Richardson Electronics Reports Fourth Quarter Fiscal 2021 Net Income of $1.9 Million; Fiscal 2021 Net Income of $1.7 Million and Non-GAAP Net Income* of $3.3 Million; Declares Quarterly Cash Dividend
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Richardson Electronics Reports Fourth Quarter Fiscal 2021 Net Income of $1.9 Million; Fiscal 2021 Net Income of $1.7 Million and Non-GAAP Net Income* of $3.3 Million; Declares Quarterly Cash Dividend

Healthcare, PMG, Canvys and Semiconductor Wafer Fab Revenues Grow Versus Q4 FY20; Higher ALTA750™  Tube Sales

Q4 and FY21 Highlights

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 year’s 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 year’s 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 year’s 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 year’s 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 year’s 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 Company’s financial performance by excluding a special item that is not indicative of the Company’s core operating performance or that may obscure trends useful in evaluating the Company’s 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 Company’s fourth quarter and fiscal year 2021 results.  A question and answer session will be included as part of the call’s 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 Company’s 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 Company’s 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 Company’s 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, 2021  May 30, 2020 
Assets        
Current assets:        
Cash and cash equivalents $43,316  $30,535 
Accounts receivable, less allowance of $202 and $334, respectively  24,451   20,197 
Inventories, 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 shares at May 30, 2020  105   105 
Preferred 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, 2021  May 30, 2020  May 29, 2021  May 30, 2020 
Net 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 administrative expenses  14,001   12,660   55,925   51,327 
Loss on disposal of assets  19   2   13   3 
Operating income (loss)  2,337   (1,290)  2,887   (1,657)
Other expense (income):                
Investment/interest income  (28)  (37)  (76)  (377)
Foreign exchange loss (gain)  109   (132)  759   (15)
Other, net  (43)  (27)  (104)  (51)
Total other expense (income)  38   (196)  579   (443)
Income (loss) before income taxes  2,299   (1,094)  2,308   (1,214)
Income tax provision  414   186   653   624 
Net income (loss)  1,885   (1,280)  1,655   (1,838)
Foreign currency translation gain (loss), net of tax  437   (346)  3,403   (900)
Comprehensive income (loss) $2,322  $(1,626) $5,058  $(2,738)
Net income (loss) per share:                
Common shares - Basic $0.14  $(0.10) $0.13  $(0.14)
Class B common shares - Basic $0.13  $(0.09) $0.11  $(0.13)
Common shares - Diluted $0.14  $(0.10) $0.13  $(0.14)
Class B common shares - Diluted $0.13  $(0.09) $0.11  $(0.13)
Weighted average number of shares:                
Common shares - Basic  11,130   11,038   11,105   11,026 
Class B common shares - Basic  2,097   2,097   2,097   2,097 
Common shares - Diluted  11,352   11,038   11,164   11,026 
Class B common shares - Diluted  2,097   2,097   2,097   2,097 
Dividends per common share $0.060  $0.060  $0.240  $0.240 
Dividends per Class B common share $0.054  $0.054  $0.220  $0.220 
                 


Richardson Electronics, Ltd. 
Consolidated Statements of Cash Flows 
(in thousands) 
         
  Fiscal Year Ended 
  May 29, 2021  May 30, 2020 
Operating activities:        
Net income (loss) $1,655  $(1,838)
Adjustments to reconcile net income (loss) to cash provided by        
operating 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 activities  13,368   (9,776)
Financing activities:        
Payment of financing lease principal  (181)  (166)
Proceeds from issuance of common stock  289   59 
Cash dividends paid on Common and Class B Common shares  (3,122)  (3,101)
Net cash used in financing activities  (3,014)  (3,208)
Effect of exchange rate changes on cash and cash equivalents  1,595   (423)
Increase (decrease) in cash and cash equivalents  12,781   (11,484)
Cash and cash equivalents at beginning of period  30,535   42,019 
Cash 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 2021      YTD FY 2020  % Change 
PMT $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  % of Net Sales  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 2021  % of Net Sales  YTD FY 2020  % of Net Sales 
PMT $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, 2021  May 30, 2020  May 29, 2021  May 30, 2020 
Selling, general and administrative expenses reconciliation                
Selling, general and administrative expenses $14,001  $12,660  $55,925  $51,327 
Legal settlement        (1,600)   
Non-GAAP selling, general and administrative expenses $14,001  $12,660  $54,325  $51,327 
                 
Operating income (loss) reconciliation                
Operating income (loss) $2,337  $(1,290) $2,887  $(1,657)
Legal settlement        1,600    
Non-GAAP operating income (loss) reconciliation $2,337  $(1,290) $4,487  $(1,657)
                 
Net income (loss) reconciliation                
Net income (loss) $1,885  $(1,280) $1,655  $(1,838)
Legal settlement        1,600    
Non-GAAP net income (loss) reconciliation $1,885  $(1,280) $3,255  $(1,838)
                 
Net income (loss) per share (diluted) reconciliation                
Net income (loss) per share (diluted) $0.14  $(0.10) $0.13  $(0.14)
Legal settlement        0.12    
Non-GAAP net income (loss) per share (diluted) reconciliation $0.14  $(0.10) $0.25  $(0.14)


For Details Contact: 40W267 Keslinger Road
Edward J. RichardsonRobert J. BenPO BOX 393
Chairman and CEOEVP & CFOLaFox, IL 60147-0393 USA
Phone: (630) 208-2205(630) 208-2203(630) 208-2200 | Fax: (630) 208-2550

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