PMT, Canvys and Healthcare Revenues Grow Versus Second Quarter FY21

Second Quarter Highlights

• Net sales of $54.0 million were up 27.3% from last year’s second quarter.
• Sales increased for PMG, Canvys, Healthcare and Semiconductor Wafer Fabrication Equipment products in the second quarter of fiscal 2022 versus the second quarter of fiscal 2021.
• Backlog increased to $146.9 million in the second quarter versus $126.5 million at the end of the first quarter.
• Gross margin was 32.7% of net sales for the second quarter of fiscal 2022 versus 33.8% of net sales in the prior year’s second quarter primarily due to product mix and higher global freight costs.
• Operating expenses decreased $0.4 million to $13.1 million compared to the prior year’s second quarter. This decrease was due to lower legal fees, partially offset by increased employee compensation expense, including higher incentive expense due to the substantially improved performance.
• Operating income was $4.5 million for the second quarter of fiscal 2022 compared to an operating income of $0.9 million in the second quarter of fiscal 2021.
• Earnings per common share (diluted) were $0.30 for the second quarter of fiscal 2022 compared to $0.05 per common share (diluted) in the second quarter of fiscal 2021.
• Cash and investments increased to $39.7 million as of November 27, 2021 versus $36.4 million on August 28, 2021.

LAFOX, Ill., Jan. 05, 2022 (GLOBE NEWSWIRE) -- Richardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its second quarter ended November 27, 2021. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.

“Our strong second quarter financial and operating performance is encouraging, as we produced our sixth consecutive quarter of increased revenues and our highest quarterly operating profit in 11 years,” said Edward J. Richardson, Chairman, Chief Executive Officer, and President. “Our second quarter results reflect the success of our multiple growth strategies as well as strong performance of new products, including our new ULTRA3000. In addition, we are experiencing favorable demand trends across many of our global markets. I am also pleased by the significant improvement in profitability, which we believe demonstrates the power of our compelling financial model. With continued growth in our backlog, we remain confident that fiscal year 2022 will be a strong year of sales growth and improved profitability.”

Second Quarter Results

Net sales for the second quarter of fiscal 2022 increased 27.3% to $54.0 million compared to net sales of $42.4 million in the prior year’s second quarter due to higher net sales across all three business units. PMT sales increased $8.8 million or 26.7% from last year’s second quarter. Demand within PMT was driven by strong growth from our Power and Microwave new technology partners for various Power and Microwave applications including Power Management and 5G infrastructure, as well as increasing shipments of the ULTRA3000. In addition, sales for certain Electron Tube product lines increased from the second quarter of fiscal 2021. Canvys sales increased by $2.4 million or 36.5% due to strong customer demand in North America and Europe. Richardson Healthcare sales increased $0.3 million or 10.9% primarily due to a significant increase in demand for the ALTA750^TM Tubes.

Gross margin was 32.7% of net sales during the second quarter of fiscal 2022 compared to 33.8% of net sales during the second quarter of fiscal 2021. PMT margin decreased to 33.5% from 34.2% due to a higher mix of lower margin PMG sales. Canvys margin as a percent of net sales decreased to 31.8% from 35.5% because of higher global freight costs. Healthcare gross margin was 24.5% in the second quarter of fiscal 2022 compared to 25.6% in the prior year’s second quarter primarily due to increased component scrap expense.

Operating expenses were $13.1 million compared to $13.5 million in the second quarter of fiscal 2021. The decrease in operating expenses resulted from lower legal fees, partially offset by higher employee compensation expenses.

The Company reported operating income of $4.5 million for the second quarter of fiscal 2022 compared to an operating income of $0.9 million in the prior year’s second quarter. Other income for the second quarter of fiscal 2022, including interest income and foreign exchange, was $0.2 million, compared to other expense of $0.1 million in the second quarter of fiscal 2021.

The income tax provision of $0.6 million for the second quarter of fiscal 2022 reflected a provision for foreign income taxes and the offset of a U.S. tax provision against the valuation allowance. In addition, state income taxes for Illinois increased due to the suspension of net operating loss carryforwards (“NOLs”) until the end of fiscal 2023. Net income for the second quarter of fiscal 2022 was $4.1 million compared to a net income of $0.7 million in the second quarter of fiscal 2021. Earnings per common share (diluted) were $0.30 in the second quarter of fiscal 2022 compared to $0.05 per common share (diluted) in the second quarter of fiscal 2021.

Cash and investments at the end of the second quarter of fiscal 2022 were $39.7 million compared to $36.4 million at the end of the first quarter of fiscal 2022 and $46.0 million at the end of the second quarter of fiscal 2021. The Company spent $0.8 million during the quarter on capital expenditures primarily related to its Healthcare and manufacturing businesses as well as its IT System, versus $0.6 million during the second quarter of fiscal 2021.

FINANCIAL SUMMARY – SIX MONTHS ENDED NOVEMBER 27, 2021

• Net sales for the first six months of fiscal 2022 were $107.7 million, an increase of 32.6%, compared to net sales of $81.2 million during the first six months of fiscal 2021. Sales increased by $21.6 million or 34.1% for PMT, $4.2 million or 31.1% for Canvys and $0.7 million or 15.3% for Richardson Healthcare.
• Gross profit increased to $34.0 million during the first six months of fiscal 2022, compared to $26.7 million during the first six months of fiscal 2021. As a percentage of net sales, gross margin decreased to 31.5% of net sales during the first six months of fiscal 2022, compared to 32.9% of net sales during the first six months of fiscal 2021, primarily because of an unfavorable product mix in PMT and higher global freight costs in Canvys, partially offset by improved manufacturing efficiencies for Healthcare.
• Operating expenses increased to $26.6 million for the first six months of fiscal 2022, compared to $26.5 million for the first six months of fiscal 2021. The increase in operating expenses resulted from higher employee compensation and travel expenses, partially offset by lower legal expenses.
• Operating income during the first six months of fiscal 2022 was $7.3 million, compared to an operating income of $0.2 million during the first six months of fiscal 2021.
• Other income for the first six months of fiscal 2022, including interest income and foreign exchange, was $0.1 million, as compared to other expense of $0.5 million in the first six months of fiscal 2021.
• The income tax provision of $0.7 million during the first six months of fiscal 2022 reflected a provision for foreign income taxes and the offset of a U.S. tax provision against the valuation allowance. In addition, state income taxes for Illinois increased due to the suspension of NOLs until the end of fiscal 2023.
• Net income for the first six months of fiscal 2022 was $6.8 million, versus a net loss of $0.5 million during the first six months of fiscal 2021. Earnings per common share (diluted) were $0.50 for the first six months of fiscal 2022 compared to a net loss of $0.04 per common share (diluted) for the first six months of fiscal 2021.
  

CASH DIVIDEND DECLARED

The Board of Directors of Richardson Electronics 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 February 23, 2022, to common stockholders of record as of February 4, 2022.

CONFERENCE CALL INFORMATION

On Thursday, January 6, 2022, at 9:00 a.m. CST, Edward J. Richardson, Chairman and Chief Executive Officer, and Robert J. Ben, Chief Financial Officer, will host a conference call to discuss the Company’s second quarter fiscal year 2022 results.  A question and answer session will be included as part of the call’s agenda.