Deswell Announces Third Quarter 2014 Results

Deswell Industries, Inc. (Nasdaq: DSWL) today announced its financial results for the fiscal third quarter ended December 31, 2013.

Net sales for the third quarter ended December 31, 2013 were $10.7 million, a decrease of 22.1% compared to net sales of $13.7 million for the same quarter ended December 31, 2012. Net sales decreased by 18.5% to $5.2 million in the Company’s plastic segment and decreased by 25.2% to $5.5 million in the electronic and metallic segment. The operating loss in the third quarter was $1.3 million, compared to an operating loss of $0.7 million for the same quarter of fiscal 2013.

Total gross margin decreased to 10.5% in the third quarter ended December 31, 2013 compared to 11.7% in the same quarter last year. Gross profit margin in the plastic segment increased to 15.5% of net sales for the third quarter of fiscal 2014 compared to 10.9% of net sales for the same quarter of last fiscal year. The increase in gross profit and margin in the plastic segment was mainly due to the decrease in raw materials cost in total and as a percentage of sales. Gross profit margin in the electronic and metallic segment decreased to 5.9% of net sales for the third quarter ended December 31, 2013 compared to 12.5% of net sales for the year-ago quarter. The decrease in gross profit and margin in the electronic and metallic segment was mainly attributed to increase in labor costs, resulting from a higher labor rate, offsetting the decrease in headcount.

The Company reported a net loss of $1.4 million for the third quarter ended December 31, 2013 compared to net loss of $0.2 million for the quarter ended December 31, 2012. Deswell reported a basic and diluted loss per share of ($0.09) for the third quarter of fiscal 2014 (based on 16,262,000 and 16,266,000 weighted average shares outstanding, respectively), compared to a basic and diluted loss per share of ($0.01) (based on 16,698,000 and 16,717,000 weighted average shares outstanding, respectively), for the quarter ended December 31, 2012.

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