Richardson Electronics Reports Third Quarter Fiscal 2012 Results And Declares Cash Dividend

Richardson Electronics, Ltd. (NASDAQ: RELL) today reported sales and earnings for its third quarter ended March 3, 2012. The Company also announced that its Board of Directors declared a $0.05 quarterly cash dividend.

Net sales for the third quarter of Fiscal 2012 were $38.3 million, down 3.3% from net sales of $39.7 million during the third quarter of last year. Gross profit for the third quarter of Fiscal 2012 was $11.3 million, or 29.5% of net sales, compared to $11.6 million, or 29.1% of net sales, during the third quarter of Fiscal 2011. SG&A expenses for the third quarter of Fiscal 2012 were $9.5 million, or 24.7% of net sales, compared to $10.7 million, or 27.1% of net sales, during the third quarter of Fiscal 2011.

Operating income during the third quarter of fiscal 2012 was $1.8 million, or 4.8% of net sales, compared to operating income of $0.8 million, or 2.1% of net sales, during the third quarter of last year.

Income from continuing operations for the third quarter of Fiscal 2012 was $1.6 million, or $0.09 per diluted common share, compared to income from continuing operations of $0.2 million, or $0.01 per diluted common share during the third quarter of last year.

FINANCIAL SUMMARY ─ THREE MONTHS ENDED MARCH 3, 2012
  • Net sales for the third quarter of fiscal 2012 were $38.3 million, down 3.3%, compared to net sales of $39.7 million during the third quarter of last year.
  • Gross margin as a percentage of net sales increased to 29.5% during the third quarter of fiscal 2012 compared to 29.1% during the third quarter of last year.
  • SG&A expenses during the third quarter of fiscal 2012 were $9.5 million, or 24.7% of net sales, compared to $10.7 million, or 27.1% of net sales, during the third quarter of last year.
  • Operating income during the third quarter of fiscal 2012 was $1.8 million, or 4.8% of net sales, compared to operating income of $0.8 million, or 2.1% of net sales, during the third quarter of last year.
  • Income from continuing operations during the third quarter of fiscal 2012 was $1.6 million, compared to income from continuing operations of $0.2 million during the third quarter of last year.
  • Loss from discontinued operations, net of tax, was $0.3 million during the third quarter of fiscal 2012 compared to income from discontinued operations, net of tax, of $8.0 million during the third quarter of last year.
  • Net income during the third quarter of fiscal 2012 was $1.3 million, or $0.08 per diluted common share, compared to net income of $8.2 million, or $0.44 per diluted common share, during the third quarter of last year.

FINANCIAL SUMMARY ─ NINE MONTHS ENDED MARCH 3, 2012
  • Net sales for the first nine months of fiscal 2012 were $119.0 million, up 0.7%, compared to net sales of $118.1 million during the first nine months of last year.
  • Gross margin as a percentage of net sales increased to 30.0% during the first nine months of fiscal 2012, compared to 29.4% during the first nine months of last year.
  • SG&A expenses during the first nine months of fiscal 2012 were $30.2 million, or 25.4% of net sales, compared to $32.5 million, or 27.5% of net sales, during the first nine months of last year.
  • Operating income during the first nine months of fiscal 2012 was $5.6 million, or 4.7% of net sales, compared to operating income of $2.3 million, or 1.9% of net sales, during the first nine months of last year.
  • Income from continuing operations during the first nine months of fiscal 2012 was $4.2 million, compared to income from continuing operations of $0.9 million during the first nine months of last year.
  • Income from discontinued operations, net of tax, was $1.6 million, during the first nine months of fiscal 2012, compared to $23.2 million during the first nine months of last year.
  • Net income during the first nine months of fiscal 2012 was $5.8 million, or $0.34 per diluted common share, compared to net income of $24.1 million, or $1.33 per diluted common share, during the first nine months of last year.

