Richardson Electronics Reports First Quarter Fiscal 2021 Results and Declares Quarterly Cash Dividend

PMG, North America Display and Semiconductor Wafer Fab Revenues Grow Versus Q1 FY20 ; All SBUs Grow Versus Q4 FY20

Q1 and FY21 Highlights

  • Net sales of $38.8 million were down less than 5% from last year’s first quarter despite the COVID-19 impact on all three of our strategic business units.
  • Sales increased for PMG, Canvys display solutions in North America and Semiconductor Wafer Fabrication equipment products in the first quarter of fiscal 2021 versus the first quarter of fiscal 2020.
  • Gross margin was 31.8% of net sales for the first quarter of fiscal 2021 versus 31.9% of net sales in the prior year’s first quarter.
  • Operating expenses increased $0.2 million to $13.0 million compared to the prior year’s first quarter. Legal expenses increased by $0.4 million.
  • Operating loss was $0.6 million compared to an operating income of $0.1 million in last year’s first quarter.
  • Cash and investments were $42.5 million as of August 29, 2020 versus $46.5 million at both May 30, 2020 and August 31, 2019.

LAFOX, Ill., Oct. 07, 2020 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its first quarter ended August 29, 2020. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend. 

First Quarter Results

Net sales for the first quarter of fiscal 2021 decreased 4.5% to $38.8 million compared to net sales of $40.7 million in the prior year’s first quarter primarily due to the impact on demand from COVID-19. Richardson Electronics is an “essential business” and continued operating its manufacturing and distribution businesses on a global basis throughout the pandemic under strict safety guidelines. Sales of semiconductor wafer fab equipment specialty products as well as power conversion and RF and microwave components increased from last year’s first quarter, although overall PMT sales decreased $0.3 million or 1.0%. Power grid tube sales were negatively impacted by the pandemic and economic softness. Canvys sales decreased by $0.6 million or 7.8% due to COVID-related pushouts from its European medical OEMs, partially offset by higher North American sales. Richardson Healthcare sales decreased $1.0 million or 34.2% due to reduced or frozen capital expenditure budgets, difficulty reaching hospital staff and a slow ramp-up of patients returning to hospitals for non-COVID-related care. Decreased sales of refurbished CT systems in Latin America also contributed to the revenue decline. Healthcare sales increased 27.7% versus the fourth quarter of 2020.

Gross margin was 31.8% of net sales during the first quarter of fiscal 2021 compared to 31.9% of net sales during the first quarter of fiscal 2020. PMT margin increased to 33.0% from 31.7% due to a favorable product mix and improved manufacturing efficiencies. Also, Canvys margin as a percent of net sales increased to 34.0% from 31.9% as a result of its product mix. Healthcare margin as a percent of net sales was 5.6% in the first quarter of fiscal 2021 due to manufacturing under absorption and inventory reserve costs related to tube development and production improvements on significantly lower net sales.

Operating expenses were $13.0 million in the first quarter of fiscal 2021 compared to $12.8 million in the first quarter of fiscal 2020. The increase in operating expenses resulted from higher legal and employee compensation expenses, partially offset by lower travel 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 loss of $0.6 million for the first quarter of fiscal 2021 compared to an operating income of $0.1 million in the prior year’s first quarter. Other expense for the first quarter of fiscal 2021, including interest income and foreign exchange, was $0.4 million, compared to other income of $0.2 million in the first quarter of fiscal 2020.

The income tax provision of $0.1 million for the first quarter of fiscal 2021 reflected a provision for foreign income taxes, which was lower than the prior year’s first quarter and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. Net loss for the first quarter of fiscal 2021 was $1.1 million compared to a net income of $0.2 million in the first quarter of fiscal 2020.

“While our overall results continued to be negatively impacted by the coronavirus, we were pleased with the sales growth in PMG, Canvys North America and in semiconductor wafer fab equipment products as well as higher sales overall compared to the fourth quarter of Fiscal 2020,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “We continue to capitalize on all revenue opportunities as well as manage expenses and cash flow appropriately given the ongoing uncertainty in the global economy,” he concluded.

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 November 24, 2020, to common stockholders of record as of November 6, 2020.

Cash and investments at the end of the first quarter of fiscal 2021 were $42.5 million compared to $46.5 million at both the end of fiscal 2020 and at the end of the first quarter of fiscal 2020. The Company spent $0.7 million during the quarter on capital expenditures primarily related to its Healthcare business and IT System, versus $0.3 million during the first quarter of fiscal 2020.

C ONFERENCE CALL INFORMATION

On Thursday, October 8, 2020, 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 first quarter 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: 2286803 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 October 8, 2020, for seven days.  The telephone number for the replay is (800) 585-8367; Conference ID: 2286803.

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 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.

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