Richardson Electronics, Ltd. (NASDAQ: RELL) today reported net sales for the third quarter ended February 27, 2010, of $121.3 million, a 10.0% increase over net sales of $110.3 million for the third quarter of last year. Operating income in the third quarter was $5.7 million, compared to an operating loss of $9.7 million in the prior year’s third quarter. Net income for the third quarter was $4.5 million, or $0.25 per diluted common share, as compared with a net loss of $11.4 million, during the third quarter of last year.
“Our sales increase reflects growth in all three of our business units and suggests that the global economic conditions are improving. Higher sales, combined with the continued success of our cost reduction efforts, enabled us to reduce our operating expense ratio to 19.5%. In addition, focused management of working capital contributed to strong cash flow generated from operations of $16 million,” said Edward J. Richardson, Chairman, Chief Executive Officer and President of Richardson Electronics, Ltd.
FINANCIAL SUMMARY ─ THREE MONTHS ENDED FEBRUARY 27, 2010
- Net sales for the third quarter of fiscal 2010 were $121.3 million, up 10.0%, compared to net sales of $110.3 million during the prior year’s third quarter.
- Gross margin as a percent of net sales increased to 24.2% during the third quarter of fiscal 2010 compared to 21.5% during the third quarter of fiscal 2009.
- SG&A expenses decreased to $23.7 million, or 19.5% of net sales, during the third quarter of fiscal 2010, compared to $27.7 million, or 25.1% of net sales, during the prior year’s third quarter.
- Operating income during the third quarter of fiscal 2010 was $5.7 million, compared to an operating loss of $9.7 million during the third quarter of last year.
- Net income during the third quarter of fiscal 2010 was $4.5 million, or $0.25 per diluted common share, versus a net loss of $11.4 million during the prior year’s third quarter. The net loss for the third quarter of fiscal 2009 included $9.7 million of significant charges.
FINANCIAL SUMMARY ─ NINE MONTHS ENDED FEBRUARY 27, 2010
- Net sales for the first nine months of fiscal 2010 were $346.8 million, down 9.2%, compared to net sales of $381.8 million during the first nine months of fiscal 2009.
- Gross margin as a percent of net sales increased to 24.5% during the first nine months of fiscal 2010, compared to 23.5% during the first nine months of last year.
- SG&A expenses decreased to $70.3 million, or 20.3% of net sales, during the first nine months of fiscal 2010, compared to $84.1 million, or 22.0% of net sales, during the first nine months of fiscal 2009.
- Operating income during the first nine months of fiscal 2010 was $14.6 million, or 4.2% of net sales, compared to an operating loss of $0.3 million during the first nine months of last year.
- Income from continuing operations during the first nine months of fiscal 2010 was $10.7 million, or $0.60 per diluted common share, versus a loss from continuing operations of $1.8 million during the first nine months of fiscal 2009.
GENERATING STRONG OPERATING CASH FLOWS AND REDUCING DEBT
Cash flows provided by operating activities were $16.0 million during the third quarter of fiscal 2010, compared to cash used in operating activities of $2.0 million during the third quarter of last year. The Company’s cash position was $51.6 million at the end of the third quarter of fiscal 2010 compared to $32.6 million at the end of the prior year’s quarter.
Long term debt declined to $43.8 million at the end of the third quarter of fiscal 2010, compared to $52.4 million, as of the end of the third quarter last year.
On March 22, 2010, the Company redeemed $10.0 million of its 7¾% notes at par value. As a result, the long-term debt is currently $33.8 million.
“We generated $10.4 million of cash from our working capital management during the third quarter, compared to $2.6 million of cash generated during last year’s third quarter. With our improving operating performance and our disciplined working capital management, we are confident in our ability to generate free cash flow to further reduce our debt,” said Kathleen S. Dvorak, Executive Vice President and Chief Financial Officer.
