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Richardson Electronics Reports Third Quarter Fiscal 2022 Net Income of $2.9 Million and Declares Quarterly Cash Dividend

Seventh Consecutive Quarter of Sequential Revenue Growth; All Business Units Grow Versus Third Quarter FY21

Third Quarter Highlights

LAFOX, Ill., April 06, 2022 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its third quarter ended February 26, 2022. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

“In our third quarter of fiscal 2022, we produced our seventh consecutive quarter of sequential revenue growth,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “With continued growth in our backlog in all three business units, and new customers expressing interest in our growing range of engineered solutions, we remain confident that in spite of the challenging economic environment, fiscal year 2022 will finish with strong sales and improved profitability.”

Third Quarter Results

Net sales for the third quarter of fiscal 2022 increased 22.3% to $55.3 million compared to net sales of $45.2 million in the prior year’s third quarter due to higher net sales across all three business units. PMT sales increased $8.8 million or 25.0% from last year’s third quarter. Demand within PMT was driven by strong growth from new Power and Microwave Technology partners for various applications including Power Management and 5G infrastructure, as well as increasing shipments of our patented ULTRA3000. In addition, sales for several electron tube product lines, including semiconductor wafer fabrication, increased from the third quarter of fiscal 2021. Canvys sales increased by $1.1 million or 15.0% due to strong customer demand in North America and Europe. Richardson Healthcare sales increased $0.2 million or 7.4% primarily due to an increase in parts sales and an increase in demand for the ALTA750TM Tubes.

Gross margin was 31.8% of net sales during the third quarter of fiscal 2022 compared to 34.9% of net sales during the third quarter of fiscal 2021. PMT margin decreased to 32.2% from 34.9% primarily due to product mix. Canvys margin as a percent of net sales decreased to 32.2% from 35.2% because of higher global freight costs. Healthcare gross margin was 25.1% in the third quarter of fiscal 2022 compared to 33.0% in the prior year’s third quarter due to an increase in component scrap expense and rising freight costs.

Operating expenses were $13.9 million compared to $15.5 million in the third quarter of fiscal 2021. The decrease in operating expenses resulted from the non-recurrence of a $1.6 million legal settlement in the third quarter of fiscal 2021. In addition, lower legal fees were offset by higher employee compensation expenses.

The Company reported operating income of $3.6 million for the third quarter of fiscal 2022 compared to an operating income of $0.3 million in the prior year’s third quarter. Other expenses for the third quarter of fiscal 2022, including interest income and foreign exchange, were $0.1 million, compared to other expenses of less than $0.1 million in the third quarter of fiscal 2021.

The income tax provision of $0.6 million for the third quarter of fiscal 2022 reflected a provision for foreign income taxes and the offset of a U.S. tax provision against the valuation allowance. In addition, state income taxes for Illinois increased due to the suspension of net operating loss carryforwards (“NOLs”) until the end of fiscal 2023. Net income for the third quarter of fiscal 2022 was $2.9 million compared to net income of $0.2 million in the third quarter of fiscal 2021. Earnings per common share (diluted) were $0.21 in the third quarter of fiscal 2022 compared to $0.02 per common share (diluted) in the third quarter of fiscal 2021.

Cash and investments at the end of the third quarter of fiscal 2022 were $39.1 million compared to $39.7 million at the end of the second quarter of fiscal 2022 and $47.4 million at the end of the third quarter of fiscal 2021. The Company continues to invest in inventory and working capital to support its growth initiatives as well as, $0.6 million during the quarter on capital expenditures primarily related to its Healthcare and manufacturing businesses as well as its IT System, versus $0.6 million during the third quarter of fiscal 2021.

FINANCIAL SUMMARY – NINE MONTHS ENDED FEBRUARY 26, 2022

CASH DIVIDEND DECLARED

The Board of Directors of Richardson Electronics declared a $0.06 quarterly cash 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 25, 2022, to common stockholders of record as of May 6, 2022.

