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Richardson Electronics Reports Second Quarter Fiscal 2023 Net Income of $5.5 Million or 8.4% of Net Sales; Declares Quarterly Cash Dividend
ソース: Nasdaq GlobeNewswire / 04 1 2023 16:15:00 America/New_York
Green Energy Solutions sales increase 150.3% over Q2 FY22; total net sales increase 22.1%
Second Quarter Highlights
- Net sales of $65.9 million were up 22.1% from last year’s second quarter driven by increases in Power and Microwave Technologies (“PMT”), Green Energy Solutions (“GES”) and Canvys business units.
- Backlog totaled $192.6 million in the second quarter versus $199.2 million at the end of the first quarter of fiscal 2023 and $146.9 million at the end of the second quarter of last fiscal year.
- Gross margin was 33.2% of net sales for the second quarter of fiscal 2023 versus 32.7% of net sales in the prior year’s second quarter representing strong sales and growth in engineered solutions within the PMT and GES business units.
- Operating income was $7.2 million in the second quarter of fiscal 2023 compared to $4.5 million for the second quarter of fiscal 2022.
- Income tax expense was $1.5 million for the second quarter of fiscal 2023 or 21.5% versus $0.6 million in the prior year’s second quarter due to the use of federal NOLs in fiscal 2022.
- Earnings per common share (diluted) were $0.39 for the second quarter of fiscal 2023 compared to $0.30 per common share (diluted) in the second quarter of fiscal 2022.
- Cash and investments were $31.1 million as of November 26, 2022 compared to $35.6 million on August 27, 2022, and $40.5 million as of May 28, 2022. The use of cash was related to higher working capital to support sales growth.
LAFOX, Ill., Jan. 04, 2023 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its second quarter ended November 26, 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 we continue to achieve because of our success capitalizing on new market opportunities, and positive demand trends underway tied to our key growth initiatives. The second quarter of fiscal 2023 was the ninth consecutive quarter of quarter of year-over-year revenue growth and positions us for another strong year of operating and financial performance for fiscal 2023,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “In the first quarter of fiscal 2023, we began reporting a new segment, Green Energy Solutions (“GES”). With rapidly increasing sales from green energy products and customers and over $192 million in total Company backlog, we believe sales and profits will continue to significantly increase in fiscal 2023.”
Second Quarter Results
Net sales for the second quarter of fiscal 2023 increased 22.1% to $65.9 million compared to net sales of $54.0 million in the prior year’s second quarter due to higher net sales in PMT, GES and Canvys, partially offset by slightly lower sales for Healthcare. PMT sales increased $3.8 million or 10.2% from last year’s second quarter. Sales of manufactured products for our semiconductor wafer fabrication equipment customers and distributed products for RF and Microwave applications increased from the second quarter of fiscal 2022. Net sales for GES increased $7.4 million or 150.3% from last year’s second quarter. GES combines our key technology partners and engineered solutions capabilities, to design and manufacture products for the fast-growing green energy market and power management applications. Canvys sales increased by $0.9 million or 10.2% primarily due to strong customer demand in North America. Richardson Healthcare sales decreased $0.2 million or 4.7% due to a decrease in parts sales, partially offset by increases in equipment and CT tube sales.
Gross margin was 33.2% of net sales during the second quarter of fiscal 2023 compared to 32.7% of net sales during the second quarter of fiscal 2022. PMT margin increased to 34.5% from 33.7% and GES margin increased to 33.9% from 32.3% primarily due to product mix. Canvys margin as a percent of net sales decreased to 29.7% from 31.8% because of product mix and foreign exchange effects. Healthcare gross margin was 23.2% in the second quarter of fiscal 2023 compared to 24.5% in the prior year’s second quarter due to product mix.
Operating expenses were $14.7 million compared to $13.1 million in the second quarter of fiscal 2022. The increase in operating expenses resulted from higher employee compensation expenses, including incentive expense from significantly higher operating income and higher travel expenses. Operating expenses as a percentage of net sales decreased to 22.3% during the second quarter of fiscal 2023 compared to 24.3% during the second quarter of fiscal 2022 as the Company benefits from higher sales and controlled operating expenses.
The Company reported operating income of $7.2 million for the second quarter of fiscal 2023 compared to operating income of $4.5 million in the prior year’s second quarter. Other expenses for the second quarter of fiscal 2023, including interest income and foreign exchange, were $0.1 million, compared to other income of $0.2 million in the second quarter of fiscal 2022.
Income tax expense was $1.5 million for the second quarter of fiscal 2023 or 21.5% versus $0.6 million in the prior year’s second quarter due to the use of federal NOLs in fiscal 2022.
Net income for the second quarter of fiscal 2023 was $5.5 million compared to net income of $4.1 million in the second quarter of fiscal 2022. Earnings per common share (diluted) were $0.39 in the second quarter of fiscal 2023 compared to $0.30 per common share (diluted) in the second quarter of fiscal 2022.
