LAFOX, Ill., July 25, 2018 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ:RELL) today reported financial results for its fourth quarter and fiscal year ended June 2, 2018. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.
Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2018 increased 21.8% to $45.5 million compared to net sales of $37.4 million in the prior year’s fourth quarter. Sales increased $8.4 million for PMT and $1.0 million for Canvys. PMT sales were higher in power conversion and RF and microwave components, industrial power grid tubes and specialty products sold into the semiconductor wafer fabrication capital equipment market. Sales increased for Canvys due to new program wins and higher overall demand across both the U.S. and Europe. Sales decreased for Richardson Healthcare by $1.3 million due to the sale of the PACS Display business at the end of fiscal 2017 and lower sales of pre-owned CT Tubes. However, at the end of the quarter, the Healthcare group released its first CT Tube, making Richardson Electronics one of a small group of global companies with the design and manufacturing capabilities necessary to successfully produce CT Tubes. This capability is the cornerstone for expanding the Company’s presence in the healthcare market.
Gross margin increased to $15.5 million, or 34.1% of net sales during the fourth quarter of fiscal 2018, compared to $12.0 million, or 32.1% of net sales during the fourth quarter of fiscal 2017. Margin increased as a percent of net sales primarily due to an improved product mix in both PMT and Canvys. Richardson Healthcare margin as a percent of net sales also increased primarily due to the sale of its lower margin PACS Display business.
Operating expenses increased to $13.7 million for the fourth quarter of fiscal 2018, compared to $12.2 million for the fourth quarter of fiscal 2017. This increase was a result of additional compensation and other expenses primarily related to the increase in net sales as well as higher research and development and other expenses for Richardson Healthcare. Operating expenses as a percent of net sales decreased to 30.1% in the current quarter from 32.5% last year.
Including a small gain on disposal of assets, the Company reported $1.9 million of operating income for the fourth quarter of fiscal 2018 compared to operating income of $39,000 in the prior year’s fourth quarter.
Other income for the fourth quarter of fiscal 2018, primarily foreign exchange, was $0.3 million, compared to other expense of $0.2 million for the fourth quarter of fiscal 2017.
The income tax provision of $0.5 million for the fourth quarter of fiscal 2018 reflected a provision for foreign income taxes based on the current quarter’s geographical distribution of income and adjustments from foreign income tax returns recently filed.
Net income for the fourth quarter of fiscal 2018 was $1.7 million, compared to a net loss of $0.1 million in the fourth quarter of 2017.
Fiscal 2018 Results
Net sales for fiscal 2018 were $163.2 million, an increase of 19.2%, compared to net sales of $136.9 million for fiscal 2017. Sales increased by $24.1 million for PMT and $6.1 million for Canvys. These increases were partially offset by a $3.9 million decrease for Richardson Healthcare, which was due to the divestiture of the PACS Display business at the end of fiscal 2017.
Gross profit increased to $55.1 million, compared to $43.9 million for fiscal 2017. As a percentage of net sales, gross margin increased to 33.7% of net sales during fiscal 2018, compared to 32.1% of net sales of fiscal 2017, mostly a result of an improved product mix.
Operating expenses increased to $51.7 million for fiscal 2018, compared to $49.9 million for fiscal 2017, which included $1.3 million in severance expense associated with the reduction in work force during the second quarter of fiscal 2017. The increase was due to additional compensation and other expenses mostly related to the higher net sales in PMT and Canvys as well as increased research and development and other expenses for Richardson Healthcare.
In addition, during fiscal 2018, we recorded a $0.3 million total gain on the sale of our building in Florence, Italy and the disposal of old assets in LaFox. Operating income for fiscal 2018 was $3.6 million, compared to an operating loss of $5.8 million for fiscal 2017.
Other income for fiscal 2018, including foreign exchange and investment income, was $0.2 million, compared to other expense of $0.4 million for fiscal 2017.
The income tax provision of $1.5 million during fiscal 2018 reflected a provision for foreign income taxes, additional tax due from an audit in Germany and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss. During the third quarter of fiscal 2018, the company calculated its estimated tax liability as a result of the recently enacted Tax Cut and Jobs Act. The $11.2 million liability was entirely offset by newly generated foreign tax credits and foreign tax credit carryforwards. In addition, the company wrote down $1.6 million of its net operating loss carryforwards and other deferred tax assets against the valuation allowance due to the reduction in the federal tax rate.
Income from continuing operations for fiscal 2018 was $2.3 million, compared to a loss from continuing operations of $6.9 million in 2017. In addition, during the second quarter of fiscal 2018, the Company received an income tax refund from the State of Illinois, inclusive of interest and net of professional fees, of $1.5 million. This refund was a result of the conclusion of the Illinois amended return related to the sale of RFPD in 2011 and was therefore, classified as income from discontinued operations.
Net income for fiscal 2018 was $3.8 million, compared to a net loss of $6.9 million for fiscal 2017.
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 August 23, 2018, to common stockholders of record on August 7, 2018.
Cash and investments at the end of fiscal 2018 were $60.5 million compared to $60.1 million at the end of the third quarter of fiscal 2018 and $64.2 million at the end of fiscal 2017. During the fourth quarter of fiscal 2018, the Company did not repurchase any shares of its common stock under the existing share repurchase authorization. Since the sale of RFPD, the Company has spent $65.6 million on share repurchases, nearly $20.0 million on acquisitions, approximately $23.3 million on dividends and $9.2 million on purchases of Richardson Healthcare equipment. Currently, there are 10.8 million outstanding shares of common stock and 2.1 million outstanding shares of Class B common stock.
“I am pleased to report an operating income of $1.9 million for the fourth quarter of fiscal 2018 as compared to a $39,000 operating income in the fourth quarter of fiscal 2017,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “Consolidated net sales grew by nearly 22% in the fourth quarter of fiscal 2018 along with a significant improvement in gross margin, which was driven by a favorable global economy and the success of our growth initiatives. All three of our strategic business units did well in fiscal 2018. We are particularly excited about the recent introduction of our new ALTA750™ CT Tube and plan to aggressively market it worldwide,” Mr. Richardson concluded.
CONFERENCE CALL INFORMATION
On Thursday, July 26, 2018, 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 fourth quarter and fiscal year 2018 results. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial (888) 419-5570 and enter passcode 21359665 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 12:00 a.m. CDT on July 27, 2018, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 50687569.