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	120	70	12	60	27	2	4	112	44%	28.0	3%
RADA	100	54	12	0	0	0	0	78			0%
VOXX	120	492	108	421	112	-31	-30	87	27%	-2.8	-6%
PRCP	50	67	25	73	26	-7	-5	46	35%	-8.5	-10%
CUI	26	65	26	52	16	-6	-5	24	32%	-4.8	-9%
TAIT	16	14	1	5	2	1	1	11	50%	10.4	7%
AWSM	12	30	41	17	5	-13	-12	34	26%	-2.8	-43%
QBAK	12	11	4	10	3	0	0	7	27%	34.9	2%
UUU	2	17	8	17	5	-2	-2	2	31%	-1.2	-12%
RELL	89	151	28	163	51	-8	-3	43	31%	-12.5	-5%

10-Q 1 rell-10q_20191130.htm 10-Q rell-10q_20191130.htm

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

☐	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.

TABLE OF CONTENTS

		Page

Part I.	Financial Information

Item 1.	Financial Statements	2
	Consolidated Balance Sheets	2
	Unaudited Consolidated Statements of Comprehensive Loss	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	24
Item 4.	Controls and Procedures	25

Part II.	Other Information

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
Exhibit Index		27
Signatures		28

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Richardson Electronics, Ltd.

Consolidated Balance Sheets

(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

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.

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)		—			—		—

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	-0	$-0

10-Q	2020-01-09	Quarter: 2019-11-30
10-Q	2019-10-10	Quarter: 2019-08-31
10-K	2019-08-05	Annual: 2019-06-01
10-Q	2019-04-11	Quarter: 2019-03-02
10-Q	2019-01-10	Quarter: 2018-12-01
10-Q	2018-10-11	Quarter: 2018-09-01
10-K	2018-08-02	Annual: 2018-06-02
10-Q	2018-04-12	Quarter: 2018-03-03
10-Q	2018-01-11	Quarter: 2017-12-02
10-Q	2017-10-12	Quarter: 2017-09-02
10-K	2017-07-31	Annual: 2017-05-27
10-Q	2017-04-06	Quarter: 2017-02-25
10-Q	2017-01-05	Quarter: 2016-11-26
10-Q	2016-10-06	Quarter: 2016-08-27
10-K	2016-07-29	Annual: 2016-05-28
10-Q	2016-04-07	Quarter: 2016-02-27
10-Q	2016-01-07	Quarter: 2015-11-28
10-Q	2015-10-08	Quarter: 2015-08-29
10-K	2015-07-28	Annual: 2015-05-30
10-Q	2015-04-10	Quarter: 2015-02-28
10-Q	2015-01-08	Quarter: 2014-11-29
10-Q	2014-10-09	Quarter: 2014-08-30
10-K	2014-07-25	Annual: 2014-05-31
10-Q	2014-04-10	Quarter: 2014-03-01
10-Q	2014-01-09	Quarter: 2013-11-30
10-Q	2013-10-10	Quarter: 2013-08-31
10-K	2013-07-26	Annual: 2013-06-01
10-Q	2013-04-11	Quarter: 2013-03-02
10-Q	2013-01-10	Quarter: 2012-12-01
10-Q	2012-10-11	Quarter: 2012-09-01
10-K	2012-07-27	Annual: 2012-06-02
10-Q	2012-04-12	Quarter: 2012-03-03
10-Q	2012-01-12	Quarter: 2011-12-03
10-Q	2011-10-06	Quarter: 2011-09-03
10-K	2011-07-22	Annual: 2011-05-28
10-Q	2011-04-07	Quarter: 2011-02-26
10-Q	2011-01-06	Quarter: 2010-11-27
10-Q	2010-10-07	Quarter: 2010-08-28
10-K	2010-07-22	Annual: 2010-05-29
10-Q	2010-04-09	Quarter: 2010-02-27
10-Q	2010-01-07	Quarter: 2009-11-28

8-K	2020-01-08	Earnings, Exhibits
8-K	2019-10-09	Earnings, Exhibits
8-K	2019-07-24	Earnings, Exhibits
8-K	2019-03-13	Officers

EX-31.1	rell-ex311_9.htm
EX-31.2	rell-ex312_7.htm
EX-32	rell-ex32_8.htm