Cash and investments at the end of the second quarter of fiscal 2023 were $31.1 million compared to $35.6 million at the end of the first quarter of fiscal 2023 and $40.5 million at the end of fiscal 2022. The Company continues to invest in inventory and working capital to support its growth initiatives and invested $1.3 million during the quarter on capital expenditures primarily related to its manufacturing business, facilities, and IT system, versus $0.8 million during the second quarter of fiscal 2022.
FINANCIAL SUMMARY – SIX MONTHS ENDED NOVEMBER 26, 2022
- Net sales for the first six months of fiscal 2023 were $133.5 million, an increase of 23.9%, compared to net sales of $107.7 million during the first six months of fiscal 2022. Sales increased by $8.7 million or 11.2% for PMT, $13.3 million or 177.9% for GES, $2.9 million or 16.5% for Canvys and $0.9 million or 16.5% for Richardson Healthcare.
- Gross profit increased to $44.9 million during the first six months of fiscal 2023, compared to $34.0 million during the first six months of fiscal 2022. As a percentage of net sales, gross margin increased to 33.6% of net sales during the first six months of fiscal 2023, compared to 31.5% of net sales during the first six months of fiscal 2022, primarily because of a favorable product mix in PMT and GES, decreased component scrap expense and improved manufacturing absorption in Healthcare, partially offset by an unfavorable product mix and foreign currency effects in Canvys.
- Operating expenses increased to $28.9 million for the first six months of fiscal 2023, compared to $26.6 million for the first six months of fiscal 2022. The increase in operating expenses resulted from higher employee compensation and travel expenses.
- Operating income during the first six months of fiscal 2023 was $16.0 million, compared to an operating income of $7.3 million during the first six months of fiscal 2022.
- Other expense for the first six months of fiscal 2023, including interest income and foreign exchange, was $0.5 million, as compared to other income of $0.1 million in the first six months of fiscal 2022.
- The income tax provision was $3.6 million during the first six months of fiscal 2023 or 23.4% versus $0.7 million in the prior year’s first six months due to the use of federal NOLs in fiscal 2022.
- Net income for the first six months of fiscal 2023 was $11.9 million, versus $6.8 million during the first six months of fiscal 2022. Earnings per common share (diluted) were $0.83 for the first six months of fiscal 2023 compared to $0.50 per common share (diluted) for the first six months 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 February 22, 2023, to common stockholders of record as of February 3, 2023.
CONFERENCE CALL INFORMATION
On Thursday, January 5, 2023, 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 second 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 January 5, 2023, for seven days. Registration instructions are also on our website at www.rell.com.
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 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 November 26, 2022 May 28, 2022 Assets Current assets: Cash and cash equivalents $ 26,106 $ 35,495 Accounts receivable, less allowance of $178 and $186, respectively 34,880 29,878 Inventories, net 97,434 80,390 Prepaid expenses and other assets 2,521 2,448 Investments - current 5,000 5,000 Total current assets 165,941 153,211 Non-current assets: Property, plant and equipment, net 17,964 16,961 Intangible assets, net 2,025 2,010 Lease ROU asset 2,527 3,239 Other non-current assets 302 — Non-current deferred income taxes 4,342 4,398 Total non-current assets 27,160 26,608 Total assets $ 193,101 $ 179,819 Liabilities Current liabilities: Accounts payable $ 24,603 $ 23,987 Accrued liabilities 17,074 16,110 Lease liability current 1,015 1,109 Total current liabilities 42,692 41,206 Non-current liabilities: Non-current deferred income tax liabilities 83 85 Lease liability non-current 1,512 1,915 Other non-current liabilities 726 766 Total non-current liabilities 2,321 2,766 Total liabilities 45,013 43,972 Stockholders’ Equity Common stock, $0.05 par value; issued and outstanding 12,022 shares on November 26, 2022 and 11,649 shares on May 28, 2022 601 582 Class B common stock, convertible, $0.05 par value; issued and outstanding 2,052 shares on November 26, 2022 and 2,053 shares on May 28, 2022 103 103 Preferred stock, $1.00 par value, no shares issued — — Additional paid-in-capital 69,669 66,331 Retained earnings 78,254 68,031 Accumulated other comprehensive (loss) income (539 ) 800 Total stockholders’ equity 148,088 135,847 Total liabilities and stockholders’ equity $ 193,101 $ 179,819 Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)Three Months Ended Six Months Ended November 26,