CASH USED FOR SHARE REPURCHASES

“Total cash and investments at the end of the third quarter was $169.2 million. We used $13.1 million in cash to repurchase 1.0 million shares during the first nine months of fiscal 2012. As of today, we have repurchased 1.8 million shares using $24 million of our $50 million share repurchase authorization. With our strong balance sheet, we are committed to returning value to our shareholders through a combination of cash dividends, continued share repurchases and investments in our strategic initiatives,” said Edward J. Richardson, Chairman, Chief Executive Officer and President.

Share repurchases may be made on the open market or in privately negotiated transactions, subject to market conditions and trading restrictions. This authorization has no expiration and may be cancelled at any time.

OUTLOOK

“While we were disappointed with our overall sales volume during the quarter, we have been successful with delivering operating margin near our target of 5% as we carefully manage our mix of sales, expenses, and investment opportunities. We are optimistic that the economy, particularly in Europe, will show improvement in the coming months which will strengthen our sales early in FY 13. We are confident that the investments we have made in service will begin to drive incremental power grid tube sales as planned,” said Mr. Richardson.

“We expect that sales for EDG and Canvys for Fiscal 2012 should be in the range of $160 to $163 million, up 1% to 4% over Fiscal 2011. We remain confident that we will be able to achieve our 5% operating margin target by the end of the fiscal year,” concluded Mr. Richardson.

CASH DIVIDEND

The Company also announced today that its Board of Directors voted to declare a $0.05 dividend per share to all holders of common stock and a $0.045 cash dividend per share to all holders of Class B common stock. The dividend will be payable on May 29, 2012, to all common stockholders of record on May 16, 2012. The Company currently has 13,802,486 million outstanding shares of common stock and 2,939,961 outstanding shares of Class B common stock.

CONFERENCE CALL INFORMATION

On Thursday, April 12, 2012, 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 results for fiscal 2012. 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 96136069 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 12, 2012, for seven days. The telephone numbers for the replay are (USA) 888-286-8010 and (International) 617-801-6888; access code 90365880.

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 22, 2011, and in the Company’s Proxy Statement on Schedule 14A filed on August 23, 2011. 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, and customized display solutions serving customers in the alternative energy, 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. More information is available online at www.rell.com.

Richardson Electronics common stock trades on the NASDAQ Global Select Market under the ticker symbol RELL.
 
Richardson Electronics, Ltd.
Unaudited Consolidated Balance Sheets
(in thousands, except per share amounts)
       
March 3, May 28,
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 24,430 $ 170,975
Accounts receivable, less allowance of $584 and $438 22,937 22,374
Inventories 38,339 30,853
Prepaid expenses and other assets 1,229 5,768
Deferred income taxes 1,940 2,084
Income tax receivable 4,810 -
Investments - current 130,030 52,116
Discontinued operations - assets   626     4,018  
 
Total current assets   224,341     288,188  
 
Non-current assets:
Property, plant and equipment, net 4,491 5,216
Goodwill 1,761 -
Non-current deferred income taxes 1,829 3,994
Investments - non-current   14,765     16,656  
 
Total non-current assets   22,846     25,866  
 
Total assets $ 247,187   $ 314,054  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 14,385 $ 17,814
Accrued liabilities 9,573 43,719
Discontinued operations - liabilities   113     15,897  
 
Total current liabilities   24,071     77,430  
 
Non-current liabilities:
Long-term income tax liabilities 8,618 12,568
Other non-current liabilities 1,200 387
Discontinued operations - non-current liabilities   1,233     1,622  
 
Total non-current liabilities   11,051     14,577  
 
Total liabilities   35,122     92,007  
 
Commitments and contingencies - -
 
Stockholders' equity

Common stock, $0.05 par value; issued 13,953 shares at March 3, 2012, and 14,921 shares at May 28, 2011
698 746

Class B common stock, convertible, $0.05 par value; issued 2,940 shares at March 3, 2012, and 2,952 shares at May 28, 2011
147 147
Preferred stock, $1.00 par value, no shares issued - -
Additional paid-in-capital 98,849 112,179

