Richardson Electronics Reports Third Quarter Fiscal 2024 Results and Declares Quarterly Cash Dividend
- Sales increased 18.7% sequentially, showing improving business conditions.
- Board of Directors declared a $0.06 per share quarterly cash dividend.
- Net sales for the third quarter of fiscal 2024 decreased by 25.6% to $52.4 million.
- Gross margin was 29.5% of net sales during the third quarter of fiscal 2024.
- Cash dividend of $0.06 per share declared, payable on May 29, 2024.
- Net sales decreased by 25.6% for the third quarter of fiscal 2024.
- Operating income decreased significantly from the prior year's third quarter.
- Net income for the third quarter of fiscal 2024 was lower compared to the same period in fiscal 2023.
Insights
The reported 18.7% sequential sales increase and dividend declaration by Richardson Electronics are indicative of a positive trend in the company's operations. The reduction in inventory also suggests a strategic approach to working capital management, which is important for maintaining liquidity and operational efficiency. The focus on diversification strategies and engineered solutions is a proactive measure to mitigate the cyclical nature of semiconductor sales, which appear to be a significant segment of their business.
It's important to note, however, that the 25.6% decrease in net sales year-over-year raises concerns about the company's performance in its PMT and Canvys divisions. This could signal underlying challenges in these markets or possible shifts in customer demand that need to be closely monitored. Investors should consider the company's long-term growth strategies and how they align with current global trends, such as energy transition, which could open up new avenues for growth.
Richardson Electronics' gross margin contraction from 31.8% to 29.5% suggests pressure on profitability, potentially due to product mix changes and manufacturing under absorption. While the company has managed to maintain a positive operating income, the sharp decline from the previous year's quarter is a point of concern. The operating expense control is a positive takeaway, indicating management's efforts to balance growth initiatives with cost management.
The decline in backlog for PMT and Canvys, although marginal, could be indicative of future revenue challenges if not addressed. The dividend declaration, despite reduced profitability, reflects confidence in the company's cash flow management but warrants scrutiny on whether it's sustainable in the long-term without compromising growth investments.
The company's success in reducing inventory for the first time in over two years highlights a significant improvement in supply chain efficiency. After a period marked by supply chain constraints, this adjustment is a positive sign that Richardson Electronics is realigning its inventory with expected market demand. However, the increase in accounts receivable and decrease in accounts payable suggest potential shifts in cash flow that could impact financial stability if not managed effectively.
Looking at the decrease in net sales for PMT and GES, it's essential to understand the supply chain dynamics that may have contributed to these outcomes. The semiconductor industry is known for its volatility and the company's exposure to this sector requires a resilient supply chain to adapt to rapid changes in demand.
Sales increased
Inventory decreased
LAFOX, Ill., April 10, 2024 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its third quarter ended March 2, 2024. The Company also announced that its Board of Directors declared a
"The sequential increase in sales and profitability is encouraging, reflecting the benefits of our diversification strategies as well as our team’s focus on enhancing profitability and strengthening our balance sheet. Sales growth at GES is even more impressive, considering last year’s third quarter benefited from a large order to an EV rail customer. Overall, our net sales continue to reflect the cyclical nature of sales to semiconductor wafer fab customers that had an
“Throughout fiscal 2024 we have focused on decreasing inventory levels to better align with expected demand across our markets after a period of inventory growth, caused by supply chain constraints over the past several years. I am pleased with the progress our global teams are making as this quarter marks the first time we’ve seen a decline in inventory in more than two years. Overall, we continue to pursue significant long-term growth strategies that take advantage of opportunities created by recent government stimulus programs as well as global energy transition trends. Over the near-term, recent customer discussions indicate expected demand growth in the semiconductor and GES markets. As a result, we anticipate sequential sales growth in our fiscal 2024 fourth quarter, as well as further improvements in profitability,” concluded Mr. Richardson.