2022November 27,
2021November 26,
2022November 27,
2021Net sales $ 65,905 $ 53,979 $ 133,462 $ 107,683 Cost of sales 44,054 36,322 88,584 73,729 Gross profit 21,851 17,657 44,878 33,954 Selling, general and administrative expenses 14,677 13,135 28,925 26,604 (Gain) loss on disposal of assets (25 ) 2 (25 ) 2 Operating income 7,199 4,520 15,978 7,348 Other expense (income): Investment/interest income (78 ) (8 ) (103 ) (25 ) Foreign exchange loss 223 (150 ) 597 (123 ) Other, net (13 ) 6 (15 ) 22 Total other expense (income) 132 (152 ) 479 (126 ) Income before income taxes 7,067 4,672 15,499 7,474 Income tax provision 1,518 550 3,626 717 Net income 5,549 4,122 11,873 6,757 Foreign currency translation gain (loss), net of tax 976 (1,420 ) (1,339 ) (2,422 ) Comprehensive income $ 6,525 $ 2,702 $ 10,534 $ 4,335 Net income per share: Common shares - Basic $ 0.40 $ 0.31 $ 0.87 $ 0.52 Class B common shares - Basic 0.36 0.28 0.78 0.46 Common shares - Diluted 0.39 0.30 0.83 0.50 Class B common shares - Diluted 0.35 0.27 0.75 0.45 Weighted average number of shares: Common shares – Basic 11,918 11,270 11,816 11,232 Class B common shares – Basic 2,053 2,097 2,053 2,097 Common shares – Diluted 12,535 11,697 12,442 11,568 Class B common shares – Diluted 2,053 2,097 2,053 2,097 Dividends per share: Common share $ 0.060 $ 0.060 $ 0.120 $ 0.120 Class B common share 0.054 0.054 0.108 0.108 Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Cash Flows
(in thousands)Three Months Ended Six Months Ended November 26,
2022November 27,
2021November 26,
2022November 27,
2021Operating activities: Net income $ 5,549 $ 4,122 $ 11,873 $ 6,757 Adjustments to reconcile net income to cash (used in) provided by operating activities: Depreciation and amortization 893 859 1,776 1,688 Inventory provisions 124 57 195 140 Share-based compensation expense 213 153 524 372 (Gain) loss on disposal of assets (25 ) 2 (25 ) 2 Deferred income taxes 27 (23 ) 28 12 Change in assets and liabilities: Accounts receivable (2,009 ) 1,862 (5,505 ) (3,146 ) Inventories (7,658 ) (4,225 ) (18,126 ) (9,182 ) Prepaid expenses and other assets 774 (994 ) (425 ) (1,056 ) Accounts payable (699 ) 1,695 796 2,302 Accrued liabilities (1,062 ) 1,032 1,147 1,512 Other (49 ) 91 589 357 Net cash (used in) provided by operating activities (3,922 ) 4,631 (7,153 ) (242 ) Investing activities: Capital expenditures (1,301 ) (770 ) (2,743 ) (1,607 ) Proceeds from sale of assets 193 — 193 — Net cash used in investing activities (1,108 ) (770 ) (2,550 ) (1,607 ) Financing activities: Proceeds from issuance of common stock 1,517 672 2,902 724 Cash dividends paid (831 ) (792 ) (1,650 ) (1,578 ) Other — (46 ) (69 ) (91 ) Net cash provided by (used in) financing activities 686 (166 ) 1,183 (945 ) Effect of exchange rate changes on cash and cash equivalents (183 ) (448 ) (869 ) (857 ) (Decrease) increase in cash and cash equivalents (4,527 ) 3,247 (9,389 ) (3,651 ) Cash and cash equivalents at beginning of period 30,633 36,418 35,495 43,316 Cash and cash equivalents at end of period $ 26,106 $ 39,665 $ 26,106 $ 39,665 Richardson Electronics, Ltd.
Unaudited Net Sales and Gross Profit
For the Second Quarter and First Six Months of Fiscal 2023 and 2022
($ in thousands)By Strategic Business Unit: Net Sales Q2 FY 2023 Q2 FY 2022 % Change PMT $ 40,585 $ 36,826 10.2 % GES 12,293 4,911 150.3 % Canvys 10,079 9,150 10.2 % Healthcare 2,948 3,092 -4.7 % Total $ 65,905 $ 53,979 22.1 % YTD FY 2023 YTD FY 2022 % Change PMT $ 85,939 $ 77,261 11.2 % GES 20,804 7,485 177.9 % Canvys 20,492 17,591 16.5 % Healthcare 6,227 5,346 16.5 % Total $ 133,462 $ 107,683 23.9 % Gross Profit Q2 FY 2023 % of Net Sales Q2 FY 2022 % of Net Sales PMT $ 14,011 34.5 % $ 12,399 33.7 % GES 4,162 33.9 % 1,587 32.3 % Canvys 2,995 29.7 % 2,912 31.8 % Healthcare 683 23.2 % 759 24.5 % Total $ 21,851 33.2 % $ 17,657 32.7 % YTD FY 2023 % of Net Sales YTD FY 2022 % of Net Sales PMT $ 29,546 34.4 % $ 24,586 31.8 % GES 7,184 34.5 % 2,331 31.1 % Canvys 6,261 30.6 % 5,730 32.6 % Healthcare 1,887 30.3 % 1,307 24.4 % Total $ 44,878 33.6 % $ 33,954 31.5 % For Details Contact: Edward J. Richardson Robert J. Ben Chairman and CEO EVP & CFO Phone: (630) 208-2320 (630) 208-2203 40W267 Keslinger Road PO BOX 393 LaFox, IL 60147-0393 USA (630) 208-2200 | Fax: (630) 208-2550