Common stock in treasury, at cost, 11 shares at March 3, 2012, and 112 shares at May 28, 2011
(140 ) (1,493 )
Retained earnings 102,217 98,927
Accumulated other comprehensive income   10,294     11,541  
 
Total stockholders' equity   212,065     222,047  
 
Total liabilities and stockholders' equity $ 247,187   $ 314,054  
 
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Income
and Comprehensive Income
(in thousands, except per share amounts)
 
  Three Months Ended   Nine Months Ended
March 3,   February 26, March 3,   February 26,
2012 2011 2012 2011
Statements of Income
Net sales $ 38,330 $ 39,653 $ 118,979 $ 118,143
Cost of sales   27,033     28,096   83,290     83,400  
Gross profit 11,297 11,557 35,689 34,743
Selling, general, and administrative expenses 9,457 10,733 30,202 32,476
Loss (gain) on disposal of assets   (3 )   1   (73 )   3  
Operating income   1,843     823   5,560     2,264  
Other (income) expense:
Interest expense - 39 - 145
Investment/interest income (357 ) - (1,003 ) -
Foreign exchange (gain) loss (19 ) 27 276 343
Loss on retirement of short-term debt - - - 60
Other, net   (8 )   4   (9 )   (67 )
Total other (income) expense   (384 )   70   (736 )   481  
Income from continuing operations before income taxes 2,227 753 6,296 1,783
Income tax provision   636     523   2,047     933  
Income from continuing operations 1,591 230 4,249 850
Income (loss) from discontinued operations, net of tax   (252 )   7,987   1,551     23,202  
Net income $ 1,339   $ 8,217 $ 5,800   $ 24,052  
 

Net income per Common share - Basic:
Income from continuing operations $ 0.10 $ 0.01 $ 0.25 $ 0.05
Income (loss) from discontinued operations   (0.02 )   0.45   0.09     1.32  
Total net income per Common share - Basic: $ 0.08   $ 0.46 $ 0.34   $ 1.37  
 

Net income per Class B common share - Basic:
Income from continuing operations $ 0.09 $ 0.01 $ 0.23 $ 0.04
Income (loss) from discontinued operations   (0.01 )   0.40   0.08     1.19  
Total net income per Class B common share - Basic: $ 0.08   $ 0.41 $ 0.31   $ 1.23  
 

Net income per Common share - Diluted:
Income from continuing operations $ 0.09 $ 0.01 $ 0.25 $ 0.05
Income (loss) from discontinued operations   (0.01 )   0.43   0.09     1.28  
Total net income per Common share - Diluted: $ 0.08   $ 0.44 $ 0.34   $ 1.33  
 

Net income per Class B common share - Diluted:
Income from continuing operations $ 0.09 $ 0.01 $ 0.23 $ 0.04
Income (loss) from discontinued operations   (0.01 )   0.40   0.08     1.17  
Total net income per Class B common share - Diluted: $ 0.08   $ 0.41 $ 0.31   $ 1.21  
 
Weighted average number of shares:
Common shares - Basic   13,988     15,086   14,134     14,846  
Class B common shares - Basic   2,940     3,002   2,944     3,026  
Common shares - Diluted   17,050     18,455   17,244     18,182  
Class B common shares - Diluted   2,940     3,002   2,944     3,026  
 
Dividends per common share $ 0.05   $ 0.020 $ 0.150   $ 0.060  
Dividends per Class B common share $ 0.045   $ 0.018 $ 0.135   $ 0.054  
 
Statements of Comprehensive Income
Net income $ 1,339 $ 8,217 $ 5,800 $ 24,052
Foreign currency translation gain (loss) (23 ) 1,852 (1,228 ) 6,291
Fair value adjustments on investments   32     32   (19 )   61  
Comprehensive income $ 1,348   $ 10,101 $ 4,553   $ 30,404  
 
