8-K
Richardson Electronics, Ltd. (RELL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 8, 2020
RICHARDSON ELECTRONICS, LTD.
(Exact name of registrant as specified in charter)
_________________________
| Delaware<br><br><br>(State or other jurisdiction of incorporation) | 0-12906<br><br><br>(Commission File Number) | 36-2096643<br><br><br>(IRS Employer Identification No.) |
|---|---|---|
| 40W267 Keslinger Road, P.O. Box 393, LaFox, Illinois<br><br><br>Address of principal executive offices) | 60147-0393<br>(Zip Code) | |
| --- | --- |
Registrant’s telephone number, including area code: (630) 208-2200
(Former name or former address, if changed since last report.)
_________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
|---|---|---|
| Common stock, $0.05 Par Value per share | RELL | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02.Results of Operation and Financial Condition.
On January 8, 2020, Richardson Electronics, Ltd. (the “Company”) issued a press release announcing earnings results for its second quarter ended November 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
The information contained in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
|---|---|
| 99.1 | Press release issued January 8, 2020, furnished herewith |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Richardson Electronics, Ltd. | ||
|---|---|---|
| Date: January 8, 2020 | By: | /s/ Robert J. Ben |
| Name: | Robert J. Ben | |
| Title: | Chief Financial Officer and Chief Accounting Officer |
rell-ex991_6.htm
Exhibit 99.1
Press Release
For Immediate Release
| For Details Contact: | 40W267 Keslinger Road | ||
|---|---|---|---|
| Edward J. Richardson | Robert J. Ben | PO BOX 393 | |
| Chairman and CEO | EVP & CFO | LaFox, IL 60147-0393 USA | |
| Phone: (630) 208-2205 | (630) 208-2203 | (630) 208-2200 | Fax: (630) 208-2550 |
RICHARDSON ELECTRONICS REPORTS SECOND QUARTER FISCAL 2020 RESULTS AND DECLARES QUARTERLY CASH DIVIDEND
Display, PMG and CT Tube Businesses Grow Quarter over Quarter
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, IL, JANUARY 8, 2020: 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.
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 flat panel detector solutions, replacement parts, tubes and service training 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)
| Audited | |||
|---|---|---|---|
| June 1, 2019 | |||
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | 33,054 | $ | 42,019 |
| Accounts receivable, less allowance of 278 and 339, respectively | 22,336 | 24,296 | |
| Inventories, net | 56,169 | 53,232 | |
| Prepaid expenses and other assets | 2,853 | 3,067 | |
| Investments - current | 13,000 | 8,000 | |
| Total current assets | 127,412 | 130,614 | |
| Non-current assets: | |||
| Property, plant and equipment, net | 18,361 | 19,111 | |
| Intangible assets, net | 2,637 | 2,763 | |
| Lease ROU asset | 3,991 | — | |
| Non-current deferred income taxes | 575 | 529 | |
| Total non-current assets | 25,564 | 22,403 | |
| Total assets | 152,976 | $ | 153,017 |
| Liabilities and Stockholders’ Equity | |||
| Current liabilities: | |||
| Accounts payable | 15,439 | $ | 16,943 |
| Accrued liabilities | 10,836 | 11,273 | |
| Lease liability current | 1,628 | — | |
| Total current liabilities | 27,903 | 28,216 | |
| Non-current liabilities: | |||
| Non-current deferred income tax liabilities | 241 | 212 | |
| Lease liability non-current | 2,437 | — | |
| Other non-current liabilities | 718 | 832 | |
| Total non-current liabilities | 3,396 | 1,044 | |
| Total liabilities | 31,299 | 29,260 | |
| Stockholders’ equity | |||
| Common stock, 0.05 par value; issued and outstanding 11,038 shares at<br> November 30, 2019 and 10,957 shares at June 1, 2019 | 552 | 547 | |
| Class B common stock, convertible, 0.05 par value; issued and outstanding<br> 2,097 shares at November 30, 2019 and June 1, 2019 | 105 | 105 | |
| Preferred stock, 1.00 par value, no shares issued | — | — | |
| Additional paid-in-capital | 61,436 | 61,012 | |
| Common stock in treasury, at cost, no shares at November 30, 2019 and<br> June 1, 2019 | — | — | |
| Retained earnings | 57,688 | 59,703 | |
| Accumulated other comprehensive income | 1,896 | 2,390 | |
| Total stockholders’ equity | 121,677 | 123,757 | |
| Total liabilities and stockholders’ equity | 152,976 | $ | 153,017 |
All values are in US Dollars.
