Richardson Electronics(RELL) - 2022 Q3 - Quarterly Report

Part I. Financial Information Financial Statements Presents unaudited consolidated financial statements for the quarter ended February 26, 2022, including balance sheets, income, cash flow, and equity statements with detailed notes Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Items | Feb 26, 2022 ($ thousands) | May 29, 2021 ($ thousands) | | :--- | :--- | :--- | | Total Current Assets | 147,787 | 134,305 | | Total Assets | 170,686 | 156,753 | | Total Current Liabilities | 37,883 | 32,227 | | Total Liabilities | 41,075 | 35,193 | | Total Stockholders' Equity | 129,611 | 121,560 | Consolidated Statements of Comprehensive Income Highlights (Unaudited) | Income Statement Items | Three Months Ended Feb 26, 2022 ($ thousands) | Nine Months Ended Feb 26, 2022 ($ thousands) | | :--- | :--- | :--- | | Net Sales | 55,308 | 162,991 | | Gross Profit | 17,569 | 51,523 | | Operating Income | 3,623 | 10,971 | | Net Income | 2,887 | 9,644 | | Diluted EPS (Common) | $0.21 | $0.71 | Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Items | Nine Months Ended Feb 26, 2022 ($ thousands) | Nine Months Ended Feb 27, 2021 ($ thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | (1,456) | 3,868 | | Net cash (used in) provided by investing activities | (2,161) | 5,165 | | Net cash provided by (used in) financing activities | 110 | (2,476) | | (Decrease) increase in cash and cash equivalents | (4,169) | 7,872 | Notes to Unaudited Consolidated Financial Statements Provides detailed context for financial statements, outlining business segments, accounting policies, lease obligations, income tax, and COVID-19 impact - The company operates through three reportable segments: Power and Microwave Technologies Group (PMT), Canvys (customized display solutions), and Healthcare (replacement parts for diagnostic imaging)[21][22][23] - Revenue is primarily recognized at a point in time when control of goods transfers to the customer. Contract liabilities (deferred revenue) increased from $3.3 million at May 29, 2021, to $4.4 million at February 26, 2022[32][36][40] Net Sales by Segment (Nine Months Ended) | Segment | Feb 26, 2022 ($ thousands) | Feb 27, 2021 ($ thousands) | | :--- | :--- | :--- | | PMT | 128,778 | 98,418 | | Canvys | 25,732 | 20,491 | | Healthcare | 8,481 | 7,556 | - The company was considered an essential business and continued operations during the COVID-19 pandemic. The full financial impact remains uncertain, but no major supply chain interruptions were experienced[75][76] Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses Q3 and nine-month fiscal 2022 financial results, highlighting sales growth, increased operating income, and net income, alongside segment performance, margin pressures, and liquidity analysis Financial Summary - Q3 FY2022 vs Q3 FY2021 | Metric | Q3 FY2022 | Q3 FY2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $55.3M | $45.2M | 22.3% | | Gross Margin | 31.8% | 34.9% | -3.1 p.p. | | Operating Income | $3.6M | $0.3M | +1100% | | Net Income | $2.9M | $0.2M | +1350% | Net Sales Growth by Segment - Q3 FY2022 vs Q3 FY2021 | Segment | Q3 FY2022 Sales ($ thousands) | Q3 FY2021 Sales ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | PMT | 44,032 | 35,237 | 25.0% | | Canvys | 8,141 | 7,078 | 15.0% | | Healthcare | 3,135 | 2,920 | 7.4% | - Selling, general and administrative (SG&A) expenses decreased to $13.9 million in Q3 FY22 from $15.5 million in Q3 FY21, primarily due to the non-recurrence of a $1.6 million legal settlement paid to Varex Imaging Corporation in the prior year[105][106] - Cash and cash equivalents decreased from $43.3 million at May 29, 2021, to $39.1 million at February 26, 2022. The decrease was driven by cash used in operating activities ($1.5 million) due to increases in accounts receivable and inventory, and cash used in investing activities ($2.2 million) for capital expenditures[116][117][120] Quantitative and Qualitative Disclosures About Market Risk Identifies foreign currency exchange as the primary market risk, managed through normal operating and financing activities without derivative instruments - The primary financial risk exposure for the company is foreign currency exchange[128] - Risks are managed through normal operating and financing activities without the use of derivative instruments[128] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of February 26, 2022, with no material changes to internal control over financial reporting during Q3 FY2022 - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[131] - There were no material changes to the company's internal control over financial reporting during the third quarter of fiscal 2022[132] Part II. Other Information Legal Proceedings This section reports no new legal proceedings for the current period Risk Factors No material changes to previously disclosed risk factors have occurred since the Annual Report on Form 10-K for fiscal year ended May 29, 2021 - No material changes to risk factors have occurred since the last Annual Report on Form 10-K was filed[134] Unregistered Sales of Equity Securities and Use of Proceeds This section contains no reported information regarding unregistered sales of equity securities or use of proceeds Other Information This section contains no other reported information Exhibits Provides an index of exhibits filed with Form 10-Q, including CEO/CFO certifications and financial statements in iXBRL format - The filing includes certifications from the CEO (Exhibit 31.1) and CFO (Exhibit 31.2) pursuant to Section 302 of the Sarbanes-Oxley Act[138] - Financial data is provided in iXBRL format as required (Exhibit 101)[138]