OUTLOOK
“We are very pleased with our performance and are confident that we will end the year on a strong note. Sales for the fourth quarter are expected to be in the range of $130 million to $135 million, or 13% to 17% growth, compared to sales of $115 million during last year’s fourth quarter. Our sales growth, combined with strong expense management, will lead to further improvements in operating margin. We believe we are now well positioned to deliver solid financial performance over the long term,” concluded Mr. Richardson.
CASH DIVIDEND
The Company also announced today that its Board of Directors voted to declare a $0.02 cash dividend per share to all holders of common stock and a $0.018 cash dividend per share to all holders of Class B common stock. The dividend will be payable on May 21, 2010, to all common stockholders of record on May 7, 2010. The Company currently has 14,592,837 outstanding shares of common stock and 3,048,258 outstanding shares of Class B common stock.
CONFERENCE CALL INFORMATION
On Friday, April 9, 2010, at 9:00 a.m. CT, Edward J. Richardson, Chairman and Chief Executive Officer, and Kathleen S. Dvorak, Chief Financial Officer, will host a conference call to discuss the Company’s third quarter fiscal 2010 results. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 888-481-7939 and enter passcode 30406594 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:00 a.m. CT on April 9, 2010, for seven days. The telephone numbers for the replay are (USA) 888-286-8010 and (International) 617-801-6888; access code 38762696.
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 2009 Annual Report on Form 10-K. 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 global provider of engineered solutions and a global distributor of electronic components to the radio frequency (“RF”), wireless and power conversion, electron device, and display systems markets. Utilizing its core engineering and manufacturing capabilities, the Company’s strategy is to provide specialized technical expertise and value-add, or “engineered solutions.” The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, and logistics for end products of its customers. More information is available online at www.rell.com.
Richardson Electronics common stock trades on the NASDAQ Global Market under the ticker symbol RELL.
| Richardson Electronics, Ltd. | ||||||||||||||||||
| Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| February 27, | February 28, | February 27, | February 28, | |||||||||||||||
| Statements of Operations | 2010 | 2009 | 2010 | 2009 | ||||||||||||||
| Net sales | $ | 121,330 | $ | 110,316 | $ | 346,756 | $ | 381,814 | ||||||||||
| Cost of sales | 91,922 | 86,590 | 261,838 | 292,191 | ||||||||||||||
| Gross profit | 29,408 | 23,726 | 84,918 | 89,623 | ||||||||||||||
| Selling, general, and administrative expenses | 23,720 | 27,686 | 70,336 | 84,089 | ||||||||||||||
| Loss on disposal of assets | 9 | 5,778 | 7 | 5,856 | ||||||||||||||
| Operating income (loss) | 5,679 | (9,738 | ) | 14,575 | (322 | ) | ||||||||||||
| Other (income) expense: | ||||||||||||||||||
| Interest expense | 983 | 1,130 | 3,227 | 3,489 | ||||||||||||||
| Investment (income) loss | (19 | ) | 33 | (79 | ) | (337 | ) | |||||||||||
| Foreign exchange (gain) loss | (208 | ) | (153 | ) | 1,310 | (2,636 | ) | |||||||||||
| (Gain) loss on retirement of long-term debt | 127 | - | 127 | (849 | ) | |||||||||||||