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Loss
(in thousands, except per share amounts)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 30, 2019 | December 1, 2018 | November 30, 2019 | December 1, 2018 | |||||||||
| Statements of Comprehensive Loss | ||||||||||||
| Net sales | $ | 39,634 | $ | 41,314 | $ | 80,287 | $ | 85,471 | ||||
| Cost of sales | 26,954 | 28,343 | 54,656 | 58,547 | ||||||||
| Gross profit | 12,680 | 12,971 | 25,631 | 26,924 | ||||||||
| Selling, general and administrative expenses | 13,161 | 13,425 | 26,008 | 26,524 | ||||||||
| Loss on disposal of assets | — | — | 1 | — | ||||||||
| Operating (loss) income | (481 | ) | (454 | ) | (378 | ) | 400 | |||||
| Other expense (income): | ||||||||||||
| Investment/interest income | (123 | ) | (121 | ) | (243 | ) | (247 | ) | ||||
| Foreign exchange loss (gain) | 199 | (211 | ) | 89 | 75 | |||||||
| Other, net | (15 | ) | 4 | (16 | ) | (4 | ) | |||||
| Total other expense (income) | 61 | (328 | ) | (170 | ) | (176 | ) | |||||
| (Loss) income before income taxes | (542 | ) | (126 | ) | (208 | ) | 576 | |||||
| Income tax provision | 80 | 178 | 257 | 449 | ||||||||
| Net (loss) income | (622 | ) | (304 | ) | (465 | ) | 127 | |||||
| Foreign currency translation gain (loss), net of tax | 222 | (1,041 | ) | (494 | ) | (1,781 | ) | |||||
| Comprehensive loss | $ | (400 | ) | $ | (1,345 | ) | $ | (959 | ) | $ | (1,654 | ) |
| Net (loss) income per share | ||||||||||||
| Common shares - Basic | $ | (0.05 | ) | $ | (0.02 | ) | $ | (0.04 | ) | $ | 0.01 | |
| Class B common shares - Basic | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | 0.01 | |
| Common shares - Diluted | $ | (0.05 | ) | $ | (0.02 | ) | $ | (0.04 | ) | $ | 0.01 | |
| Class B common shares - Diluted | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | 0.01 | |
| Weighted average number of shares: | ||||||||||||
| Common shares – Basic | 11,038 | 10,952 | 11,014 | 10,890 | ||||||||
| Class B common shares – Basic | 2,097 | 2,097 | 2,097 | 2,114 | ||||||||
| Common shares – Diluted | 11,038 | 10,952 | 11,014 | 11,053 | ||||||||
| Class B common shares – Diluted | 2,097 | 2,097 | 2,097 | 2,114 | ||||||||
| Dividends per common share | $ | 0.060 | $ | 0.060 | $ | 0.120 | $ | 0.120 | ||||
| Dividends per Class B common share | $ | 0.054 | $ | 0.054 | $ | 0.108 | $ | 0.108 |
Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 30, 2019 | December 1, 2018 | November 30, 2019 | December 1, 2018 | |||||||||
| Operating activities: | ||||||||||||
| Net (loss) income | $ | (622 | ) | $ | (304 | ) | $ | (465 | ) | $ | 127 | |
| Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities: | ||||||||||||
| Depreciation and amortization | 825 | 792 | 1,658 | 1,556 | ||||||||
| Inventory provisions | 120 | 150 | 281 | 365 | ||||||||
| Loss on disposal of assets | — | — | 1 | — | ||||||||
| Share-based compensation expense | 182 | 230 | 370 | 395 | ||||||||
| Deferred income taxes | 23 | 97 | (25 | ) | 155 | |||||||
| Change in assets and liabilities: | ||||||||||||
| Accounts receivable | (335 | ) | 100 | 1,826 | (98 | ) | ||||||
