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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 February 25, 2023

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

 

img206256862_0.jpg 

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 April 4, 2023, there were outstanding 12,085,774 shares of Common Stock, $0.05 par value and 2,051,488 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.

 


 

TABLE OF CONTENTS

 

Page

 

 

 

 

 

 

 

 

Part I.

Financial Information

 

 

Item 1.

Financial Statements

2

Unaudited Consolidated Balance Sheets

2

Unaudited Consolidated Statements of Comprehensive Income

3

Unaudited Consolidated Statements of Cash Flows

4

Unaudited Consolidated Statement of Stockholders’ Equity

5

Notes to Unaudited Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

 

Part II.

Other Information

 

 

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 5.

Other Information

28

Item 6.

Exhibits

29

Exhibit Index

29

Signatures

30

 

 

1


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Richardson Electronics, Ltd.

Unaudited Consolidated Balance Sheets

(in thousands, except per share amounts)

 

 

 

Unaudited

 

 

Audited

 

 

 

February 25, 2023

 

 

May 28, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,645

 

 

$

35,495

 

Accounts receivable, less allowance of $189 and $186, respectively

 

 

42,151

 

 

 

29,878

 

Inventories, net

 

 

101,409

 

 

 

80,390

 

Prepaid expenses and other assets

 

 

2,639

 

 

 

2,448

 

Investments - current

 

 

 

 

 

5,000

 

Total current assets

 

 

170,844

 

 

 

153,211

 

Non-current assets:

 

 

 

 

 

 

Property, plant and equipment, net

 

 

19,335

 

 

 

16,961

 

Intangible assets, net

 

 

1,957

 

 

 

2,010

 

Lease ROU asset

 

 

2,378

 

 

 

3,239

 

Other non-current assets

 

 

339

 

 

 

 

Non-current deferred income taxes

 

 

4,350

 

 

 

4,398

 

Total non-current assets

 

 

28,359

 

 

 

26,608

 

Total assets

 

$

199,203

 

 

$

179,819

 

Liabilities

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

24,686

 

 

$

23,987

 

Accrued liabilities

 

 

16,502

 

 

 

16,110

 

Lease liability current

 

 

996

 

 

 

1,109

 

Total current liabilities

 

 

42,184

 

 

 

41,206

 

Non-current liabilities:

 

 

 

 

 

 

Non-current deferred income tax liabilities

 

 

84

 

 

 

85

 

Lease liability non-current

 

 

1,382

 

 

 

1,915

 

Other non-current liabilities

 

 

613

 

 

 

766

 

Total non-current liabilities

 

 

2,079

 

 

 

2,766

 

Total liabilities

 

 

44,263

 

 

 

43,972

 

Stockholders’ Equity

 

 

 

 

 

 

Common stock, $0.05 par value; issued and outstanding 12,085 shares on
   February 25, 2023 and
11,649 shares on May 28, 2022

 

 

604

 

 

 

582

 

Class B common stock, convertible, $0.05 par value; issued and outstanding
   
2,052 shares on February 25, 2023 and 2,053 shares on May 28, 2022

 

 

103

 

 

 

103

 

Preferred stock, $1.00 par value, no shares issued

 

 

 

 

 

 

Additional paid-in-capital

 

 

70,383

 

 

 

66,331

 

Retained earnings

 

 

83,760

 

 

 

68,031

 

Accumulated other comprehensive income

 

 

90

 

 

 

800

 

                    Total stockholders’ equity

 

 

154,940

 

 

 

135,847

 

Total liabilities and stockholders’ equity

 

$

199,203

 

 

$

179,819

 

 

2


 

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

February 25, 2023

 

 

February 26, 2022

 

 

February 25, 2023

 

 

February 26, 2022

 

Net sales

 

$

70,364

 

 

$

55,308

 

 

$

203,826

 

 

$

162,991

 

Cost of sales

 

 

47,959

 

 

 

37,739

 

 

 

136,543

 

 

 

111,468

 

Gross profit

 

 

22,405

 

 

 

17,569

 

 

 

67,283

 

 

 

51,523

 

Selling, general and administrative expenses

 

 

14,779

 

 

 

13,946

 

 

 

43,704

 

 

 

40,550

 

Loss (gain) on disposal of assets

 

 

13

 

 

 

 

 

 

(12

)

 

 

2

 

Operating income

 

 

7,613

 

 

 

3,623

 

 

 

23,591

 

 

 

10,971

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

Investment/interest income

 

 

(76

)

 

 

(11

)

 

 

(179

)

 

 

(36

)

Foreign exchange (income) loss

 

 

(292

)

 

 

121

 

 

 

305

 

 

 

(2

)

Other, net

 

 

(14

)

 

 

17

 

 

 

(29

)

 

 

39

 

Total other (income) expense

 

 

(382

)

 

 

127

 

 

 

97

 

 

 

1

 

Income before income taxes

 

 

7,995

 

 

 

3,496

 

 

 

23,494

 

 

 

10,970

 

Income tax provision

 

 

1,655

 

 

 

609

 

 

 

5,281

 

 

 

1,326

 

Net income

 

 

6,340

 

 

 

2,887

 

 

 

18,213

 

 

 

9,644

 

Foreign currency translation gain (loss), net of tax

 

 

629

 

 

 

69

 

 

 

(710

)

 

 

(2,353

)

