RELL - Earnings call transcript Q4 2020 | Richardson Electronics, Ltd.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Richardson Electronics Fourth Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participants lines are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Ed Richardson, CEO. sir. ahead, go Please

Edward Richardson

welcome fiscal Electronics year and the call fourth quarter XXXX. to morning conference Richardson for Good

Joining me for remote today & of Wendy Peloquin, Diddell, Canvys. are Manager Microwave Robert Ben, Operating General calling Ruppert, and Chief Technologies Officer We're Group; General General our all locations. Manager of Richardson Jens Greg Chief Healthcare; Power Financial Manager Officer; from in

quarter, our you call available also and release this SEC more an reminder, on is we'll remind for like be Therefore, today. press playback. quarter dramatically risk the explanation quarter. world in a the and based virus be the than actual being of Americas so our forward-looking seen in As our Europe will involve Asia. and making results overnight. history all businesses mark The nearly materially would leaving quickly audio I to change of our In coronavirus they're Never for to uncertainties statements fourth The spread could and in filings on factors. the that be unprecedented challenging throughout Please recorded different. ever our risks we quarter. third and negatively and have expectations affected the current refer company's business, so primarily its and was fourth the

an landslide And companies Our continue This other the the customers changed and seen prevent essential revenues, our in business, we as such quickly industries. they work. way operate. helped as and in employees to those

the America, wafer suppliers. We're growth see superior results, fab Richardson demonstrated and equipment to impacted semiconductor in and support market. our sales overall negatively customers to our in the COVID-XX Canvys North While pleased team

will individual recap changing detailed the investments provide and economy, growth new with full stronger business initiatives. to performance, quarter ongoing to in and the be impact situation details what business of with the we're Greg, unit I'm and Bob bring. it's call ever discuss our a now coronavirus. Ben making year over the difficult turn convinced team more the have financials. will our global our including I'll Wendy, the who we Given the normal will predict the Then fourth of in Jens regarding

Robert Ben

quarter, and for morning. fourth COVID-XX to for quarter sales quarter of $XX.X and you, demand. I will followed our financial Net to fourth its XXXX, XX.X% review position. fourth million year's Thank million fiscal a compared XXXX our due year in good review fiscal sales $XX.X to the primarily Ed our impact decreased results in on by cash the net of prior

partially Although PMT year's net higher medical PMT. to product Richardson to favorable restrictions net non-emergency the million XX.X% mix from market, or European $X.X virus. many expenses, to severance of XXXX. last due $XX.X expenses sales The resulted in fourth last sales increase decreased higher $XX.X and Gross million salaries compared its was OEMs partially fourth offset orders lower by million due and performance sales in margin Operating in IT stop the offset fiscal specialty or increased operating for the net to shelter-in-place and XX.X%. procedures, quarter compared million products Healthcare lower sales. million quarter North quarter. the semiconductor sales fourth fourth X.X%, manufacturing to improved decreased improved expenses. fab of a for or year's in hospital XX.X% expenses equipment XXXX primarily This people were travel closures, quarter XX.X% on fiscal American care by of during postponing spread help and sales to sales decreased of by Canvys from and to $X.X quarter. to $X.X Due sales wafer

other the million fiscal quarter the operating $X.X a loss. non-cash loss of in an the $X.X the tax fiscal included was fourth $X.X and of of of fourth including a to for benefits The which interest quarter valuation operating quarter for $X.X a year, the million quarter Other no the goodwill recorded fourth foreign fourth was an XXXX. tax reported million As the income year's quarter. which lower compared of $X.X exchange through income U.S. foreign quarter the compared for company reflected income last net in $X.X than provision fiscal XXXX, for operating fourth to million allowance income XXXX And against impairment provision result, as the of in loss taxes, million. million prior income

million any U.S. is our shown losses U.S. there our can losses, offset is in tax XXXX. fiscal in loss quarter of fourth the amount return. reported of operating fiscal The the $X.X million. we quarter to income federal Overall, NOLs benefits $XX.X $X.X our of cash of had fourth no a federal net on loss tax as we for Although from net tax million compared to net financial use of liability a XXXX operating net statements