| Other, net | 2 | 74 | (96 | ) | (92 | ) | ||||||||||||
| Total other (income) expense | 885 | 1,084 | 4,489 | (425 | ) | |||||||||||||
| Income (loss) from continuing operations before income taxes | 4,794 | (10,822 | ) | 10,086 | 103 | |||||||||||||
| Income tax provision (benefit) | 326 | 563 | (604 | ) | 1,861 | |||||||||||||
| Income (loss) from continuing operations | 4,468 | (11,385 | ) | 10,690 | (1,758 | ) | ||||||||||||
| Loss from discontinued operations | - | - | 1,173 | - | ||||||||||||||
| Net income (loss) | $ | 4,468 | $ | (11,385 | ) | $ | 9,517 | $ | (1,758 | ) | ||||||||
| Net income (loss) per common share – basic: | ||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.26 | $ | (0.65 | ) | $ | 0.61 | $ | (0.10 | ) | ||||||||
| Loss from discontinued operations | - | - | (0.07 | ) | - | |||||||||||||
| Net income (loss) per common share - basic | $ | 0.26 | $ | (0.65 | ) | $ | 0.54 | $ | (0.10 | ) | ||||||||
| Net income (loss) per Class B common share – basic: | ||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.23 | $ | (0.58 | ) | $ | 0.55 | $ | (0.09 | ) | ||||||||
| Loss from discontinued operations | - | - | (0.06 | ) | - | |||||||||||||
| Net income (loss) per Class B common share - basic | $ | 0.23 | $ | (0.58 | ) | $ | 0.49 | $ | (0.09 | ) | ||||||||
| Net income (loss) per common share – diluted: | ||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.25 | $ | (0.65 | ) | $ | 0.60 | $ | (0.10 | ) | ||||||||
| Loss from discontinued operations | - | - | (0.07 | ) | - | |||||||||||||
| Net income (loss) per common share – diluted | $ | 0.25 | $ | (0.65 | ) | $ | 0.53 | $ | (0.10 | ) | ||||||||
| Net income (loss) per Class B common share – diluted: | ||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.23 | $ | (0.58 | ) | $ | 0.55 | $ | (0.09 | ) | ||||||||
| Loss from discontinued operations | - | - | (0.06 | ) | - | |||||||||||||
| Net income (loss) per Class B common share – diluted | $ | 0.23 | $ | (0.58 | ) | $ | 0.49 | $ | (0.09 | ) | ||||||||
| Weighted average number of shares: | ||||||||||||||||||
| Common shares - basic | 14,718 | 14,858 | 14,814 | 14,856 | ||||||||||||||
| Class B common shares - basic | 3,048 | 3,048 | 3,048 | 3,048 | ||||||||||||||
| Common shares - diluted | 20,229 | 14,858 | 17,873 | 14,856 | ||||||||||||||
| Class B common shares - diluted | 3,048 | 3,048 | 3,048 | 3,048 | ||||||||||||||
| Dividends per common share | $ | 0.020 | $ | 0.020 | $ | 0.060 | $ | 0.060 | ||||||||||
| Dividends per Class B common share | $ | 0.018 | $ | 0.018 | $ | 0.054 | $ | 0.054 | ||||||||||
| Richardson Electronics, Ltd. | ||||||||||
| Unaudited Condensed Consolidated Balance Sheets | ||||||||||
| (in thousands, except per share amounts) | ||||||||||
February 27, | May 30, | |||||||||
| 2010 | 2009 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 51,561 | $ | 43,887 | ||||||
| Accounts receivable, less allowance of $1,908 and $2,396 | 93,121 | 92,449 | ||||||||
| Inventories | 79,526 | 81,165 | ||||||||
| Prepaid expenses | 6,639 | 5,245 | ||||||||
| Deferred income taxes | 2,459 | 2,591 | ||||||||
| Total current assets | 233,306 | 225,337 | ||||||||
| Non-current assets: | ||||||||||
| Property, plant and equipment, net | 16,992 | 19,371 | ||||||||
| Other intangible assets, net | 154 | 432 | ||||||||
| Non-current deferred income taxes | 3,445 | 3,385 | ||||||||
| Other non-current assets | 325 | 290 | ||||||||