| Inventories | (2,062 | ) | (1,908 | ) | (3,419 | ) | (1,831 | ) | ||||
| Prepaid expenses and other assets | (423 | ) | (319 | ) | 202 | (282 | ) | |||||
| Accounts payable | 2,590 | 1,538 | (1,365 | ) | (3,881 | ) | ||||||
| Accrued liabilities | 486 | 344 | (390 | ) | 571 | |||||||
| Other | (165 | ) | 161 | (109 | ) | 174 | ||||||
| Net cash provided by (used in) operating activities | 619 | 881 | (1,435 | ) | (2,749 | ) | ||||||
| Investing activities: | ||||||||||||
| Capital expenditures | (475 | ) | (1,120 | ) | (814 | ) | (2,192 | ) | ||||
| Proceeds from maturity of investments | — | — | 8,000 | — | ||||||||
| Purchases of investments | (13,000 | ) | (3,000 | ) | (13,000 | ) | (5,300 | ) | ||||
| Net cash used in investing activities | (13,475 | ) | (4,120 | ) | (5,814 | ) | (7,492 | ) | ||||
| Financing activities: | ||||||||||||
| Proceeds from issuance of common stock | 59 | 11 | 59 | 203 | ||||||||
| Cash dividends paid | (775 | ) | (770 | ) | (1,550 | ) | (1,534 | ) | ||||
| Payment of financing lease principal | (45 | ) | — | (75 | ) | — | ||||||
| Other | (4 | ) | — | — | — | |||||||
| Net cash used in financing activities | (765 | ) | (759 | ) | (1,566 | ) | (1,331 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 218 | (621 | ) | (150 | ) | (1,034 | ) | |||||
| Decrease in cash and cash equivalents | (13,403 | ) | (4,619 | ) | (8,965 | ) | (12,606 | ) | ||||
| Cash and cash equivalents at beginning of period | 46,457 | 52,478 | 42,019 | 60,465 | ||||||||
| Cash and cash equivalents at end of period | $ | 33,054 | $ | 47,859 | $ | 33,054 | $ | 47,859 | ||||
| Richardson Electronics, Ltd.<br><br><br>Net Sales and Gross Profit<br><br><br>For the Second Quarter and First Six Months of Fiscal 2020 and Fiscal 2019<br><br><br>($ in thousands) | ||||||||||||
| --- | ||||||||||||
| By Strategic Business Unit: | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Net Sales | ||||||||||||
| Q2 FY 2020 | Q2 FY 2019 | % Change | ||||||||||
| PMT | $ | 29,603 | $ | 32,328 | -8.4 | % | ||||||
| Canvys | 7,856 | 6,498 | 20.9 | % | ||||||||
| Healthcare | 2,175 | 2,488 | -12.6 | % | ||||||||
| Total | $ | 39,634 | $ | 41,314 | -4.1 | % | ||||||
| YTD FY 2020 | YTD FY 2019 | % Change | ||||||||||
| PMT | $ | 60,170 | $ | 67,097 | -10.3 | % | ||||||
| Canvys | 15,133 | 13,671 | 10.7 | % | ||||||||
| Healthcare | 4,984 | 4,703 | 6.0 | % | ||||||||
| Total | $ | 80,287 | $ | 85,471 | -6.1 | % | ||||||
| Gross Profit | ||||||||||||
| Q2 FY 2020 | % of Net Sales | Q2 FY 2019 | % of Net Sales | |||||||||
| PMT | $ | 9,349 | 31.6 | % | $ | 10,107 | 31.3 | % | ||||
| Canvys | 2,585 | 32.9 | % | 2,132 | 32.8 | % | ||||||
| Healthcare | 746 | 34.3 | % | 732 | 29.4 | % | ||||||
| Total | $ | 12,680 | 32.0 | % | $ | 12,971 | 31.4 | % | ||||
| YTD FY 2020 | % of Net Sales | YTD FY 2019 | % of Net Sales | |||||||||
| PMT | $ | 19,028 | 31.6 | % | $ | 21,114 | 31.5 | % | ||||
| Canvys | 4,906 | 32.4 | % | 4,445 | 32.5 | % | ||||||
| Healthcare | 1,697 | 34.0 | % | 1,365 | 29.0 | % | ||||||
| Total | $ | 25,631 | 31.9 | % | $ | 26,924 | 31.5 | % |