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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

PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.
January 4, 2023 GMT

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,
2022
   November 27,
2021
   November 26,
2022
   November 27,
2021
 
Net 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,
2022
   November 27,
2021
   November 26,
2022
   November 27,
2021
 
Operating 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. RichardsonRobert J. Ben
Chairman and CEOEVP & 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