CONFERENCE CALL INFORMATION

On Thursday, April 7, 2022, at 9:00 a.m. Central Time, 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 third quarter fiscal year 2022 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: 8259925 approximately five minutes before the start of the call.  A replay of the call will be available beginning at 1:00 p.m. Central Time on April 7, 2022, for seven days. The telephone number for the replay is (855) 859-2056; Conference ID: 8259925. In addition, there is a webcast link: https://edge.media-server.com/mmc/p/hat5fppd

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 2, 2021, 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 manufacturer of engineered solutions, power grid and microwave tubes and related consumables; power conversion and RF and microwave components; high-value replacement parts, tubes, and service training for diagnostic imaging equipment; and customized display solutions. More than 60% of our products are manufactured in LaFox, Illinois, Marlborough, Massachusetts, or Donaueschingen, Germany, or by one of our manufacturing partners throughout the world. All of our partners manufacture to our strict specifications and per our supplier code of conduct. 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)

 Unaudited  Audited 
 February 26, 2022  May 29, 2021 
Assets       
Current assets:       
Cash and cash equivalents$39,147  $43,316 
Accounts receivable, less allowance of $149 and $202, respectively 31,605   25,096 
Inventories, net 73,673   63,508 
Prepaid expenses and other assets 3,362   2,385 
Total current assets 147,787   134,305 
Non-current assets:       
Property, plant and equipment, net 16,839   17,067 
Intangible assets, net 2,077   2,270 
Lease ROU asset 3,502   2,570 
Non-current deferred income taxes 481   541 
Total non-current assets 22,899   22,448 
Total assets$170,686  $156,753 
Liabilities       
Current liabilities:       
Accounts payable$20,744  $16,979 
Accrued liabilities 15,975   14,182 
Lease liability current 1,164   1,066 
Total current liabilities 37,883   32,227 
Non-current liabilities:       
Non-current deferred income tax liabilities 235   242 
Lease liability non-current 2,113   1,358 
Other non-current liabilities 844   1,366 
Total non-current liabilities 3,192   2,966 
Total liabilities 41,075   35,193 
Stockholders’ Equity       
Common stock, $0.05 par value; issued and outstanding 11,608 shares on
February 26, 2022 and 11,160 shares on May 29, 2021		 580   558 
Class B common stock, convertible, $0.05 par value; issued and outstanding
2,053 shares on February 26, 2022 and 2,097 shares on May 29, 2021		 103   105 
Preferred stock, $1.00 par value, no shares issued —   — 
Additional paid-in-capital 65,831   62,707 
Retained earnings 60,557   53,297 
Accumulated other comprehensive income 2,540   4,893 
Total stockholders’ equity 129,611   121,560 
Total liabilities and stockholders’ equity$170,686  $156,753 


Richardson Electronics, Ltd. 
Unaudited Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)

 Three Months Ended  Nine Months Ended 
 February 26, 2022  February 27, 2021  February 26, 2022  February 27, 2021 
Net sales$55,308  $45,235  $162,991  $126,465 
Cost of sales 37,739   29,469   111,468   83,997 
Gross profit 17,569   15,766   51,523   42,468 
Selling, general and administrative expenses 13,946   15,457   40,550   41,924 
Loss (gain) on disposal of assets —   (6)  2   (6)
Operating income 3,623   315   10,971   550 
Other expense (income):               
Investment/interest income (11)  (15)  (36)  (48)
Foreign exchange loss (gain) 121   65   (2)  650 
Other, net 17   (25)  39   (61)
Total other expense 127   25   1   541 
Income before income taxes 3,496   290   10,970   9 
Income tax provision 609   62   1,326   239 
Net income (loss) 2,887   228   9,644   (230)
Foreign currency translation gain (loss), net of tax 69   353   (2,353)  2,966 
Comprehensive income$2,956  $581  $7,291  $2,736 
                
Net income (loss) per share:               
Common shares - Basic$0.22  $0.02  $0.73  $(0.02)
Class B common shares - Basic 0.19   0.02   0.66   (0.02)
Common shares - Diluted 0.21   0.02   0.71   (0.02)
Class B common shares - Diluted 0.19   0.02   0.64   (0.02)
                
