Richardson Electronics(US:RELL)2019-07-26 20:34Financial Data and Key Metrics Changes - For Q4 FY 2019, net sales were $42.2 million, a decrease of 7.3% from $45.5 million in Q4 FY 2018 [8][15] - Gross margin for Q4 FY 2019 was 29.7%, down from 34.1% in the same quarter last year, primarily due to a less favorable product mix and higher production costs [9][10] - Operating expenses decreased to $12.5 million in Q4 FY 2019 from $13.7 million in Q4 FY 2018, resulting in a decrease in operating expenses as a percentage of net sales [11][12] - The company reported a net loss of $6.4 million for Q4 FY 2019, compared to a net income of $1.7 million in Q4 FY 2018 [15] - For FY 2019, net sales were $166.7 million, an increase of 2.1% from $163.2 million in FY 2018 [16] - The overall net loss for FY 2019 was $7.3 million, including a goodwill impairment charge of $6.3 million [25] Business Line Data and Key Metrics Changes - PMT sales in Q4 FY 2019 were $32.1 million, down from $37.2 million in Q4 FY 2018, with gross margins decreasing to 30.7% from 34.3% [29] - Richardson Healthcare sales grew by 68.8% in Q4 FY 2019, driven by increased demand for replacement CT tubes and parts [41] - Canvys reported sales of $7.3 million in Q4 FY 2019, an increase of 10.8% over the same period last year, with a slight decrease in gross margin [51][52] Market Data and Key Metrics Changes - The semiconductor wafer fab equipment market experienced a significant downturn, impacting PMT sales [5][29] - The 5G infrastructure market is showing strong growth, with expectations of 20% to 30% growth in the coming year [75][76] - The healthcare market is expanding, particularly in Latin America, with a focus on CT tube sales [44][49] Company Strategy and Development Direction - The company is focused on returning to profitability while investing in future growth initiatives [6][25] - There is a commitment to improving efficiencies and leveraging existing global infrastructure to support growth in new technology partnerships [33][39] - The company aims to enhance its position in the 5G market and is actively working with suppliers to ensure sufficient inventory [65] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for growth in FY 2020, contingent on the recovery of the semiconductor wafer fab business [71][72] - The company is experiencing strong demand in the PMG and Healthcare sectors, which are expected to drive sales growth [72][64] - Management acknowledged challenges in the semiconductor market but remains confident in the company's ability to adapt and grow [39][39] Other Important Information - The company has a cash position of $50 million at the end of FY 2019, with plans to repatriate additional foreign cash [25][27] - The company is awaiting CE approval for its ALTA tubes, which is critical for sales in Europe [47][48] Q&A Session Summary Question: Guidance for fiscal year 2020 - Management expects sales growth, largely dependent on the semiconductor wafer fab business recovery [71][72] Question: 5G investment progress - The rollout of 5G is expected to show significant growth, with the company shipping over $25 million into the 5G market in FY 2019 [75][76] Question: Healthcare growth expectations - Management anticipates good growth in Healthcare, particularly in CT tube sales [80] Question: Operating cash flow for FY 2020 - Management expects operating cash flow to be close to the previous year's figure of minus $2.6 million [81] Question: Drivers of PMT sales decline - The decline was primarily due to a significant drop in the semi-wafer fab market, which could not be offset by growth in other areas [88][90] Question: Inventory issues in Healthcare - Inventory issues were mainly related to older Toshiba systems, leading to price deterioration [102][104] Question: Goodwill impairment explanation - The impairment was an accounting procedure, and management does not believe it reflects a loss of value in the IMES unit [125]