Richardson Electronics Reports Third Quarter Fiscal 2016 Results and Declares Quarterly Cash Dividend

CONFERENCE CALL INFORMATION

On Thursday, April 7, 2016, at 9:00 a.m. CT, 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 third quarter results for fiscal 2016. A question and answer session will be included as part of the call's agenda. To listen to the call, please dial (888) 339-2688 and enter passcode 92903258 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 12:00 a.m. CT on April 8, 2016, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 88120014.

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 July 28, 2015. 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 provider of engineered solutions, power grid and microwave tubes and related consumables; power conversion and RF and microwave components; high value displays, flat panel detector solutions and replacement parts for diagnostic imaging equipment; and customized display solutions. We serve customers in the alternative 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 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
February 27, May 30,
2016 2015
Assets
Current assets:
Cash and cash equivalents $ 60,205 $ 74,535
Accounts receivable, less allowance of $362 and $283 20,881 20,753
Inventories, net 45,533 38,769
Prepaid expenses and other assets 2,143 1,696
Deferred income taxes 792 804
Income tax receivable 78 929
Investments - current   3,537   23,692
Total current assets   133,169   161,178
Non-current assets:
Property, plant and equipment, net 11,624 10,081
Goodwill 6,332
Intangible assets, net 3,897 743
Non-current deferred income taxes 1,198 1,443
Investments - non-current   7,772   11,549
Total non-current assets   30,823   23,816
Total assets $ 163,992 $ 184,994
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable 12,732 15,768
Accrued liabilities   8,053   10,144
Total current liabilities   20,785   25,912
Non-current liabilities:
Non-current deferred income tax liabilities 1,170 1,209
Other non-current liabilities   831   1,221
Total non-current liabilities   2,001   2,430
Total liabilities   22,786   28,342
Stockholders’ equity
Common stock, $0.05 par value; issued 10,703 shares at February 27, 2016, and 11,530 shares at May 30, 2015 535 577
Class B common stock, convertible, $0.05 par value; issued and outstanding 2,141 shares at February 27, 2016, and at May 30, 2015 107 107
Preferred stock, $1.00 par value, no shares issued
Additional paid-in-capital 58,775 63,252
Common stock in treasury, at cost, no shares at February 27, 2016, and at May 30, 2015
Retained earnings 80,205 89,141
Accumulated other comprehensive income   1,584   3,575
Total stockholders’ equity   141,206   156,652
Total liabilities and stockholders’ equity $ 163,992 $ 184,994
 
 
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Loss
(in thousands, except per share amounts)
               
Three Months Ended Nine Months Ended
February 27, February 28, February 27, February 28,
2016 2015 2016 2015
Statements of Comprehensive Loss
Net sales $ 31,291 $ 33,471 $ 102,448 $ 102,011
Cost of sales   21,541     23,671     71,001     71,091  
Gross profit 9,750 9,800 31,447 30,920
Selling, general, and administrative expenses 12,471 12,563 37,938 36,366
Gain on disposal of assets       (14 )   (244 )   (5 )
Operating loss   (2,721 )   (2,749 )   (6,247 )   (5,441 )
Other (income) expense:
Investment/interest income (131 ) (239 ) (433 ) (744 )
Foreign exchange (gain) loss 265 (275 ) 108 (285 )
Other, net   (40 )   (6 )   (53 )   (22 )
Total other (income) expense   94     (520 )   (378 )   (1,051 )
Loss from continuing operations before income taxes (2,815 ) (2,229 ) (5,869 ) (4,390 )
Income tax provision (benefit)   111     (31 )   742     (965 )
Loss from continuing operations (2,926 ) (2,198 ) (6,611 ) (3,425 )
Income from discontinued operations, net of tax               87  
Net loss   (2,926 )   (2,198 )   (6,611 )   (3,338 )
Foreign currency translation gain (loss), net of tax 240 (2,188 ) (1,912 ) (6,149 )
Fair value adjustments on investments gain (loss)   (47 )   5     (79 )   30  
Comprehensive loss $ (2,733 ) $ (4,381 ) $ (8,602 ) $ (9,457 )

Net income (loss) per Common share - Basic:

Loss from continuing operations $ (0.23 ) $ (0.16 ) $ (0.51 ) $ (0.25 )
Income from discontinued operations               0.01  
Total loss per Common share - Basic: $ (0.23 ) $ (0.16 ) $ (0.51 ) $ (0.24 )

Net income (loss) per Class B common share - Basic:

Loss from continuing operations $ (0.21 ) $ (0.15 ) $ (0.46 ) $ (0.22 )
Income from discontinued operations               0.01  
Total loss per Class B common share - Basic: $ (0.21 ) $ (0.15 ) $ (0.46 ) $ (0.21 )

Net income (loss) per Common share - Diluted:

Loss from continuing operations $ (0.23 ) $ (0.16 ) $ (0.51 ) $ (0.25 )
Income from discontinued operations               0.01  
Total loss per Common share - Diluted: $ (0.23 ) $ (0.16 ) $ (0.51 ) $ (0.24 )

