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Richardson Electronics Reports First Quarter Fiscal 2015 Results and Declares Quarterly Cash Dividend

LAFOX, Ill. — (BUSINESS WIRE) — October 8, 2014 — Richardson Electronics, Ltd. (NASDAQ: RELL) today reported sales and earnings for its first quarter ended August 30, 2014. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Net sales for the first quarter of fiscal 2015 were $34.7 million, a 1.3% increase compared to net sales of $34.3 million in the prior year. The sales increase primarily reflects growth in the EDG business of 7.7% offset by a decline in the Canvys division. Gross margin increased slightly to $10.7 million, or 30.7% of net sales during the first quarter of fiscal 2015, compared to $10.2 million, or 29.8% of net sales during fiscal 2014. Operating expenses increased to $11.2 million during the first quarter of fiscal 2015, compared to $10.1 million during the fiscal 2014. The $1.1 million increase in expense is due to investments in new business units and new products to provide future growth along with incremental expenses associated with our new ERP system implementation. As a result, operating loss for the first quarter of fiscal 2015 was $0.5 million, compared to operating income for the first quarter of fiscal 2014 of $0.1 million.

Loss from continuing operations for the first quarter of fiscal 2015 was $0.1 million, compared to income from continuing operations of $2.0 million, or $0.14 per diluted common share during the first quarter of last year.

“We are pleased that EDG is beginning to see growth across multiple product lines and markets. Our solid vendor partnerships, coupled with the investments we are making in engineering, product development, and manufacturing capabilities, should enable us to continue increasing revenues in high growth niche markets.

We have now formalized Richardson Healthcare as a strategic business unit to focus on providing the highest quality replacement parts for diagnostic imaging equipment. Through our investments and focus on power management and healthcare, we believe our operating results will improve over the next several years as we leverage our global infrastructure and existing customer relationships,” said Edward J. Richardson, Chairman, Chief Executive Officer and President.

“We anticipate our second quarter sales should be in the range of $34 to $36 million. We remain focused on building our business to achieve sustainable growth over the long term,” said Mr. Richardson.

FINANCIAL SUMMARY ─ THREE MONTHS ENDED AUGUST 30, 2014

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 November 21, 2014, to common stockholders of record on November 7, 2014.

“Cash and investments at the end of our first quarter of fiscal 2015 were $133.2 million. As of today, the Company currently has 11.8 million outstanding shares of common stock and 2.1 million outstanding shares of Class B common stock. With our strong balance sheet, we are committed to returning value to our shareholders,” said Mr. Richardson.

CONFERENCE CALL INFORMATION

On Thursday, October 9, 2014, at 9:00 a.m. CT, Edward J. Richardson, Chairman and Chief Executive Officer, and Kathleen S. Dvorak, Chief Financial Officer, will host a conference call to discuss the Company's first quarter results for fiscal 2015. A question and answer session will be included as part of the call's agenda. To listen to the call, please dial (888) 339-2688 and enter passcode 35240832 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:00 a.m. CT on October 9, 2014, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 87050145.

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 25, 2014. 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, and customized display solutions serving customers in the alternative energy, 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. More information is available online 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)

 
  Unaudited   Audited
August 30, May 31,
2014 2014
Assets
Current assets:
Cash and cash equivalents $ 98,084 $ 102,752
Accounts receivable, less allowance of $564 and $581 18,494 18,354
Inventories 35,620 33,869
Prepaid expenses and other assets 936 1,089
Deferred income taxes 1,803 1,537
Income tax receivable 580 2,888
Investments—current 26,362 31,732
Discontinued operations—assets   18  
Total current assets 181,879   192,239  
Non-current assets:
Property, plant and equipment, net 7,723 7,223
Other intangibles 820 843
Non-current deferred income taxes 1,686 1,724
Investments—non-current 8,797   1,516  
Total non-current assets 19,026   11,306  
Total assets $ 200,905   $ 203,545  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 12,336 $ 12,337
Accrued liabilities 8,490 9,220
Discontinued operations—liabilities   7  
Total current liabilities 20,826   21,564  
Non-current liabilities:
Long-term income tax liabilities 5,876 5,691
Other non-current liabilities 1,296 1,315
Discontinued operations—non-current liabilities 126   130  
Total non-current liabilities 7,298   7,136  
Total liabilities 28,124   28,700  
Commitments and contingencies
Stockholders’ equity
Common stock, $0.05 par value; issued 11,906 shares at August 30, 2014, and 11,835 shares at May 31, 2014 595 592
Class B common stock, convertible, $0.05 par value; issued 2,141 shares at August 30, 2014 and 2,191 shares at May 31, 2014 107 110
Preferred stock, $1.00 par value, no shares issued
Additional paid-in-capital 66,419 66,141
Common stock in treasury, at cost, 50 shares at August 30, 2014, and 1 share at May 31, 2014 (501 ) (14 )
Retained earnings 97,048 97,959
Accumulated other comprehensive income 9,113   10,057  
Total stockholders’ equity 172,781   174,845  
Total liabilities and stockholders’ equity $ 200,905   $ 203,545  
 

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(in thousands, except per share amounts)