Third Quarter Results
Net sales for the third quarter of fiscal 2024 decreased
Backlog totaled
Gross margin was
Operating expenses were
The Company reported an operating income of
Income tax provision was
Net income for the third quarter of fiscal 2024 was
Cash and investments were
Financial Summary for the Nine Months Ended March 2, 2024
- Net sales for the first nine months of fiscal 2024 were
$149.1 million , compared to net sales of$203.8 million during the first nine months of fiscal 2023. Sales decreased by$34.6 million or26.0% for PMT,$13.7 million or42.6% for GES,$6.4 million or21.2% for Canvys and less than$0.1 million or0.3% for Richardson Healthcare. - Gross profit decreased to
$45.2 million during the first nine months of fiscal 2024, compared to$67.3 million during the first nine months of fiscal 2023. As a percentage of net sales, gross margin decreased to30.3% of net sales during the first nine months of fiscal 2024, compared to33.0% of net sales during the first nine months of fiscal 2023, primarily because of product mix and manufacturing under absorption in PMT, product mix in GES, as well as increased scrap expense and manufacturing under absorption in Healthcare, partially offset by a favorable product mix and lower freight costs in Canvys. - Operating expenses increased
2.3% to$44.7 million for the first nine months of fiscal 2024, compared to$43.7 million for the first nine months of fiscal 2023. The increase in operating expenses resulted from higher salaries and R&D expenses, partially offset by lower incentive expense. - Operating income during the first nine months of fiscal 2024 was
$0.5 million , compared to operating income of$23.6 million during the first nine months of fiscal 2023. - Other expense for the first nine months of fiscal 2024, including interest income and foreign exchange, was
$0.2 million , as compared to other expense of$0.1 million in the first nine months of fiscal 2023. - The income tax provision was
$0.1 million or an effective tax rate of39.2% for the first nine months of fiscal 2024 compared to an income tax provision of$5.3 million or an effective tax rate of22.5% during the first nine months of fiscal 2023. - Net income for the first nine months of fiscal 2024 was
$0.2 million , or$0.01 per diluted share versus net income of$18.2 million , or$1.27 per diluted share during the first nine months of fiscal 2023.
CASH DIVIDEND DECLARED
The Board of Directors of Richardson Electronics declared a
CONFERENCE CALL INFORMATION
The Company will host a conference call on Thursday, April 11, 2024, at 9:00 a.m. Central Time, to discuss its third quarter fiscal 2024 results. A question-and-answer session will be included as part of the call’s agenda.
Participant Instructions
Participants may register for the call here. While not required, it is recommended you join 10 minutes prior to the event start. A replay of the call will be available beginning at 1:00 p.m. Central Time on April 11, 2024, for seven days. Registration instructions are also on our website at www.rell.com.
In addition, the webcast link is available here.
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 that 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 31, 2023, and other reports we file with the Securities and Exchange Commission. 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 manufacturer of engineered solutions, green energy products, power grid and microwave tubes, and related consumables; power conversion and RF and microwave components including green energy solutions; high-value replacement parts, tubes, and service training for diagnostic imaging equipment; and customized display solutions. Nearly
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 | |||||||
| March 2, 2024 | May 27, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 18,880 | $ | 24,981 | ||||
| Accounts receivable, less allowance of | 29,131 | 30,067 | ||||||
| Inventories, net | 112,635 | 110,402 | ||||||
| Prepaid expenses and other assets | 2,741 | 2,633 | ||||||
| Total current assets | 163,387 | 168,083 | ||||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | 20,723 | 20,823 | ||||||
| Intangible assets, net | 1,704 | 1,892 | ||||||
