05 par value; issued and outstanding 11,160 shares at May 29, 2021 and 11,038 shares at May 30, 2020 558 552 Class B common stock, convertible, $0.05 par value; issued and outstanding 2,097 shares at May 29, 2021 and 2,097 105 105 shares at May 30, 2020Preferred stock, $1.00 par value, no shares issued ? ? Additional paid-in-capital 62,707 61,749 Retained earnings 53,297 54,764 Accumulated other comprehensive income 4,893 1,490 Total stockholders? equity 121,560 118,660 Total liabilities and stockholders? equity $ 156,108 $ 150,720

Richardson Electronics, Ltd. Consolidated Statements of Comprehensive Income (Loss) (in thousands, except per share amounts) Three Months Ended Twelve Months Ended May 29, May 30, May 29, May 30, 2021 2020 2021 2020Net sales $ 50,472 $ 37,362 $ 176,937 $ 155,898 Cost of sales 34,115 25,990 118,112 106,225 Gross profit 16,357 11,372 58,825 49,673 Selling,general and 14,001 12,660 55,925 51,327 administrativeexpensesLoss ondisposal of 19 2 13 3 assetsOperating 2,337 (1,290 ) 2,887 (1,657 )income (loss)Other expense (income):Investment/interest (28 ) (37 ) (76 ) (377 )incomeForeignexchange loss 109 (132 ) 759 (15 )(gain)Other, net (43 ) (27 ) (104 ) (51 )Total otherexpense 38 (196 ) 579 (443 )(income)Income (loss)before income 2,299 (1,094 ) 2,308 (1,214 )taxesIncome tax 414 186 653 624 provisionNet income 1,885 (1,280 ) 1,655 (1,838 )(loss)Foreigncurrencytranslation 437 (346 ) 3,403 (900 )gain (loss),net of taxComprehensive $ 2,322 $ (1,626 ) $ 5,058 $ (2,738 )income (loss)Net income(loss) per share:Common shares $ 0.14 $ (0.10 ) $ 0.13 $ (0.14 )- BasicClass B common $ 0.13 $ (0.09 ) $ 0.11 $ (0.13 )shares - BasicCommon shares $ 0.14 $ (0.10 ) $ 0.13 $ (0.14 )- DilutedClass B commonshares - $ 0.13 $ (0.09 ) $ 0.11 $ (0.13 )DilutedWeightedaverage number of shares:Common shares 11,130 11,038 11,105 11,026 - BasicClass B common 2,097 2,097 2,097 2,097 shares - BasicCommon shares 11,352 11,038 11,164 11,026 - DilutedClass B commonshares - 2,097 2,097 2,097 2,097 DilutedDividends per $ 0.060 $ 0.060 $ 0.240 $ 0.240 common shareDividends perClass 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 29, May 30, 2021 2020Operating activities: Net income (loss) $ 1,655 $ (1,838 )Adjustments to reconcile net income (loss) to cash provided byoperating activities: Depreciation and amortization 3,424 3,386 Inventory provisions 1,041 1,013 Loss on disposal of assets 13 3 Share-based compensation expense 675 683 Deferred income taxes (1 ) (7 )Change in assets and liabilities: Accounts receivable (3,553 ) 3,895 Inventories (4,861 ) (5,452 )Prepaid expenses and other assets 103 620 Accounts payable (1,210 ) 631 Accrued liabilities 4,016 (889 )Other (470 ) (122 )Net cash provided by operating activities 832 1,923 Investing activities: Capital expenditures (2,632 ) (1,776 )Proceeds from maturity of investments 25,000 21,000 Purchases of investments (9,000 ) (29,000 )Net cash provided by (used in) investing 13,368 (9,776 )activitiesFinancing activities: Payment of financing lease principal (181 ) (166 )Proceeds from issuance of common stock 289 59 Cash dividends paid on Common and Class B (3,122 ) (3,101 )Common sharesNet cash used in financing activities (3,014 ) (3,208 )Effect of exchange rate changes on cash and 1,595 (423 )cash equivalentsIncrease (decrease) in cash and cash 12,781 (11,484 )equivalentsCash and cash equivalents at beginning of 30,535 42,019 periodCash and cash equivalents at end of period $ 43,316 $ 30,535

Richardson Electronics, Ltd. Net Sales and Gross Profit For the Fourth Quarter and Fiscal 2021 and Fiscal 2020 ($ in thousands) By Strategic Business Unit: Net Sales Q4 FY 2021 Q4 FY 2020 % Change PMT $ 38,862 $ 29,322 32.5 %Canvys 8,828 6,593 33.9 %Healthcare 2,782 1,447 92.3 %Total $ 50,472 $ 37,362 35.1 % YTD FY YTD FY % Change 2021 2020PMT $ 137,280 $ 118,480 15.9 %Canvys 29,319 28,926 1.4 %Healthcare 10,338 8,492 21.7 %Total $ 176,937 $ 155,898 13.5 % Gross Profit Q4 FY 2021 %ofNetSales Q4 FY 2020 % of Net Sales PMT $ 12,421 32.0 % $ 9,741 33.2 %Canvys 3,118 35.3 % 2,045 31.0 %Healthcare 818 29.4 % (414 ) -28.6 %Total $ 16,357 32.4 % $ 11,372 30.4 % YTD FY %ofNetSales YTD FY %ofNetSales 2021 2020PMT $ 45,951 33.5 % $ 38,288 32.3 %Canvys 10,274 35.0 % 9,313 32.2 %Healthcare 2,600 25.1 % 2,072 24.4 %Total $ 58,825 33.2 % $ 49,673 31.9 %

Richardson Electronics, Ltd.Unaudited Reconciliation between GAAP and Non-GAAP Financial Measures(in thousands, except per share amounts) Three Months Ended Twelve Months Ended May 29, May 30, May 29, May 30, 2021 2020 2021 2020Selling, general andadministrative expenses reconciliationSelling, general and $ 14,001 $ 12,660 $ 55,925 $ 51,327 administrative expensesLegal settlement ? ? (1,600 ) ? Non-GAAP selling, general and $ 14,001 $ 12,660 $ 54,325 $ 51,327 administrative expenses Operating income (loss) reconciliationOperating income (loss) $ 2,337 $ (1,290 ) $ 2,887 $ (1,657 )Legal settlement ? ? 1,600 ? Non-GAAP operating income (loss) $ 2,337 $ (1,290 ) $ 4,487 $ (1,657 )reconciliation Net income (loss) reconciliation Net income (loss) $ 1,885 $ (1,280 ) $ 1,655 $ (1,838 )Legal settlement ? ? 1,600 ? Non-GAAP net income (loss) $ 1,885 $ (1,280 ) $ 3,255 $ (1,838 )reconciliation Net income (loss) per share (diluted) reconciliationNet income (loss) per share $ 0.14 $ (0.10 ) $ 0.13 $ (0.14 )(diluted)Legal settlement ? ? 0.12 ? Non-GAAP net income (loss) per $ 0.14 $ (0.10 ) $ 0.25 $ (0.14 )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