 
  Three Months Ended
August 30,   August 31,
2014 2013
Statements of Comprehensive Income (Loss)
Net Sales $ 34,699 $ 34,257
Cost of Sales 24,041   24,065  
Gross profit 10,658 10,192
Selling, general, and administrative expenses 11,182 10,069
Gain on disposal of assets 9    
Operating income (loss) (533 ) 123  
Other (income) expense:
Investment/interest income (256 ) (265 )
Foreign exchange (gain) loss (57 ) 106
Proceeds from legal settlement (2,115 )
Other, net (2 ) (30 )
Total other income (315 ) (2,304 )
Income (loss) from continuing operations before income taxes (218 ) 2,427
Income tax provision (benefit) (135 ) 448  
Income (loss) from continuing operations (83 ) 1,979
Loss from discontinued operations, net of tax   (11 )
Net income (loss) (83 ) 1,968  
Foreign currency translation gain (loss), net of tax (968 ) 425
Fair value adjustments on investments 25   1  
Comprehensive income (loss) $ (1,026 ) $ 2,394  

Net income (loss) per Common share - Basic:

Income (loss) from continuing operations $ (0.01 ) $ 0.14
Income (loss) from discontinued operations    
Total net income (loss) per Common share - Basic: $ (0.01 ) $ 0.14  

Net income (loss) per Class B common share - Basic:

Income (loss) from continuing operations $ (0.01 ) $ 0.13
Income (loss) from discontinued operations    
Total net income (loss) per Class B common share - Basic: $ (0.01 ) $ 0.13  

Net income (loss) per Common share - Diluted:

Income (loss) from continuing operations $ (0.01 ) $ 0.14
Income (loss) from discontinued operations    
Total net income (loss) per Common share - Diluted: $ (0.01 ) $ 0.14  

Net income (loss) per Class B common share - Diluted:

Income (loss) from continuing operations $ (0.01 ) $ 0.13
Income (loss) from discontinued operations    
Total net income (loss) per Class B common share - Diluted: $ (0.01 ) $ 0.13  
Weighted average number of shares:
Common shares - Basic 11,822   12,127  
Class B common shares - Basic 2,182   2,428  
Common shares - Diluted 11,822   14,688  
Class B common shares - Diluted 2,182   2,428  
Dividends per common share $ 0.060   $ 0.060  
Dividends per Class B common share $ 0.054   $ 0.054  
 

Richardson Electronics, Ltd.

Consolidated Statements of Cash Flows

(in thousands)

 
  Three Months Ended
August 30,   August 31,
2014 2013
Operating activities:
Net income (loss) $ (83 ) $ 1,968
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization 366 248
Gain on sale of investments (3 ) (7 )
Share-based compensation expense 120 114
Deferred income taxes (79 ) (59 )
Change in assets and liabilities, net of effect of acquired businesses:
Accounts receivable (372 ) (1,218 )
Income tax receivable 2,308 2,751
Inventories (2,110 ) (450 )
Prepaid expenses and other assets 135 156
Accounts payable 101 (2,547 )
Accrued liabilities (662 ) (1,890 )
Long-term income tax liabilities (242 )
Other (49 ) (9 )
Net cash used in operating activities (328 ) (1,185 )
Investing activities:
Cash consideration paid for acquired businesses (973 )
Capital expenditures (834 ) (441 )
Proceeds from maturity of investments 30,482 40,488
Purchases of investments (32,362 ) (40,094 )
Proceeds from sales of available-for-sale securities 37 56
Purchases of available-for-sale securities (37 ) (56 )
Other (28 ) 69  
Net cash used in investing activities (2,742 ) (951 )
Financing activities:
Repurchase of common stock (488 ) (6,700 )
Proceeds from issuance of common stock 158 71
Cash dividends paid (828 ) (857 )
Other 1   1  
Net cash used in financing activities (1,157 ) (7,485 )
Effect of exchange rate changes on cash and cash equivalents (441 ) 149  
Decrease in cash and cash equivalents (4,668 ) (9,472 )
Cash and cash equivalents at beginning of period 102,752   102,002  
Cash and cash equivalents at end of period $ 98,084   $ 92,530  
 

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the First Quarter of Fiscal 2015 and Fiscal 2014

(in thousands)

 

By Strategic Business Unit:

         

Net Sales

Q1 Q1

FY 2015

FY 2014

% Change

EDG $ 27,438 $ 25,479 7.7%
Canvys 5,968 7,446 (19.8%)
Healthcare 1,293   $ 1,332   (2.9%)
Total $ 34,699   $ 34,257   1.3%
 

Gross Profit

Q1 Q1

FY 2015

% of Net Sales

FY 2014

% of Net Sales

EDG $ 8,686 31.7% $ 7,859 30.8%
Canvys 1,656 27.7% 1,903 25.6%
Healthcare 316   24.4% 430   32.3%
Total $ 10,658   30.7% $ 10,192   29.8%
 



Contact:

Richardson Electronics, Ltd.
Edward J. Richardson
Chairman and CEO
(630) 208-2340
or
Kathleen S. Dvorak
EVP & CFO
(630) 208-2208