Richardson Electronics Reports Second Quarter Fiscal 2020 Results and Declares Quarterly Cash Dividend

Q2 FY20 Highlights

  • Net sales of $39.6 million were down 4.1% from last year’s second quarter, primarily from economic softness in the PMT power grid tube business and a slow ramp up in sales in the semiconductor wafer fab equipment business. In addition, Healthcare sales were down overall due to soft equipment sales in Latin America.
  • These declines were partially offset by significantly increased sales for our PMG products. Also, Canvys sales increased by 20.9% and Healthcare CT tube sales were up by 11.9%.
  • Gross margin increased to 32.0% of net sales versus 31.4% of net sales for the prior year’s second quarter.
  • Operating expenses decreased $0.2 million to $13.2 million compared to prior year.
  • Operating loss was $0.5 million, same as last year’s second quarter.
  • Cash and investments were $46.1 million at November 30, 2019 versus $46.5 million at the end of the first quarter of this fiscal year.

LAFOX, Ill., Jan. 08, 2020 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its second quarter ended November 30, 2019.  The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend. 

Second Quarter Results

Net sales for the second quarter of fiscal 2020 decreased 4.1% to $39.6 million compared to net sales of $41.3 million in the prior year’s second quarter. Canvys sales increased by $1.4 million or 20.9% due to higher demand in both its North American and European markets. Although PMT sales benefited from much higher sales of power conversion and RF and microwave components, overall sales for PMT decreased $2.7 million or 8.4%. This was primarily due to a soft market for power grid tubes with OEM customers and the quarter over quarter decline in sales to the semiconductor wafer fabrication equipment market. Sales in the semiconductor wafer fab market are starting to improve but were held in check due to our suppliers’ inability to deliver critical parts. Richardson Healthcare sales decreased $0.3 million or 12.6% as a result of lower sales of equipment in Latin America, partially offset by higher sales of our ALTA750 TM CT tube.

Gross margin decreased to $12.7 million, or 32.0% of net sales during the second quarter of fiscal 2020, compared to $13.0 million, or 31.4% of net sales during the second quarter of fiscal 2019.  Margin increased as a percent of net sales primarily due to a favorable product mix in Richardson Healthcare and significantly improved manufacturing overhead absorption in both PMT and Richardson Healthcare.

Operating expenses were $13.2 million for the second quarter of fiscal 2020 compared to $13.4 million in the second quarter of fiscal 2019.  The decrease in operating expenses resulted from lower severance and legal expenses, partially offset by higher research and development expenses for Richardson Healthcare.  

As a result, the Company reported an operating loss of $0.5 million for the second quarter of fiscal 2020, the same as in the prior year’s second quarter. Other expense for the second quarter of fiscal 2020, including interest income and foreign exchange, was $0.1 million, compared to other income of $0.3 million in the second quarter of fiscal 2019.

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

Net loss for the second quarter of fiscal 2020 was $0.6 million compared to a net loss of $0.3 million in the second quarter of fiscal 2019.  

“We are pleased to see growth resulting from the investments we are making in our healthcare, power and microwave technologies, and display businesses,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “We will continue to closely manage operating expenses and cash flow in line with revenue trends to ensure we maximize efficiency,” he concluded.

FINANCIAL SUMMARY – SIX MONTHS ENDED NOVEMBER 30, 2019

  • Net sales for the first six months of fiscal 2020 were $80.3 million, a decrease of 6.1%, compared to net sales of $85.5 million during the first six months of fiscal 2019. Sales decreased by $6.9 million or 10.3% for PMT, but increased by $1.5 million or 10.7% for Canvys and $0.3 million or 6.0% for Richardson Healthcare.
  • Gross margin decreased to $25.6 million during the first six months of fiscal 2020, compared to $26.9 million during the first six months of fiscal 2019. As a percentage of net sales, gross margin increased to 31.9% of net sales during the first six months of fiscal 2020, compared to 31.5% of net sales during the first six months of fiscal 2019, primarily as a result of a favorable product mix and manufacturing overhead absorption for Healthcare.
  • Operating expenses decreased to $26.0 million for the first six months of fiscal 2020, compared to $26.5 million for the first six months of fiscal 2019. The decrease was due to lower severance, legal and IT expenses.
  • Operating loss during the first six months of fiscal 2020 was $0.4 million, compared to an operating income of $0.4 million during the first six months of fiscal 2019.
  • Other income for the first six months of fiscal 2020, including interest income and foreign exchange, was $0.2 million, the same as in the first six months of fiscal 2019.
  • The income tax provision of $0.3 million during the first six months of fiscal 2020 reflected a provision for foreign income taxes, which was lower than in the prior year’s first six months and no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.
  • Net loss for the first six months of fiscal 2020 was $0.5 million, compared to a net income of $0.1 million during the first six months of fiscal 2019.

CASH DIVIDEND

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 February 27, 2020, to common stockholders of record as of February 6, 2020.

Cash and investments at the end of the second quarter of fiscal 2020 were $46.1 million compared to $46.5 million at the end of the first quarter of fiscal 2020 and $53.2 million at the end of the second quarter of fiscal 2019.  The Company spent $0.5 million during the quarter on capital expenditures primarily related to our IT System and Healthcare and LaFox manufacturing businesses versus $1.1 million during the second quarter of fiscal 2019.  During the second quarter of fiscal 2020, the Company did not repurchase any shares of its common stock.  Currently, there are 11.0 million outstanding shares of common stock and 2.1 million outstanding shares of Class B common stock.

CONFERENCE CALL INFORMATION

On Thursday, January 9, 2020, at 9:00 a.m. CST, 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 year 2020 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) (888) 339-2688 or (International) (617) 847-3007 and enter passcode 49060851 approximately five minutes prior to the start of the call.  A replay of the call will be available beginning at 10:00 a.m. CST on January 10, 2020, for seven days.  The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 51370493.

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 5, 2019.  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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