| Right of use lease asset | 3,120 | 2,457 | ||||||
| Deferred income taxes | 4,471 | 4,526 | ||||||
| Other non-current assets | 200 | 267 | ||||||
| Total non-current assets | 30,218 | 29,965 | ||||||
| Total assets | $ | 193,605 | $ | 198,048 | ||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 18,393 | $ | 23,535 | ||||
| Accrued liabilities | 12,660 | 12,026 | ||||||
| Lease liability current | 1,234 | 1,028 | ||||||
| Total current liabilities | 32,287 | 36,589 | ||||||
| Non-current liabilities: | ||||||||
| Non-current deferred income tax liabilities | 96 | 98 | ||||||
| Lease liability non-current | 1,886 | 1,429 | ||||||
| Other non-current liabilities | 715 | 612 | ||||||
| Total non-current liabilities | 2,697 | 2,139 | ||||||
| Total liabilities | 34,984 | 38,728 | ||||||
| Stockholders’ Equity | ||||||||
| Common stock, March 2, 2024 and 12,140 shares issued and outstanding on May 27, 2023 | 611 | 607 | ||||||
| Class B common stock, convertible, and outstanding on March 2, 2024 and 2,052 shares issued and outstanding on May 27, 2023 | 103 | 103 | ||||||
| Preferred stock, | — | — | ||||||
| Additional paid-in-capital | 72,215 | 70,951 | ||||||
| Retained earnings | 84,692 | 87,044 | ||||||
| Accumulated other comprehensive income | 1,000 | 615 | ||||||
| Total stockholders' equity | 158,621 | 159,320 | ||||||
| Total liabilities and stockholders’ equity | $ | 193,605 | $ | 198,048 | ||||
| Richardson Electronics, Ltd. Unaudited Consolidated Statements of Comprehensive Income (in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| March 2, 2024 | February 25, 2023 | March 2, 2024 | February 25, 2023 | |||||||||||||
| Net sales | $ | 52,375 | $ | 70,364 | $ | 149,086 | $ | 203,826 | ||||||||
| Cost of sales | 36,939 | 47,959 | 103,844 | 136,543 | ||||||||||||
| Gross profit | 15,436 | 22,405 | 45,242 | 67,283 | ||||||||||||
| Selling, general and administrative expenses | 14,430 | 14,779 | 44,710 | 43,704 | ||||||||||||
| Loss (gain) on disposal of assets | — | 13 | 70 | (12 | ) | |||||||||||
| Operating income | 1,006 | 7,613 | 462 | 23,591 | ||||||||||||
| Other expense (income): | ||||||||||||||||
| Investment/interest income | (67 | ) | (76 | ) | (224 | ) | (179 | ) | ||||||||
| Foreign exchange loss (gain) | 101 | (292 | ) | 347 | 305 | |||||||||||
| Other, net | (7 | ) | (14 | ) | 43 | (29 | ) | |||||||||
| Total other expense (income) | 27 | (382 | ) | 166 | 97 | |||||||||||
| Income before income taxes | 979 | 7,995 | 296 | 23,494 | ||||||||||||
| Income tax provision | 229 | 1,655 | 116 | 5,281 | ||||||||||||
| Net income | 750 | 6,340 | 180 | 18,213 | ||||||||||||
| Foreign currency translation (loss) gain, net of tax | (205 | ) | 629 | 385 | (710 | ) | ||||||||||
| Comprehensive income | $ | 545 | $ | 6,969 | $ | 565 | $ | 17,503 | ||||||||
| Net income per share: | ||||||||||||||||
| Common shares - Basic | $ | 0.05 | $ | 0.46 | $ | 0.01 | $ | 1.33 | ||||||||
| Class B common shares - Basic | 0.05 | 0.41 | 0.01 | 1.19 | ||||||||||||
| Common shares - Diluted | 0.05 | 0.44 | 0.01 | 1.27 | ||||||||||||
| Class B common shares - Diluted | 0.05 | 0.40 | 0.01 | 1.15 | ||||||||||||
| Weighted average number of shares: | ||||||||||||||||
| Common shares – Basic | 12,227 | 12,047 | 12,208 | 11,893 | ||||||||||||
| Class B common shares – Basic | 2,052 | 2,052 | 2,052 | 2,053 | ||||||||||||
| Common shares – Diluted | 12,445 | 12,666 | 12,480 | 12,524 | ||||||||||||
| Class B common shares – Diluted | 2,052 | 2,052 | 2,052 | 2,053 | ||||||||||||
| Dividends per share: | ||||||||||||||||
| Common share | $ | 0.060 | $ | 0.060 | $ | 0.180 | $ | 0.180 | ||||||||
| 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 | |||||||||||||||
| March 2, 2024 | February 25, 2023 | March 2, 2024 | February 25, 2023 | |||||||||||||
| Operating activities: | ||||||||||||||||
| Net income | $ | 750 | $ | 6,340 | $ | 180 | $ | 18,213 | ||||||||
| Adjustments to reconcile net income to cash used in operating activities: | ||||||||||||||||
| Depreciation and amortization | 1,104 | 912 | 3,218 | 2,688 | ||||||||||||
| Inventory provisions | 173 | 115 | 450 | 310 | ||||||||||||
| Share-based compensation expense | 279 | 206 | 1,045 | 730 | ||||||||||||
