LAFOX, Ill., Jan. 04, 2017 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ:RELL) today reported financial results for its second quarter ended November 26, 2016.  The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Second Quarter Results

Net sales for the second quarter of fiscal 2017 were $33.8 million, nearly flat compared to net sales of $34.1 million in the prior year’s second quarter. A sales decrease of $0.5 million for Canvys, primarily due to declines in demand from key OEMs relating to market conditions, was partially offset by increases of $0.1 million in both PMT and Richardson Healthcare.

Gross margin increased to $11.0 million, or 32.4% of net sales during the second quarter of fiscal 2017, compared to $10.4 million, or 30.6% of net sales during the second quarter of fiscal 2016.  Margin improved as a percent of net sales primarily due to higher PMT and Canvys margins as a result of an improved product mix. In addition, the Canvys margin benefitted from cost reductions on selected products sold.

Operating expenses increased to $13.4 million for the second quarter of fiscal 2017, compared to $13.2 million for the second quarter of fiscal 2016. The increase was due to $1.3 million in severance expense associated with the reduction in work force during the second quarter of fiscal 2017, mostly offset by reduced salary, benefits and incentive compensation expenses. In addition, IT expenses were lower than in the second quarter of fiscal 2016.

As a result, operating loss for the second quarter of fiscal 2017 was $2.4 million, compared to an operating loss of $2.5 million in the prior year’s second quarter. However, excluding the $1.3 million severance expense, the operating loss would have been $1.1 million for the second quarter of fiscal 2017.

Other income for the second quarter of fiscal 2017, including foreign exchange, was $0.2 million, compared to $0.5 million in the second quarter of fiscal 2016.

The income tax provision of $0.3 million during the second quarter of fiscal 2017 reflects a provision for foreign income taxes and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.

Net loss for the second quarter of fiscal 2017 was $2.5 million, compared to a net loss of $2.3 million in the second quarter of 2016.

FINANCIAL SUMMARY – SIX MONTHS ENDED NOVEMBER 26, 2016

• Net sales for the first six months of fiscal 2017 were $67.2 million, a decrease of 5.6%, compared to net sales of $71.2 million during the first six months of fiscal 2016. Sales decreased by $1.7 million for PMT and $2.5 million for Canvys, primarily due to declines in demand from key customers relating to market conditions.
• Gross margin decreased to $21.2 million during the first six months of fiscal 2017, compared to $21.7 million during the first six months of fiscal 2016. However, as a percentage of net sales, gross margin increased to 31.6% of net sales during the first six months of fiscal 2017, compared to 30.5% of net sales during the first six months of fiscal 2016.
• Operating expenses increased to $25.7 million for the first six months of fiscal 2017, compared to $25.5 million for the first six months of fiscal 2016. The increase was due to the $1.3 million in severance expense associated with the reduction in work force during the second quarter of fiscal 2017, mostly offset by reduced salary, benefits and incentive compensation expenses. In addition, IT expenses were lower than the first six months of fiscal 2016.
• Operating loss during the first six months of fiscal 2017 was $4.5 million, compared to an operating loss of $3.5 million during the first six months of fiscal 2016. After excluding the severance expense of $1.3 million, the operating loss would have been $3.2 million for the first six months of fiscal year 2017.
• Other expense for the first six months of fiscal 2017, including foreign exchange, was less than $0.1 million, compared to other income of $0.5 million for the first six months of fiscal 2016.
• The income tax provision of $0.8 million for the first six months of fiscal 2017 reflects a provision for foreign income taxes, an estimate for additional tax due from an audit in France and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.
• Net loss for the first six months of fiscal 2017 was $5.4 million, compared to a net loss of $3.7 million during the first six months of fiscal 2016.

CASH DIVIDEND
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 February 24, 2017, to common stockholders of record on February 7, 2017.

Cash and investments at the end of the second quarter of fiscal 2017 were $62.8 million compared to $70.5 million at the end of the fourth quarter of fiscal 2016.  During the second quarter of fiscal 2017, the Company did not repurchase any shares of its common stock under the existing share repurchase authorization. Since the sale of RFPD, the Company has spent $65.6 million on share repurchases, nearly $20 million on acquisitions, more than $18 million on dividends and $5.1 million on purchases of Richardson Healthcare equipment. Currently, there are 10.7 million outstanding shares of common stock and 2.1 million outstanding shares of Class B common stock.

OUTLOOK
“While we are disappointed with flat net sales in the second quarter of fiscal 2017 as compared to the second quarter of fiscal 2016, we are pleased with the significantly higher gross margin and the substantially lower operating expenses after excluding the $1.3 million in severance expense that was incurred in the second quarter of fiscal year 2017,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “We are beginning to see revenue growth in our Power Management Technologies group and we are making good progress in CT Tube development. We are focused on increasing net sales in all of our businesses and continue to make progress on additional initiatives to permanently take cost out of the organization, improve cash flow, and return the Company to profitability,” Mr. Richardson concluded.

CONFERENCE CALL INFORMATION
On Thursday, January 5, 2017, at 9:00 a.m. CST, 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 second quarter results for fiscal 2017. A question and answer session will be included as part of the call's agenda. To listen to the call, please dial (888) 419-5570 and enter passcode 96522530 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 12:00 a.m. CST on January 6, 2017, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 66294883.

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 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 Company's Annual Report on Form 10-K filed on July 29, 2016. 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 displays, flat panel detector solutions and replacement parts 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 .