| Total non-current assets | 20,916 | 23,478 | ||||||||
| Total assets | $ | 254,222 | $ | 248,815 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 60,001 | $ | 52,996 | ||||||
| Accrued liabilities | 18,689 | 18,371 | ||||||||
| Total current liabilities | 78,690 | 71,367 | ||||||||
| Non-current liabilities: | ||||||||||
| Long-term debt | 43,833 | 52,353 | ||||||||
| Long-term income tax liabilities | 3,474 | 5,016 | ||||||||
| Other non-current liabilities | 1,550 | 1,386 | ||||||||
| Total non-current liabilities | 48,857 | 58,755 | ||||||||
| Total liabilities | 127,547 | 130,122 | ||||||||
| Commitments and contingencies | - | - | ||||||||
| Stockholders’ equity | ||||||||||
| Common stock, $0.05 par value; issued 15,946 shares at | ||||||||||
| February 27, 2010, and 15,930 shares at May 30, 2009 | 798 | 797 | ||||||||
| Class B common stock, convertible, $0.05 par value; issued 3,048 | ||||||||||
| shares at February 27, 2010, and at May 30, 2009 | 152 | 152 | ||||||||
| Preferred stock, $1.00 par value, no shares issued | - | - | ||||||||
| Additional paid-in-capital | 120,273 | 120,370 | ||||||||
| Common stock in treasury, at cost, 1,354 shares at February 27, 2010, | ||||||||||
| and 1,065 shares at May 30, 2009 | (8,492 | ) | (6,310 | ) | ||||||
| Retained earnings (accumulated deficit) | 6,695 | (2,475 | ) | |||||||
| Accumulated other comprehensive income | 7,249 | 6,159 | ||||||||
| Total stockholders’ equity | 126,675 | 118,693 | ||||||||
| Total liabilities and stockholders’ equity | $ | 254,222 | $ | 248,815 | ||||||
Richardson Electronics, Ltd. | |||||||||||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | |||||||||||||||||||
| (in thousands) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| February 27, | February 28, | February 27, | February 28, | ||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
| Operating activities: | |||||||||||||||||||
| Net income (loss) | $ | 4,468 | $ | (11,385 | ) | $ | 9,517 | $ | (1,758 | ) | |||||||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | |||||||||||||||||||
| Depreciation and amortization | 945 | 1,103 | 3,124 | 3,462 | |||||||||||||||
| Discontinued operations | - | - | 1,173 | - | |||||||||||||||
| (Gain) loss on retirement of long-term debt | 127 | - | 127 | (849 | ) | ||||||||||||||
| Loss on disposal of assets | 9 | 5,778 | 7 | 5,856 | |||||||||||||||
| Stock compensation expense | 152 | 164 | 503 | 468 | |||||||||||||||
| Deferred income taxes | 35 | 319 | 119 | 259 | |||||||||||||||
| Accounts receivable | (1,389 | ) | 6,647 | (350 | ) | 8,719 | |||||||||||||
| Inventories | (3,959 | ) | 4,177 | 1,926 | (6,221 | ) | |||||||||||||
| Prepaid expenses | (189 | ) | 808 | (1,661 | ) | (414 | ) | ||||||||||||
| Accounts payable | 15,722 | (8,207 | ) | 6,991 | (2,800 | ) | |||||||||||||
| Accrued liabilities | (395 | ) | (1,505 | ) | 551 | (3,737 | ) | ||||||||||||
| Long-term income tax liabilities | (111 | ) | (246 | ) | (1,333 | ) | (991 | ) | |||||||||||
| Other | 564 | 332 | (16 | ) | (437 | ) | |||||||||||||
| Net cash provided by (used in) operating activities | 15,979 | (2,015 | ) | 20,678 | 1,557 | ||||||||||||||
| Investing activities: | |||||||||||||||||||
| Capital expenditures | (190 | ) | (389 | ) | (684 | ) | (887 | ) | |||||||||||
| Discontinued operations settlement | (1,000 | ) | - | (1,000 | ) | - | |||||||||||||
