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Richardson Electronics Reports Improved Fourth Quarter Fiscal 2016 Results and Declares Quarterly Cash DividendRichardson Electronics, Ltd. (NASDAQ: RELL) today reported financial results for its fourth quarter and fiscal year ended May 28, 2016. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend. Fourth Quarter Results Net sales for the fourth quarter of fiscal 2016 were $39.6 million, a 13.2% increase, compared to net sales of $35.0 million in the prior year. Sales increased $3.9 million for PMT and $1.6 million for Healthcare, which includes net sales for International Medical Equipment Systems ("IMES"), acquired early this fiscal year. The increase was partially offset by a $0.9 million decrease in Canvys. Gross margin increased to $13.4 million, or 33.8% of net sales during the fourth quarter of fiscal 2016, compared to $10.2 million, or 29.2% of net sales during the fourth quarter of fiscal 2015. Margin improved as a percent of net sales primarily due to sales of diagnostic imaging replacement parts in the Healthcare business. Operating expenses increased to $13.7 million for fourth quarter of fiscal 2016, compared to $12.9 million for fourth quarter of fiscal 2015. However, operating expenses as a percent of net sales improved to 34.6% versus 36.8% in the same period last year. The increase in SG&A was due to $1.1 million related to IMES and additional investments in our Richardson Healthcare business and $0.8 million in PMT, partially offset by decreases of $0.3 million in IT services, $0.6 million in our other support functions, and $0.2 million in Canvys. As a result, operating loss for the fourth quarter of fiscal 2016 was $0.3 million, compared to an operating loss of $2.6 million in the prior year's fourth quarter. Other expense for the fourth quarter of fiscal 2016, including foreign exchange, was less than $0.1 million, compared to less than $0.1 million in other income in the fourth quarter of fiscal 2015. The income tax benefit of $0.2 million during the fourth quarter of fiscal 2016 reflects an adjusted lower provision for foreign taxes as well as the valuation allowance recorded against the net operating loss in the U.S. Net loss for the fourth quarter of fiscal 2016 was $0.2 million, compared to net loss of $2.2 million during the fourth quarter of last year. Fiscal 2016 Results Net sales for fiscal 2016 were $142.0 million, a 3.7% increase, compared to net sales of $137.0 million in the prior year. Sales for the Company's Healthcare business increased $6.4 million, which includes net sales for IMES, acquired early this fiscal year. The increase was partially offset by a $1.2 million decrease in Canvys and $0.2 million decrease in PMT. Gross margin increased to $44.8 million, or 31.6% of net sales during fiscal 2016, compared to $41.1 million, or 30.0% of net sales during 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 increased to $51.6 million for fiscal 2016, compared to $49.2 million for the fiscal 2015 and as a percentage of sales increased from 35.9% to 36.4%. The increase in SG&A reflected $5.0 million for IMES and additional investments in our Richardson Healthcare business and $0.7 million in PMT, partially offset by decreases of $1.9 million in IT services, $0.9 million in our other support functions, and $0.5 million in Canvys. As a result, operating loss for fiscal 2016 was $6.6 million, compared to an operating loss of $8.1 million in fiscal 2015. Other income for fiscal 2016, including foreign exchange, was $0.3 million, compared to $1.1 million in other income for fiscal 2015. The income tax provision of $0.5 million during fiscal 2016 was due to foreign income tax expense and additional tax due in Germany that resulted from an audit. Net loss for fiscal 2016 was $6.8 million, compared to net loss of $5.6 million during 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 August 24, 2016, to common stockholders of record on August 8, 2016. Cash and investments at the end of the fourth quarter of fiscal 2016 were $70.5 million. During the fourth 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. "Since the sale of RFPD in 2011, we have spent more than $17 million on dividends," said Edward J. Richardson, Chairman, Chief Executive Officer and President. "Including share repurchases, we have returned more than $82 million to our shareholders. Our intent now is to further improve shareholder value by investing in our growth initiatives." OUTLOOK "We are pleased with the significant improvement in our financial performance in the fourth quarter of fiscal 2016 as compared to the fourth quarter of fiscal 2015. In addition to a large U.S. government sale, there were other areas of improvement, including strong IMES sales and gross margin and lower S, G&A expenses as a percent of net sales," said Mr. Richardson. "We are highly focused on revenue growth in fiscal 2017, while carefully managing our cash flow. We have implemented programs to reduce our run rate expenses for fiscal year 2017, and are working on more operational improvement initiatives so we may continue to invest in our growth strategy," Mr. Richardson concluded. CONFERENCE CALL INFORMATION On Thursday, July 21, 2016, at 9:00 a.m. CT, 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 fourth quarter results for fiscal 2016. A question and answer session will be included as part of the call's agenda. To listen to the call, please dial (888) 339-2688 and enter passcode 68976218 approximately five minutes prior to the start of the call. A replay of the call will be available for seven days beginning at 12:00 a.m. CT on July 22, 2016. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 27292309. FORWARD-LOOKING STATEMENTS This release includes certain "forward-looking" statements as defined by the Securities and Exchange Commission. Statements in this press release regarding the Company's business which are not historical facts represent "forward-looking" statements that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, "Risk Factors" in the Company's Annual Report on Form 10-K filed on July 28, 2015. The Company assumes no responsibility to update the "forward-looking" statements in this release as a result of new information, future events, or otherwise. ABOUT RICHARDSON ELECTRONICS, LTD. Richardson Electronics, Ltd. is a leading global provider of engineered solutions, power grid and microwave tubes and related consumables; power conversion and RF and microwave components; high value displays, flat panel detector solutions and replacement parts for diagnostic imaging equipment; and customized display solutions. We serve customers in the alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. The Company's strategy is to provide specialized technical expertise and "engineered solutions" based on our core engineering and manufacturing capabilities. The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair through its global infrastructure. More information is available at www.rell.com. Richardson Electronics common stock trades on the NASDAQ Global Select Market under the ticker symbol RELL.
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