Richardson Electronics Reports Third Quarter Fiscal 2016 Results and Declares Quarterly Cash Dividend

The Company Continues to Invest in Long Term Growth and Improved Profitability

LAFOX, Ill. — (BUSINESS WIRE) — April 6, 2016 — Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its third quarter ended February 27, 2016. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

Net sales for the third quarter of fiscal 2016 were $31.3 million, a 6.5% decrease, compared to net sales of $33.5 million in the prior year. The sales decrease primarily reflects declines in the PMT business due to uncontrollable delays in shipping backlog, and in Canvys. The decline was partially offset by a 52.5% increase in the Healthcare business, which includes net sales for International Medical Equipment Systems (“IMES”), acquired early this fiscal year. Gross margin was $9.8 million, or 31.2% of net sales during the third quarter of fiscal 2016, flat to $9.8 million, or 29.3% of net sales during the third quarter of fiscal 2015. Margin improved as a percent of sales primarily due to higher margins associated with the sale of diagnostic imaging replacement parts in the Healthcare business.

Operating expenses decreased slightly to $12.5 million for the third quarter of fiscal 2016, compared to $12.6 million for the third quarter of fiscal 2015. The $0.1 million decrease in expenses is due to decreases in IT costs, partially offset by increases in expenses related to IMES and continued investments in the Company’s long term growth strategy.

As a result, operating loss for the third quarter of fiscal 2016 was $2.7 million, flat as compared to the prior year’s third quarter.

Other expense for the third quarter of fiscal 2016, including foreign exchange, was $0.1 million, compared to $0.5 million in other income in the third quarter of fiscal 2015.

The income tax provision of $0.1 million during the third quarter of fiscal 2016 reflects the provision for estimated foreign taxes as well as the valuation allowance recorded against the net operating loss in the U.S.

Net loss for the third quarter of fiscal 2016 was $2.9 million, compared to net loss of $2.2 million during the third quarter of last year.

FINANCIAL SUMMARY – NINE MONTHS ENDED FEBRUARY 27, 2016

  • Net sales for the first nine months of fiscal 2016 were $102.4 million, an increase of 0.4%, compared to net sales of $102.0 million during the first nine months of fiscal 2015. Net sales for the first nine months of fiscal 2016 have been negatively impacted by unfavorable exchange rates in both Europe and Brazil.
  • Gross margin increased to $31.4 million, or 30.7% of net sales during the first nine months of fiscal 2016, compared to $30.9 million, or 30.3% of net sales from the first nine months of fiscal 2015.
  • Selling, general, and administrative expenses increased to $37.9 million, or 37.0% of net sales for the first nine months of fiscal 2016, compared to $36.4 million, or 35.6% of net sales, for the first nine months of fiscal 2015. The majority of the increase supports the Company’s investment in Richardson Healthcare and its long term growth initiatives partially offset by a decline in IT support and other administrative costs.
  • Operating loss during the first nine months of fiscal 2016 was $6.2 million, compared to operating loss of $5.4 million during the first nine months of fiscal 2015.
  • Net loss for the first nine months of fiscal 2016 was $6.6 million, compared to net loss of $3.3 million during the first nine months of fiscal 2015.

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 May 24, 2016, to common stockholders of record on May 10, 2016.

Cash and investments at the end of the third quarter of fiscal 2016 were $71.5 million. During the third quarter of fiscal 2016, the Company did not repurchase any shares of its common stock under the existing share repurchase authorization. Since the sale of RFPD, the Company has spent $65.6 million on share repurchases and currently has 10.7 million outstanding shares of common stock and 2.1 million outstanding shares of Class B common stock.

OUTLOOK

“As we begin to close out our fiscal year 2016, we recognize the significant investments that have been made to implement our long term growth strategy and remain focused on growing sales within all of our businesses. We believe our investments in Richardson Healthcare will help provide long term growth and profitability. Our backlog in PMT, including our power conversion business continues to increase and we have several large orders we expect to ship during our fourth quarter,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “We remain focused on top line growth, while we carefully manage our expenses and investments in working capital,” Mr. Richardson concluded.

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