Richardson Electronics Reports Third Quarter Fiscal 2014 Results and Declares Quarterly Cash Dividend; Invests in Key Initiatives

CASH DIVIDEND AND SHARE REPURCHASES

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 23, 2014, to common stockholders of record on May 9, 2014.

“Cash and investments at the end of our third quarter were $132.2 million. As of today, the Company currently has 11.8 million outstanding shares of common stock and 2.2 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, April 10, 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 third quarter results for fiscal 2014. 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 13408790 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:59 p.m. CT on April 10, 2014, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 35522088.

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 26, 2013. 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
March 1,   June 1,
2014 2013
Assets
Current assets:
Cash and cash equivalents $ 97,160 $ 102,002
Accounts receivable, less allowance of $1,106 and $1,092 20,026 18,268
Inventories 35,180 33,975
Prepaid expenses and other assets 1,319 1,155
Deferred income taxes 1,915 1,856
Income tax receivable 3,640 6,429
Investments—current 33,322 38,971
Discontinued operations—assets 148   303  
Total current assets 192,710   202,959  
Non-current assets:
Property, plant and equipment, net 6,541 5,073
Goodwill 1,668 1,519
Other intangibles 864 908
Non-current deferred income taxes 1,487 1,398
Investments—non-current 1,757   5,461  
Total non-current assets 12,317   14,359  
Total assets $ 205,027   $ 217,318  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 11,248 $ 14,255
Accrued liabilities 7,428 9,566
Discontinued operations—liabilities   245  
Total current liabilities 18,676   24,066  
Non-current liabilities:
Long-term income tax liabilities 6,291 6,726
Other non-current liabilities 1,287 1,287
Discontinued operations—non-current liabilities 133    
Total non-current liabilities 7,711   8,013  
Total liabilities 26,387   32,079  
Commitments and contingencies
Stockholders’ equity
Common stock, $0.05 par value; issued 11,835 shares at March 1, 2014, and 12,263 shares at June 1, 2013 592 613
Class B common stock, convertible, $0.05 par value; issued 2,191 shares at March 1, 2014 and 2,491 shares at June 1, 2013 110 125
Preferred stock, $1.00 par value, no shares issued
Additional paid-in-capital 65,955 73,979
Common stock in treasury, at cost, 0 shares at March 1, 2014, and 9 shares at June 1, 2013 (105 )
Retained earnings 101,263 101,816
Accumulated other comprehensive income 10,720   8,811  
Total stockholders’ equity 178,640   185,239  
Total liabilities and stockholders’ equity $ 205,027   $ 217,318  
 

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(in thousands, except per share amounts)

 
  Three Months Ended   Nine Months Ended
March 1,   March 2,   March 1,   March 2,
2014 2013 2014 2013
Net Sales $ 32,884 $ 33,630 $ 102,577 $ 105,883
Cost of Sales 23,233   23,720   71,727   74,585  
Gross profit 9,651 9,910 30,850 31,298
Selling, general, and administrative expenses 10,537 9,318 31,079 29,695
Gain on disposal of assets       (2 )
Operating income (loss) (886 ) 592   (229 ) 1,605  
Other (income) expense:
Investment/interest income (277 ) (260 ) (797 ) (995 )
Foreign exchange loss 31 460 123 720
Proceeds from legal settlement (432 ) (2,547 )
Other, net (21 ) 3   (36 ) (62 )
Total other (income) expense (699 ) 203   (3,257 ) (337 )
Income (loss) from continuing operations before income taxes (187 ) 389 3,028 1,942
Income tax provision (benefit) (75 ) (197 ) 530   41  
Income (loss) from continuing operations (112 ) 586 2,498 1,901
Loss from discontinued operations, net of tax (420 ) (182 ) (538 ) (472 )
Net income (loss) (532 ) 404   1,960   1,429  
Foreign currency translation gain (loss), net of tax 258 (103 ) 1,879 1,844
Fair value adjustments on investments 6   9   29   14  
Comprehensive income (loss) $ (268 ) $ 310   $ 3,868   $ 3,287  

Net income (loss) per Common share - Basic:

Income (loss) from continuing operations $ (0.01 ) $ 0.04 $ 0.18 $ 0.13
Loss from discontinued operations (0.03 ) (0.01 ) (0.04 ) (0.03 )
Total net income (loss) per Common share - Basic: $ (0.04 ) $ 0.03   $ 0.14   $ 0.10  

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

Income (loss) from continuing operations $ (0.01 ) $ 0.04 $ 0.16 $ 0.11
Loss from discontinued operations (0.03 ) (0.01 ) (0.03 ) (0.03 )
Total net income (loss) per Class B common share - Basic: $ (0.04 ) $ 0.03   $ 0.13   $ 0.08  

Net income (loss) per Common share - Diluted:

Income (loss) from continuing operations $ (0.01 ) $ 0.04 $ 0.17 $ 0.12
Loss from discontinued operations (0.03 ) (0.01 ) (0.04 ) (0.03 )
Total net income (loss) per Common share - Diluted: $ (0.04 ) $ 0.03   $ 0.13   $ 0.09  

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

Income (loss) from continuing operations $ (0.01 ) $ 0.04 $ 0.16 $ 0.11
Loss from discontinued operations (0.03 ) (0.01 ) (0.03 ) (0.03 )
Total net income (loss) per Class B common share - Diluted: $ (0.04 ) $ 0.03   $ 0.13   $ 0.08  
Weighted average number of shares:
Common shares - Basic 11,832   12,292   11,942   12,500  
Class B common shares - Basic 2,191   2,740   2,270   2,822  
Common shares - Diluted 14,140   15,165   14,335   15,455  
Class B common shares - Diluted 2,191   2,740   2,270   2,822  
Dividends per common share $ 0.060   $ 0.060   $ 0.180   $ 0.180  
Dividends per Class B common share $ 0.054   $ 0.054   $ 0.162   $ 0.162  
 

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

 
  Three Months Ended   Nine Months Ended
March 1,   March 2, March 1,   March 2,
2014   2013 2014 2013
Operating activities:
Net income (loss) (532 ) 404 1,960 1,429
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization 275 218 796 783
Gain on sale of investments (4 ) (5 ) (23 ) (26 )
Loss on disposal of assets 18 16
Share-based compensation expense 201 81 585 413
Deferred income taxes 62 (8 ) (105 ) (16 )
Change in assets and liabilities, net of effect of acquired businesses:
Accounts receivable 228 1,881 (1,498 ) 477
Income tax receivable (319 ) (419 ) 2,789 (228 )
Inventories 273 452 133 2,167
Prepaid expenses and other assets 140 102 (134 ) (324 )
Accounts payable (940 ) (979 ) (3,170 ) 255
Accrued liabilities (73 ) (95 ) (2,528 ) (295 )
Long-term income tax liabilities 175 191 (302 ) (126 )
Other 13   158   60   348  
Net cash provided by (used in) operating activities (501 ) 1,999   (1,437 ) 4,873  
Investing activities:
Cash consideration paid for acquired businesses (973 ) (2,557 )
Capital expenditures (840 ) (512 ) (1,821 ) (1,069 )
Proceeds from sale of assets 4
Proceeds from maturity of investments 203,757 109,794 258,289 346,750
Purchases of investments (197,321 ) (86,721 ) (248,873 ) (301,729 )
Proceeds from sales of available-for-sale securities 76 24 152 161
Purchases of available-for-sale securities (76 ) (24 ) (152 ) (161 )
Other 6     97    
Net cash provided by investing activities 5,602   22,561   6,719   41,399  
Financing activities:
Repurchase of common stock (8,725 ) (11,550 )
Proceeds from issuance of common stock 13 65 184 148
Cash dividends paid (829 ) (886 ) (2,514 ) (2,685 )
Other (26 )   (25 )  
Net cash used in financing activities (842 ) (821 ) (11,080 ) (14,087 )
Effect of exchange rate changes on cash and cash equivalents 255   (234 ) 956   945  
Increase/ (decrease) in cash and cash equivalents 4,514 23,505 (4,842 ) 33,130
Cash and cash equivalents at beginning of period 92,646   53,518   102,002   43,893  
Cash and cash equivalents at end of period $ 97,160   $ 77,023   $ 97,160   $ 77,023  
 

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Third Quarter and First Nine Months of Fiscal 2014 and Fiscal 2013

(in thousands)

 

By Strategic Business Unit:

 

Net Sales

  QTD     QTD  
FY 2014 FY 2013   % Change
EDG $ 24,193 $ 24,333 (0.6)%
Canvys 8,691   9,297   (6.5)%
Total $ 32,884   $ 33,630   (2.2)%
 
YTD YTD
FY 2014 FY 2013   % Change
EDG $ 75,835 $ 76,146 (0.4)%
Canvys 26,742   29,737   (10.1)%
Total $ 102,577   $ 105,883   (3.1)%
 

Gross Profit

QTD QTD
FY 2014   % of Net Sales   FY 2013   % of Net Sales
EDG $ 7,139 29.5% $ 7,407 30.4%
Canvys 2,512   28.9% 2,503   26.9%
Total $ 9,651   29.3% $ 9,910   29.5%
 
YTD YTD
FY 2014   % of Net Sales   FY 2013   % of Net Sales
EDG $ 23,505 31.0% $ 23,337 30.6%
Canvys 7,345   27.5% 7,961   26.8%
Total $ 30,850   30.1% $ 31,298   29.6%
 




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