Net income (loss) per Class B common share - Diluted:

Loss from continuing operations $ (0.21 ) $ (0.15 ) $ (0.46 ) $ (0.22 )
Income from discontinued operations               0.01  
Total loss per Class B common share - Diluted: $ (0.21 ) $ (0.15 ) $ (0.46 ) $ (0.21 )
Weighted average number of shares:
Common shares - Basic   10,701     11,604     10,976     11,733  
Class B common shares - Basic   2,141     2,141     2,141     2,154  
Common shares - Diluted   12,842     13,745     13,117     13,887  
Class B common shares - Diluted   2,141     2,141     2,141     2,154  
Dividends per common share $ 0.060   $ 0.060   $ 0.180   $ 0.180  
Dividends per Class B common share $ 0.054   $ 0.054   $ 0.162   $ 0.162  
 
 
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
                 
Three Months Ended Nine Months Ended
February 27, February 28, February 27, February 28,
2016 2015 2016 2015
Operating activities:
Net loss $ (2,926 ) $ (2,198 ) $ (6,611 ) $ (3,338 )
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization 583 418 1,865 1,227
Loss (gain) on sale of investments 21 (6 ) 2 (15 )
Gain on disposal of assets (4 ) (244 ) (30 )
Share-based compensation expense 119 143 434 529
Deferred income taxes (82 ) (498 ) 173 (665 )
Change in assets and liabilities, net of effect of acquired business:
Accounts receivable 282 (2,361 ) 311 (2,655 )
Income tax receivable 187 851 2,888
Inventories, net (2,164 ) (105 ) (5,636 ) (4,366 )
Prepaid expenses and other assets 1 176 (443 ) (727 )
Accounts payable (986 ) (1,878 ) (2,976 ) (389 )
Accrued liabilities (871 ) 632 (2,071 ) (469 )
Long-term liabilities-accrued pension (465 )
Other   125     (25 )   256     (32 )
Net cash used in operating activities   (5,711 )   (5,706 )   (14,554 )   (8,042 )
Investing activities:
Cash consideration paid for acquired business (12,209 )
Capital expenditures (1,267 ) (1,314 ) (3,043 ) (3,250 )
Proceeds from sales of assets 402
Proceeds from maturity of investments 750 25,584 31,957
Purchases of investments (750 ) (2,151 ) (34,093 )
Proceeds from sales of available-for-sale securities 106 112 250 186
Purchases of available-for-sale securities (106 ) (112 ) (250 ) (186 )
Other   (49 )   (98 )   (17 )   (128 )
Net cash provided by (used in) investing activities   (1,316 )   (1,412 )   8,566     (5,514 )
Financing activities:
Repurchase of common stock (1,305 ) (5,015 ) (3,945 )
Proceeds from issuance of common stock 21 13 142 301
Cash dividends paid (758 ) (808 ) (2,321 ) (2,453 )
Other       2     (4 )    
Net cash used in financing activities   (737 )   (2,098 )   (7,198 )   (6,097 )
Effect of exchange rate changes on cash and cash equivalents   106     (2,272 )   (1,144 )   (4,701 )
Decrease in cash and cash equivalents (7,658 ) (11,488 ) (14,330 ) (24,354 )
Cash and cash equivalents at beginning of period   67,863     89,886     74,535     102,752  
Cash and cash equivalents at end of period $ 60,205   $ 78,398   $ 60,205   $ 78,398  
 
 
Richardson Electronics, Ltd.
Consolidated Balance Sheets
For the Third Quarter and First Nine Months of Fiscal 2016 and Fiscal 2015
(in thousands)
                       
By Strategic Business Unit:
 
Q3 Q3

Net Sales

FY 2016 FY 2015     % Change
PMT $ 23,008 $ 25,207 -8.7 %
Canvys 5,190 6,236 -16.8 %
Healthcare   3,093   2,028 52.5 %
Total $ 31,291 $ 33,471 -6.5 %
 
YTD YTD
FY 2016 FY 2015     % Change
PMT $ 75,365 $ 79,432 -5.1 %
Canvys 17,773 18,110 -1.9 %
Healthcare   9,310   4,469 108.3 %
Total $ 102,448 $ 102,011 0.4 %
 
 
Q3 Q3

Gross Profit

FY 2016     % of Net Sales     FY 2015     % of Net Sales
PMT $ 7,140 31.0 % $ 7,680 30.5 %
Canvys 1,204 23.2 % 1,621 26.0 %
Healthcare   1,406 45.5 %   499 24.6 %
Total $ 9,750 31.2 % $ 9,800 29.3 %
 
YTD YTD
FY 2016     % of Net Sales     FY 2015     % of Net Sales
PMT $ 22,793 30.2 % $ 24,904 31.4 %
Canvys 4,439 25.0 % 4,929 27.2 %
Healthcare   4,215 45.3 %   1,087 24.3 %
Total $ 31,447 30.7 % $ 30,920 30.3 %




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