| Loss (gain) on disposal of assets | — | 13 | 70 | (12 | ) | |||||||||||
| Deferred income taxes | (4 | ) | (1 | ) | 42 | 27 | ||||||||||
| Change in assets and liabilities: | ||||||||||||||||
| Accounts receivable | (5,254 | ) | (7,189 | ) | 998 | (12,694 | ) | |||||||||
| Inventories | 3,974 | (3,638 | ) | (2,246 | ) | (21,764 | ) | |||||||||
| Prepaid expenses and other assets | 151 | (153 | ) | (58 | ) | (578 | ) | |||||||||
| Accounts payable | (4,072 | ) | (12 | ) | (5,204 | ) | 784 | |||||||||
| Accrued liabilities | 247 | (661 | ) | 625 | 486 | |||||||||||
| Other | 121 | (192 | ) | 164 | 397 | |||||||||||
| Net cash used in operating activities | (2,531 | ) | (4,260 | ) | (716 | ) | (11,413 | ) | ||||||||
| Investing activities: | ||||||||||||||||
| Capital expenditures | (401 | ) | (2,230 | ) | (3,057 | ) | (4,973 | ) | ||||||||
| Proceeds from maturity of investments | — | 5,000 | — | 5,000 | ||||||||||||
| Proceeds from sale of property, plant & equipment | — | — | — | 193 | ||||||||||||
| Net cash (used in) provided by investing activities | (401 | ) | 2,770 | (3,057 | ) | 220 | ||||||||||
| Financing activities: | ||||||||||||||||
| Proceeds from issuance of common stock | — | 511 | 342 | 3,413 | ||||||||||||
| Cash dividends paid on Common and Class B Common shares | (844 | ) | (834 | ) | (2,532 | ) | (2,484 | ) | ||||||||
| Proceeds from short-term borrowing | 3,744 | — | 3,744 | — | ||||||||||||
| Repayment of short-term borrowing | (3,744 | ) | — | (3,744 | ) | — | ||||||||||
| Other | — | — | (119 | ) | (69 | ) | ||||||||||
| Net cash (used in) provided by financing activities | (844 | ) | (323 | ) | (2,309 | ) | 860 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (113 | ) | 352 | (19 | ) | (517 | ) | |||||||||
| Decrease in cash and cash equivalents | (3,889 | ) | (1,461 | ) | (6,101 | ) | (10,850 | ) | ||||||||
| Cash and cash equivalents at beginning of period | 22,769 | 26,106 | 24,981 | 35,495 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 18,880 | $ | 24,645 | $ | 18,880 | $ | 24,645 | ||||||||
| Richardson Electronics, Ltd. Unaudited Net Sales and Gross Profit For the Third Quarter and First Nine Months of Fiscal 2024 and 2023 ($ in thousands) | ||||||||||||
| By Strategic Business Unit | ||||||||||||
| Net Sales | Three Months Ended | FY24 vs. FY23 % Change | ||||||||||
| March 2, 2024 | February 25, 2023 | |||||||||||
| PMT | $ | 31,163 | $ | 46,822 | -33.4 | % | ||||||
| GES | 11,531 | 11,471 | 0.5 | % | ||||||||
| Canvys | 6,590 | 9,685 | -32.0 | % | ||||||||
| Healthcare | 3,091 | 2,386 | 29.5 | % | ||||||||
| Total | $ | 52,375 | $ | 70,364 | -25.6 | % | ||||||
| Nine Months Ended | FY24 vs. FY23 % Change | |||||||||||
| March 2, 2024 | February 25, 2023 | |||||||||||
| PMT | $ | 98,199 | $ | 132,761 | -26.0 | % | ||||||
| GES | 18,534 | 32,275 | -42.6 | % | ||||||||
| Canvys | 23,770 | 30,177 | -21.2 | % | ||||||||
| Healthcare | 8,583 | 8,613 | -0.3 | % | ||||||||
| Total | $ | 149,086 | $ | 203,826 | -26.9 | % | ||||||
| Gross Profit | Three Months Ended | |||||||||||||||
| March 2, 2024 | % of Net Sales | February 25, 2023 | % of Net Sales | |||||||||||||
| PMT | $ | 8,815 | 28.3 | % | $ | 15,404 | 32.9 | % | ||||||||
| GES | 3,070 | 26.6 | % | 2,948 | 25.7 | % | ||||||||||
| Canvys | 2,265 | 34.4 | % | 3,103 | 32.0 | % | ||||||||||
| Healthcare | 1,286 | 41.6 | % | 950 | 39.8 | % | ||||||||||
| Total | $ | 15,436 | 29.5 | % | $ | 22,405 | 31.8 | % | ||||||||
| Nine Months Ended | ||||||||||||||||
| March 2, 2024 | % of Net Sales | February 25, 2023 | % of Net Sales | |||||||||||||
| PMT | $ | 29,231 | 29.8 | % | $ | 44,950 | 33.9 | % | ||||||||
| GES | 5,411 | 29.2 | % | 10,132 | 31.4 | % | ||||||||||
| Canvys | 8,070 | 34.0 | % | 9,364 | 31.0 | % | ||||||||||
| Healthcare | 2,530 | 29.5 | % | 2,837 | 32.9 | % | ||||||||||
| Total | $ | 45,242 | 30.3 | % | $ | 67,283 | 33.0 | % | ||||||||
| 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) 208-2320 | (630) 208-2203 | (630) 208-2200 | Fax: (630) 208-2550 |
FAQ
What was the percentage of the sequential sales increase reported by Richardson Electronics, (RELL)?
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When will the cash dividend declared by Richardson Electronics, (RELL) be payable?