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
 
  Three Months Ended       Nine Months Ended
March 3,   February 26, March 3,   February 26,
2012 2011 2012 2011
Operating activities:
Net income $ 1,339 $ 8,217 $ 5,800 $ 24,052

Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization 256 283 820 1,668
Loss on retirement of short-term debt - - - 60
Loss (gain) on sale of investments 10 (4 ) 11 (5 )
Stock compensation expense 131 69 393 377
Current and non-current deferred income taxes 450 1,343 2,265 1,312
Accounts receivable (690 ) (8,676 ) (754 ) (19,888 )
Income tax receivable 774 - (4,810 ) -
Inventories (2,683 ) (10,240 ) (8,275 ) (20,256 )
Prepaid expenses and other assets 162 612 8,588 (1,092 )
Accounts payable (144 ) 2,062 (3,228 ) 8,713
Accrued liabilities (6,664 ) (1,253 ) (49,530 ) 768
Long-term income tax liabilities 1,634 14 (5,381 ) 14
Other   (141 )   (2,183 )   1,537     (2,244 )
Net cash used in operating activities   (5,566 )   (9,756 )   (52,564 )   (6,521 )
Investing activities:
Cash consideration paid for acquired business - - (2,297 ) -
Capital expenditures (8 ) (22 ) (82 ) (518 )

Proceeds from time deposits/ CDs
54,182 - 123,119 -

Purchases of time deposits/ CDs
(47,439 ) - (199,156 ) -
Proceeds from sales of available-for-sale securities 62 42 183 125
Purchases of available-for-sale securities (62 ) (42 ) (183 ) (125 )
Other   (29 )   (26 )   38     (58 )
Net cash provided by (used in) investing activities   6,706     (48 )   (78,378 )   (576 )
Financing activities:
Proceeds from borrowings - 72,200 - 181,800
Payments on debt - (68,200 ) - (159,800 )
Payments on retirement of short-term debt - - - (19,517 )
Repurchase of common stock (1,196 ) - (13,084 ) (162 )
Proceeds from issuance of common stock 298 2,302 660 4,073
Cash dividends paid (830 ) (358 ) (2,508 ) (1,057 )
Other   3     -     6     -  
Net cash provided by (used in) financing activities   (1,725 )   5,944     (14,926 )   5,337  
 
Effect of exchange rate changes on cash and cash equivalents   (167 )   690     (677 )   2,585  
 
Increase (decrease) in cash and cash equivalents (752 ) (3,170 ) (146,545 ) 825
 
Cash and cash equivalents at beginning of period 25,182 33,033 170,975 29,038
       
Cash and cash equivalents at end of period $ 24,430   $ 29,863   $ 24,430   $ 29,863  
 
Richardson Electronics, Ltd.
Net Sales and Gross Profit

For the Third Quarter and First Nine Months of Fiscal 2012 and Fiscal 2011

(in thousands)
 
By Strategic Business Unit:
 

Net Sales
     
FY 2012 FY 2011 % Change

Third Quarter
EDG $ 26,867 $ 28,002 (4.1 %)
Canvys   11,463   11,651 (1.6 %)
Total $ 38,330 $ 39,653 (3.3 %)
 
 
FY 2012 FY 2011 % Change

First Nine Months
EDG $ 85,618 $ 84,150 1.7 %
Canvys   33,361   33,993 (1.9 %)
Total $ 118,979 $ 118,143 0.7 %
 
 

Gross Profit
    % of     % of
FY 2012 Net Sales FY 2011 Net Sales

Third Quarter
EDG $ 8,085 30.1 % $ 8,412 30.0 %
Canvys   3,212 28.0 %   3,145 27.0 %
Total $ 11,297 29.5 % $ 11,557 29.1 %
 
 
% of % of
FY 2012 Net Sales FY 2011 Net Sales

First Nine Months
EDG $ 26,302 30.7 % $ 26,411 31.4 %
Canvys   9,387 28.1 %   8,332 24.5 %
Total $ 35,689 30.0 % $ 34,743 29.4 %
 

Copyright Business Wire 2010

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