• Richardson Electronics Reports First Quarter Fiscal 2023 Net Income Of $6.3 Million Or 9.4% Of Sales; Declares Quarterly Cash Dividend

    Source: Nasdaq GlobeNewswire / 05 Oct 2022 16:15:00   America/New_York

    Ninth Consecutive Quarter of Sequential Revenue Growth; Introduces New Green Energy Reporting Segment

    First Quarter Highlights

    • Net sales of $67.6 million were up 25.8% from last year’s first quarter with increases in all four business units including its new Green Energy Solutions business unit.
    • Backlog totaled $199.2 million in the first quarter versus $206.2 million at the end of fiscal 2022 and $126.5 million at the end of the first quarter of last fiscal year. The sequential decline was primarily in Canvys.
    • Gross margin was 34.1% of net sales for the first quarter of fiscal 2023 versus 30.3% of net sales in the prior year’s first quarter representing strong sales and growth in engineered solutions.
    • Operating income was $8.8 million in the first quarter of fiscal 2023 compared to $5.0 million for the fourth quarter of fiscal 2022 and $2.8 million in the first quarter of fiscal 2022.
    • Income tax expense was $2.1 million for the first quarter of fiscal 2023 or 25% versus $0.2 million in the prior year’s first quarter due to the use of federal NOLs in fiscal 2022.
    • Earnings per common share (diluted) were $0.45 for the first quarter of fiscal 2023 compared to $0.20 per common share (diluted) in the first quarter of fiscal 2022.
    • Cash and investments were $35.6 million as of August 27, 2022 compared to $40.5 million as of May 28, 2022 and $36.4 million on August 28, 2021. The use of cash was related to higher working capital to support sales growth.

    LAFOX, Ill., Oct. 05, 2022 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its first quarter ended August 27, 2022. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

    “We are extremely pleased with the strong financial performance. The first quarter of fiscal 2023 was our ninth consecutive quarter of sequential revenue growth and is a great start to our new fiscal year. Investments in our growth initiatives continue to pay off as we focus on pursuing exciting market opportunities that we believe will drive long-term growth,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “Beginning with the first quarter of fiscal 2023, we are reporting a new segment, Green Energy Solutions (“GES”), reflecting the success of our growth strategies and our ability to provide engineered solutions for new markets. With increasing sales from green energy products and customers and over $199 million in total Company backlog, we believe sales and profits will continue to significantly increase in fiscal 2023.”

    First Quarter Results

    Net sales for the first quarter of fiscal 2023 increased 25.8% to $67.6 million compared to net sales of $53.7 million in the prior year’s first quarter due to higher net sales across all four business units. PMT sales increased $4.9 million or 12.2% from last year’s first quarter. Sales of manufactured products for our semiconductor wafer fabrication equipment customers increased from the first quarter of fiscal 2022. Net sales for our new segment, GES, increased $5.9 million or 230.7% from last year’s first quarter. GES combines our key technology partners and engineered solutions capabilities, to design and manufacture products for the fast-growing energy storage market and power management applications. Canvys sales increased by $2.0 million or 23.4% due to strong customer demand in North America. Richardson Healthcare sales increased $1.0 million or 45.5% due to higher demand in all product lines.

    Gross margin was 34.1% of net sales during the first quarter of fiscal 2023 compared to 30.3% of net sales during the first quarter of fiscal 2022. PMT margin increased to 34.3% from 30.1% and GES margin increased to 35.5% from 28.9% primarily due to product mix and improved manufacturing efficiencies. Canvys margin as a percent of net sales decreased to 31.4% from 33.4% because of product mix and foreign exchange effects. Healthcare gross margin was 36.7% in the first quarter of fiscal 2023 compared to 24.3% in the prior year’s first quarter due to improved manufacturing absorption and decreased component scrap expense.

    Operating expenses were $14.2 million compared to $13.5 million in the first quarter of fiscal 2022. The increase in operating expenses resulted from higher employee compensation expenses, including incentive expense from significantly higher operating income. Operating expenses as a percentage of net sales decreased to 21.1% during the first quarter of fiscal 2023 compared to 25.1% during the first quarter of fiscal 2022 as the Company benefits from higher sales and controlled operating expenses.

    The Company reported operating income of $8.8 million for the first quarter of fiscal 2023 compared to operating income of $2.8 million in the prior year’s first quarter. Other expenses for the first quarter of fiscal 2023, including interest income and foreign exchange, were $0.3 million, compared to other expenses of less than $0.1 million in the first quarter of fiscal 2022.

    Income tax expense was $2.1 million for the first quarter of fiscal 2023 or 25% versus $0.2 million in the prior year’s first quarter due to the use of federal NOLs in fiscal 2022.

    Net income for the first quarter of fiscal 2023 was $6.3 million compared to net income of $2.6 million in the first quarter of fiscal 2022. Earnings per common share (diluted) were $0.45 in the first quarter of fiscal 2023 compared to $0.20 per common share (diluted) in the first quarter of fiscal 2022.

    Cash and investments at the end of the first quarter of fiscal 2023 were $35.6 million compared to $40.5 million at the end of fiscal 2022 and $36.4 million at the end of the first quarter of fiscal 2022. The Company continues to invest in inventory and working capital to support its growth initiatives and spent $1.4 million during the quarter on capital expenditures primarily related to its manufacturing business, facilities and IT system, versus $0.8 million during the first quarter of fiscal 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 November 23, 2022, to common stockholders of record as of November 4, 2022.

    CONFERENCE CALL INFORMATION

    On Thursday, October 6, 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 first quarter fiscal 2023 results.  A question-and-answer session will be included as part of the call’s agenda.
    Participant Instructions

    Participants may register for the call here. While not required, it is recommended you join 10 minutes prior to the event start.   A replay of the call will be available beginning at 1:00 p.m. Central Time on October 6, 2022, for seven days. 