Weighted average number of shares:               
Common shares – Basic 11,497   11,111   11,320   11,097 
Class B common shares – Basic 2,074   2,097   2,089   2,097 
Common shares – Diluted 12,027   11,183   11,724   11,097 
Class B common shares – Diluted 2,074   2,097   2,089   2,097 
                
Dividends per share:               
Common share$0.060  $0.060  $0.180  $0.180 
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 
 February 26, 2022  February 27, 2021  February 26, 2022  February 27, 2021 
Operating activities:               
Net income (loss)$2,887  $228  $9,644  $(230)
Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:               
Depreciation and amortization 872   849   2,560   2,595 
Inventory provisions 88   265   228   717 
Share-based compensation expense 142   150   514   529 
Loss (gain) on disposal of assets —   (6)  2   (6)
Deferred income taxes 26   3   38   (50)
Change in assets and liabilities:               
Accounts receivable (4,209)  (837)  (7,355)  (1,004)
Inventories (3,113)  133   (12,295)  (875)
Prepaid expenses and other assets (2)  428   (1,058)  156 
Accounts payable 1,902   496   4,204   (2,027)
Accrued liabilities 563   873   2,075   4,285 
Other (370)  216   (13)  (222)
Net cash (used in) provided by operating activities (1,214)  2,798   (1,456)  3,868 
Investing activities:               
Capital expenditures (554)  (555)  (2,161)  (1,835)
Proceeds from maturity of investments —   —   —   16,000 
Purchases of investments —   —   —   (9,000)
Net cash (used in) provided by investing activities (554)  (555)  (2,161)  5,165 
Financing activities:               
Proceeds from issuance of common stock 1,906   —   2,630   — 
Cash dividends paid (806)  (780)  (2,384)  (2,340)
Payment of financing lease principal (45)  (45)  (136)  (136)
Net cash provided by (used in) financing activities 1,055   (825)  110   (2,476)
Effect of exchange rate changes on cash and cash equivalents 195   (34)  (662)  1,315 
(Decrease) increase in cash and cash equivalents (518)  1,384   (4,169)  7,872 
Cash and cash equivalents at beginning of period 39,665   37,023   43,316   30,535 
Cash and cash equivalents at end of period$39,147  $38,407  $39,147  $38,407 


Richardson Electronics, Ltd. 
Unaudited Net Sales and Gross Profit
For the Third Quarter and First Nine Months of Fiscal 2022 and 2021
($ in thousands)

By Strategic Business Unit:               
                
Net Sales               
 Q3 FY 2022      Q3 FY 2021  % Change 
PMT$44,032      $35,237   25.0%
Canvys 8,141       7,078   15.0%
Healthcare 3,135       2,920   7.4%
Total$55,308      $45,235   22.3%
                
 YTD FY 2022      YTD FY 2021  % Change 
PMT$128,778      $98,418   30.8%
Canvys 25,732       20,491   25.6%
Healthcare 8,481       7,556   12.2%
Total$162,991      $126,465   28.9%
                
                
                
Gross Profit  
 Q3 FY 2022  % of Net Sales  Q3 FY 2021  % of Net Sales 
PMT$14,163   32.2% $12,308   34.9%
Canvys 2,618   32.2%  2,493   35.2%
Healthcare 788   25.1%  965   33.0%
Total$17,569   31.8% $15,766   34.9%
                
 YTD FY 2022  % of Net Sales  YTD FY 2021  % of Net Sales 
PMT$41,080   31.9% $33,530   34.1%
Canvys 8,348   32.4%  7,156   34.9%
Healthcare 2,095   24.7%  1,782   23.6%
Total$51,523   31.6% $42,468   33.6%


   
For Details Contact: 40W267 Keslinger Road
Edward J. RichardsonRobert J. BenPO BOX 393
Chairman and CEOEVP & CFOLaFox, IL 60147-0393 USA
Phone: (630) 208-2320(630) 208-2203(630) 208-2200 | Fax: (630) 208-2550

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