Richardson Electronics Earnings 2019-11-30
RELL 10Q Quarterly Report
| Balance Sheet | Income Statement | Cash Flow |
|---|---|---|
| Comparables ($MM TTM) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Ticker | M Cap | Assets | Liab | Rev | G Profit | Net Inc | EBITDA | EV | G Margin | EV/EBITDA | ROA |
| CYBE | 121 | 73 | 15 | 65 | 29 | 3 | 7 | 111 | 44% | 16.4 | 4% |
| RADA | 100 | 54 | 12 | 0 | 0 | 0 | 0 | 78 | 0% | ||
| VOXX | 97 | 498 | 106 | 439 | 120 | -46 | -34 | 43 | 27% | -1.3 | -9% |
| PRCP | 52 | 63 | 21 | 77 | 27 | -7 | -4 | 47 | 35% | -11.7 | -11% |
| CUI | 25 | 79 | 40 | 98 | 30 | -15 | -12 | 22 | 31% | -1.9 | -18% |
| TAIT | 18 | 14 | 1 | 8 | 4 | 1 | 2 | 14 | 46% | 9.2 | 10% |
| AWSM | 14 | 13 | 21 | 20 | 5 | -31 | -30 | 24 | 28% | -0.8 | -233% |
| QBAK | 11 | 11 | 4 | 12 | 4 | 1 | 1 | 7 | 32% | 10.7 | 5% |
| UUU | 3 | 19 | 9 | 18 | 6 | -2 | -1 | 3 | 31% | -2.7 | -8% |
| RELL | 153 | 29 | 167 | 52 | -7 | -3 | -42 | 31% | 13.4 | -5% | |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended November 30, 2019
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from To
Commission File Number: 0-12906
RICHARDSON ELECTRONICS, LTD.
(Exact name of registrant as specified in its charter)
| Delaware | 36-2096643 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
40W267 Keslinger Road, P.O. Box 393
LaFox, Illinois 60147-0393
(Address of principal executive offices)
Registrant’s telephone number, including area code: (630) 208-2200
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
| Common stock, $0.05 Par Value |
| RELL |
| NASDAQ Global Select Market |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ |
| Accelerated Filer | ☒ |
| Non-Accelerated Filer | ☐ |
| Smaller Reporting Company | ☒ |
| 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of January 7, 2020, there were outstanding 11,038,235 shares of Common Stock, $0.05 par value and 2,096,919 shares of Class B Common Stock, $0.05 par value, which are convertible into Common Stock of the registrant on a share for share basis.
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| 7 | |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| 19 | |
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| 24 | ||
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1
Richardson Electronics, Ltd.
(in thousands, except per share amounts)
|
|
| Unaudited |
|
| Audited |
| ||
|
|
| November 30, 2019 |
|
| 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 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 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 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 |
|
2
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 |
|
3
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 |
|
4
Unaudited Consolidated Statement of Stockholders’ Equity
(in thousands, except per share amounts)
|
|
| Common |
|
| Class B Common |
|
| Par Value |
|
| Additional Paid In Capital |
|
| Common Stock in Treasury |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income |
|
| Total |
| ||||||||
| Balance June 1, 2019: |
|
| 10,957 |
|
|
| 2,097 |
|
| $ | 652 |
|
| $ | 61,012 |
|
| $ | — |
|
| $ | 59,703 |
|
| $ | 2,390 |
|
| $ | 123,757 |
|
| Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (465 | ) |
|
| — |
|
|
| (465 | ) |
| Foreign currency translation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (494 | ) |
|
| (494 | ) |
| Share-based compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restricted stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 214 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 214 |
|
| Stock options |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 156 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 156 |
|
| Common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Options exercised |
|
| 10 |
|
|
| — |
|
|
| 1 |
|
|
| 58 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 59 |
|
| Restricted stock issuance |
|
| 71 |
|
|
| — |
|
|
| 4 |
|
|
| (4 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
| Dividends paid to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common ($0.120 per share) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,324 | ) |
|
| — |
|
|
| (1,324 | ) |
| Class B ($0.108 per share) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (226 | ) |
|
| — |
|
|
| (226 | ) |
| Balance November 30, 2019: |
|
| 11,038 |
|
|
| 2,097 |
|
|
| 657 |
|
|
| 61,436 |
|
| $ | — |
|
|
| 57,688 |
|
|
| 1,896 |
|
|
| 121,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance August 31, 2019: |
|
| 11,029 |
|
|
| 2,097 |
|
| $ | 656 |
|
| $ | 61,200 |
|
| $ | — |
|
| $ | 59,085 |
|
| $ | 1,674 |
|
| $ | 122,615 |
|
| Comprehensive (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (622 | ) |
|
| — |
|
|
| (622 | ) |
| Foreign currency translation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 222 |
|
|
| 222 |
|
| Share-based compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restricted stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 115 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 115 |
|
| Stock options |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 67 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 67 |
|
| Common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Options exercised |
|
| 10 |
|
|
| — |
|
|
| 1 |
|
|
| 58 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 59 |
|
| Restricted stock issuance |
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| (4 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4 | ) |
| Dividends paid to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common ($0.06 per share) |
|
| — |
|
|
| — |
|
|
| — |
|
| |||||||||||||||||||