    In addition, the webcast link is available here.

    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 1, 2022, 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 and green 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 
      August 27, 2022  May 28, 2022 
    Assets        
    Current assets:        
    Cash and cash equivalents $30,633  $35,495 
    Accounts receivable, less allowance of $192 and $186, respectively  32,568   29,878 
    Inventories, net  89,080   80,390 
    Prepaid expenses and other assets  3,557   2,448 
    Investments - current  5,000   5,000 
    Total current assets  160,838   153,211 
    Non-current assets:        
    Property, plant and equipment, net  17,643   16,961 
    Intangible assets, net  1,945   2,010 
    Lease ROU asset  2,788   3,239 
    Non-current deferred income taxes  4,372   4,398 
    Total non-current assets  26,748   26,608 
    Total assets $187,586  $179,819 
    Liabilities        
    Current liabilities:        
    Accounts payable $25,276  $23,987 
    Accrued liabilities  17,979   16,110 
    Lease liability current  1,076   1,109 
    Total current liabilities  44,331   41,206 
    Non-current liabilities:        
    Non-current deferred income tax liabilities  79   85 
    Lease liability non-current  1,713   1,915 
    Other non-current liabilities  799   766 
    Total non-current liabilities  2,591   2,766 
    Total liabilities  46,922   43,972 
    Stockholders’ Equity        
    Common stock, $0.05 par value; issued and outstanding 11,848 shares on
    August 27, 2022 and 11,649 shares on May 28, 2022    		  592   582 
    Class B common stock, convertible, $0.05 par value; issued and outstanding
    2,053 shares on August 27, 2022 and 2,053 shares on May 28, 2022    		  103   103 
    Preferred stock, $1.00 par value, no shares issued  —   — 
    Additional paid-in-capital  67,948   66,331 
    Retained earnings  73,536   68,031 
    Accumulated other comprehensive (loss) income  (1,515)  800 
    Total stockholders’ equity  140,664   135,847 
    Total liabilities and stockholders’ equity $187,586  $179,819 
             

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

      Three Months Ended 
      August 27, 2022  August 28, 2021 
    Net sales $67,557  $53,704 
    Cost of sales  44,530   37,407 
    Gross profit  23,027   16,297 
    Selling, general and administrative expenses  14,248   13,469 
    Operating income  8,779   2,828 
    Other expense:        
    Investment/interest income  (25)  (17)
    Foreign exchange loss  374   27 
    Other, net  (2)  16 
    Total other expense  347   26 
    Income before income taxes  8,432   2,802 
    Income tax provision  2,108   167 
    Net income  6,324   2,635 
    Foreign currency translation loss, net of tax  (2,315)  (1,002)
    Comprehensive income $4,009  $1,633 
             
    Net income per share:        
    Common shares - Basic $0.47  $0.20 
    Class B common shares - Basic  0.42   0.18 
    Common shares - Diluted  0.45   0.20 
    Class B common shares - Diluted  0.40   0.18 
             
    Weighted average number of shares:        
    Common shares – Basic  11,715   11,194 
    Class B common shares – Basic  2,053   2,097 
    Common shares – Diluted  12,331   11,467 
    Class B common shares – Diluted  2,053   2,097 
             
    Dividends per share:        
    Common share $0.060  $0.060 
    Class B common share  0.054   0.054 

    Richardson Electronics, Ltd. 
    Unaudited Consolidated Statements of Cash Flows
    (in thousands)

      Three Months Ended 
      August 27, 2022  August 28, 2021 
    Operating activities:        
    Net income $6,324  $2,635 
    Adjustments to reconcile net income to cash used in operating activities:        
    Depreciation and amortization  883   829 
    Inventory provisions  71   83 
    Share-based compensation expense  311   219 
    Deferred income taxes  1   35 
    Change in assets and liabilities:        
    Accounts receivable  (3,496)  (5,008)
    Inventories  (10,468)  (4,957)
    Prepaid expenses and other assets  (1,199)  (62)
    Accounts payable  1,495   607 
    Accrued liabilities  2,209   480 
    Other  638   266 
    Net cash used in operating activities  (3,231)  (4,873)
    Investing activities:        
    Capital expenditures  (1,442)  (837)
    Net cash used in investing activities  (1,442)  (837)
    Financing activities:        
    Proceeds from issuance of common stock  1,385   52 
    Cash dividends paid  (819)  (786)
    Other  (69)  (45)
    Net cash provided by (used in) financing activities  497   (779)
    Effect of exchange rate changes on cash and cash equivalents  (686)  (409)
    Decrease in cash and cash equivalents  (4,862)  (6,898)
    Cash and cash equivalents at beginning of period  35,495   43,316 
    Cash and cash equivalents at end of period $30,633  $36,418 
             

    Richardson Electronics, Ltd.
    Unaudited Net Sales and Gross Profit
    For the First Quarter of Fiscal 2023 and 2022
    ($ in thousands)

    By Strategic Business Unit:               
                     
    Net Sales                
      Q1 FY 2023      Q1 FY 2022  % Change 
    PMT $45,354      $40,435   12.2%
    GES  8,511       2,574   230.7%
    Canvys  10,413       8,441   23.4%
    Healthcare  3,279       2,254   45.5%
    Total $67,557      $53,704   25.8%
                     
    Gross Profit   
      Q1 FY 2023  % of Net Sales  Q1 FY 2022  % of Net Sales 
    PMT $15,535   34.3% $12,187   30.1%
    GES  3,022   35.5%  744   28.9%
    Canvys  3,266   31.4%  2,818   33.4%
    Healthcare  1,204   36.7%  548   24.3%
    Total $23,027   34.1% $16,297   30.3%
                     


    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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