| Proceeds from sale of assets | 6 | 124 | 6 | 175 | |||||||||||||||
| Contingent purchase price | - | 165 | - | 26 | |||||||||||||||
| (Gain) loss on sale of investments | (3 | ) | 2 | (30 | ) | (8 | ) | ||||||||||||
| Proceeds from sales of available-for-sale securities | 29 | 25 | 132 | 124 | |||||||||||||||
| Purchases of available-for-sale securities | (29 | ) | (25 | ) | (132 | ) | (124 | ) | |||||||||||
| Net cash used in investing activities | (1,187 | ) | (98 | ) | (1,708 | ) | (694 | ) | |||||||||||
| Financing activities: | |||||||||||||||||||
| Proceeds from borrowings | - | 34,400 | 10,200 | 92,300 | |||||||||||||||
| Payments on debt | - | (34,400 | ) | (10,200 | ) | (92,300 | ) | ||||||||||||
| Retirement of long-term debt | (8,494 | ) | - | (8,494 | ) | (2,364 | ) | ||||||||||||
| Repurchase of common stock | (2,192 | ) | - | (2,192 | ) | - | |||||||||||||
| Proceeds from issuance of common stock | 100 | - | 105 | 5 | |||||||||||||||
| Cash dividends paid | (347 | ) | (353 | ) | (1,051 | ) | (1,057 | ) | |||||||||||
| Other | - | - | 10 | - | |||||||||||||||
| Net cash used in financing activities | (10,933 | ) | (353 | ) | (11,622 | ) | (3,416 | ) | |||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (2,255 | ) | (429 | ) | 326 | (4,904 | ) | ||||||||||||
| Increase (decrease) in cash and cash equivalents | 1,604 | (2,895 | ) | 7,674 | (7,457 | ) | |||||||||||||
| Cash and cash equivalents at beginning of period | 49,957 | 35,480 | 43,887 | 40,042 | |||||||||||||||
| Cash and cash equivalents at end of period | $ | 51,561 | $ | 32,585 | $ | 51,561 | $ | 32,585 | |||||||||||
| Richardson Electronics, Ltd. | |||||||||||||||||||||||||||
| Net Sales and Gross Profit | |||||||||||||||||||||||||||
| For Third Quarter and First Nine Months of Fiscal 2010 and 2009 | |||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||
| By Business Unit: | |||||||||||||||||||||||||||
| Net Sales | Gross Profit | ||||||||||||||||||||||||||
| % | % of | % of | |||||||||||||||||||||||||
| Third Quarter | FY 2010 | FY 2009 | Change | FY 2010 | Sales | FY 2009 | Sales | ||||||||||||||||||||
| RF, Wireless & Power Division | $ | 87,922 | $ | 80,565 | 9.1% | $ | 19,032 | 21.6% | $ | 17,786 | 22.1% | ||||||||||||||||
| Electron Device Group | 21,229 | 17,993 | 18.0% | 7,061 | 33.3% | 5,383 | 29.9% | ||||||||||||||||||||
| Canvys | 12,179 | 11,743 | 3.7% | 3,314 | 27.2% | 636 | 5.4% | ||||||||||||||||||||
| Corporate | - | 15 | 1 | (79 | ) | ||||||||||||||||||||||
| Total | $ | 121,330 | $ | 110,316 | 10.0% | $ | 29,408 | 24.2% | $ | 23,726 | 21.5% | ||||||||||||||||
| Net Sales | Gross Profit | ||||||||||||||||||||||||||
| % | % of | % of | |||||||||||||||||||||||||
| First Nine Months | FY 2010 | FY 2009 | Change | FY 2010 | Sales | FY 2009 | Sales | ||||||||||||||||||||
| RF, Wireless & Power Division | $ | 250,218 | $ | 270,882 | (7.6% | ) | $ | 54,575 | 21.8% | $ | 59,955 | 22.1% | |||||||||||||||
| Electron Device Group | 60,146 | 65,254 | (7.8% | ) | 20,694 | 34.4% | 20,823 | 31.9% | |||||||||||||||||||
| Canvys | 36,392 | 45,676 | (20.3% | ) | 9,649 | 26.5% | 9,122 | 20.0% | |||||||||||||||||||
| Corporate | - | 2 | - | (277 | ) | ||||||||||||||||||||||
| Total | $ | 346,756 | $ | 381,814 | (9.2% | ) | $ | 84,918 | 24.5% | $ | 89,623 | 23.5% | |||||||||||||||
Contacts:
Edward J. Richardson
Chairman
and CEO
Phone: (630) 208-2340
E-mail: info@rell.com
or
Kathleen
S. Dvorak
EVP & CFO
(630) 208-2208