Comprehensive income

 

$

6,969

 

 

$

2,956

 

 

$

17,503

 

 

$

7,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Common shares - Basic

 

$

0.46

 

 

$

0.22

 

 

$

1.33

 

 

$

0.73

 

Class B common shares - Basic

 

 

0.41

 

 

 

0.19

 

 

 

1.19

 

 

 

0.66

 

Common shares - Diluted

 

 

0.44

 

 

 

0.21

 

 

 

1.27

 

 

 

0.71

 

Class B common shares - Diluted

 

 

0.40

 

 

 

0.19

 

 

 

1.15

 

 

 

0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

Common shares – Basic

 

 

12,047

 

 

 

11,497

 

 

 

11,893

 

 

 

11,320

 

Class B common shares – Basic

 

 

2,052

 

 

 

2,074

 

 

 

2,053

 

 

 

2,089

 

Common shares – Diluted

 

 

12,666

 

 

 

12,027

 

 

 

12,524

 

 

 

11,724

 

Class B common shares – Diluted

 

 

2,052

 

 

 

2,074

 

 

 

2,053

 

 

 

2,089

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

3


 

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

February 25, 2023

 

 

February 26, 2022

 

 

February 25, 2023

 

 

February 26, 2022

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

6,340

 

 

$

2,887

 

 

$

18,213

 

 

$

9,644

 

Adjustments to reconcile net income to cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

912

 

 

 

872

 

 

 

2,688

 

 

 

2,560

 

Inventory provisions

 

 

115

 

 

 

88

 

 

 

310

 

 

 

228

 

Share-based compensation expense

 

 

206

 

 

 

142

 

 

 

730

 

 

 

514

 

Loss (gain) on disposal of assets

 

 

13

 

 

 

 

 

 

(12

)

 

 

2

 

Deferred income taxes

 

 

(1

)

 

 

26

 

 

 

27

 

 

 

38

 

Change in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(7,189

)

 

 

(4,209

)

 

 

(12,694

)

 

 

(7,355

)

Inventories

 

 

(3,638

)

 

 

(3,113

)

 

 

(21,764

)

 

 

(12,295

)

Prepaid expenses and other assets

 

 

(153

)

 

 

(2

)

 

 

(578

)

 

 

(1,058

)

Accounts payable

 

 

(12

)

 

 

1,902

 

 

 

784

 

 

 

4,204

 

Accrued liabilities

 

 

(661

)

 

 

563

 

 

 

486

 

 

 

2,075

 

Other

 

 

(192

)

 

 

(370

)

 

 

397

 

 

 

(13

)

Net cash used in operating activities

 

 

(4,260

)

 

 

(1,214

)

 

 

(11,413

)

 

 

(1,456

)

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(2,230

)

 

 

(554

)

 

 

(4,973

)

 

 

(2,161

)

Proceeds from maturity of investments

 

 

5,000

 

 

 

 

 

 

5,000

 

 

 

 

Proceeds from sale of assets

 

 

 

 

 

 

 

 

193

 

 

 

 

Net cash provided by (used in) investing activities

 

 

2,770

 

 

 

(554

)

 

 

220

 

 

 

(2,161

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

511

 

 

 

1,906

 

 

 

3,413

 

 

 

2,630

 

Cash dividends paid

 

 

(834

)

 

 

(806

)

 

 

(2,484

)

 

 

(2,384

)

Other

 

 

 

 

 

(45

)

 

 

(69

)

 

 

(136

)

Net cash (used in) provided by financing activities

 

 

(323

)

 

 

1,055

 

 

 

860

 

 

 

110

 

Effect of exchange rate changes on cash and cash equivalents

 

 

352

 

 

 

195

 

 

 

(517

)

 

 

(662

)

Decrease in cash and cash equivalents

 

 

(1,461

)

 

 

(518

)

 

 

(10,850

)

 

 

(4,169

)

Cash and cash equivalents at beginning of period

 

 

26,106

 

 

 

39,665

 

 

 

35,495

 

 

 

43,316

 

Cash and cash equivalents at end of period

 

$

24,645

 

 

$

39,147

 

 

$

24,645

 

 

$

39,147

 

 

4


 

Richardson Electronics, Ltd.

Unaudited Consolidated Statement of Stockholders’ Equity

(in thousands, except per share amounts)

 

 

 

Common

 

 

Class B
Common

 

 

Par
Value

 

 

Additional
Paid In
Capital

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Total

 

Balance May 28, 2022:

 

 

11,649

 

 

 

2,053

 

 

$

685

 

 

$

66,331

 

 

$

68,031

 

 

$

800

 

 

$

135,847

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,213

 

 

 

 

 

 

18,213

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(710

)

 

 

(710

)

Share-based compensation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock

 

 

 

 

 

 

 

 

 

 

 

402

 

 

 

 

 

 

 

 

 

402

 

Stock options

 

 

 

 

 

 

 

 

 

 

 

328

 

 

 

 

 

 

 

 

 

328

 

Common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options exercised

 

 

386

 

 

 

 

 

 

20

 

 

 

3,393

 

 

 

 

 

 

 

 

 

3,413

 

Restricted stock issuance

 

 

49

 

 

 

 

 

 

2

 

 

 

(71

)

 

 

 

 

 

 

 

 

(69

)

Class B converted to Common

 

 

1

 

 

 

(1

)