efficiencies fiscal million XXXX, improved XXXX, fiscal Gross decreased resulting in for $X.X quarter million, from margin favorable fiscal lower healthcare to of mix due to in impact year. $XX.X for XX.X% to for primarily XXXX it impairment net company incentive plans layoffs increased regular for million fiscal for X.X% of PMT. the Overall, fiscal benefit. XXXX and fiscal all have severance, travel, increases million to of year $X.X Other sales the XXXX, year lower the decrease quarter. of fiscal provision loss fiscal fourth avoiding the Throughout Sales primarily the XX.X% for $XXX.X income from higher a fiscal PMT, a by operating from during inclusive fiscal coronavirus. furloughs. by non-cash employees tax of review year year exchange net a employee XX.X% XXXX, net reflecting a expenses XXXX income from Operating fiscal fiscal million $X.X loss decrease and or for including for compensation interest XXXX decided provision million to million or increased million $X.X million. the compared by The foreign XXXX. X.X% million which in of came X.X% through million $X.X or XXXX XXXX. of support or for and our for fiscal offset of fourth decreased Turning Net decrease the but XXXX manufacturing a U.S. the expenses, compared legal, tax for were product foreign for XXXX, $XX.X last reflected million in for loss were and a of $X.X for represented was due merit partially Operating no loss sales fiscal year $X.X results and taxes was for goodwill net $XXX.X XXXX. in pandemic, loss XXXX fiscal by $X.X the its income versus sales as to year million, and fiscal was million expenses. year we a Canvys. $X.X to sales the The Richardson by Nearly an $X.X of

our quarter million at $X.X for XXXX. the year to to $X.X quarter $XX.X business, to fourth $X.X million of million and Approximately system. at closely of end XXXX million investments in fiscal at to end the were end fiscal compared fiscal million manage the and the fiscal for the We million $X.X of manufacturing the of expenditures our million business, $XX.X were XXXX. third position. in of $XX.X cash compared related million fourth $X.X and was our Cash of XXXX healthcare Capital fiscal XXXX quarter was continue IT

million fiscal For period. XXXX and paid the improvement expenditures for flow totaled fiscal $X.X fourth total Both million prior respective as in was XXXX. and quarter fiscal the in year compared Free of $X.XXX XXXX. for fourth XXXX. $X.X from We quarter cash $X.X XXXX, in capital in fiscal the $X.X year $X.X million a to were million million significant million dividends fiscal

In on was in repatriated we million repatriated which end quarterly fiscal will XXXX. of per of paid our a fiscal Total our foreign position, locations. total end cash financial XXXX. positive of $X.X on was million $X.XX the the quarter of XXXX common a dividend note, U.S. declared be $XX.X from during first for million. addition, $X.X quarter, To cash at of the share, Board a based Directors current fiscal

Now, Greg discuss will to will Group. the Technologies turn Microwave & the who call over Power results I for our

Greg Peloquin

and PMT morning versus $XX.X Bob sales fourth fiscal year FY everyone. you, good of quarter $XX.X were the QX XXXX. in Thank million million XXXX in

fab as and year, and improved quarter in prior Our related manufacturing efficiencies. including primarily to our XX.X% sales business closures decline in COVID-XX, when we the wafer technology in gross PMG, QX margin the strong compared caused shelter-in-place improved to was versus to orders temporary XX.X% customers, prior the Issues our our to Microwave this as EDG quarter, bookings well Power One the growth. fourth partners bookings. X.XX Group tied our year. trend was as drove and our positive new Book-to-bill

for generate manner. With contact Our technology resources creation our infrastructure continued more backlog in opportunities EDG more and bookings global unique our PMG our by to using allow growth and strategy benefiting continue wafer due growing was markets, million to fab markets headcount. will markets, for development OEM global on the in bookings us improve increasing growth business our and growth and quarter, key actions greatly customer These partners, and wins, in global and our our we engineering customers. a logistics our model, both high model. is to improve based $X.X business over infrastructure go-to-market business efficient design The MRO the investing to the in increase existing new support our demand numerous in

manufacturing PHOTONIS, as demand QX. technology, our the manufacturers did reason our Anokiwave, key is a by Our and as and UnitedSiC, COVID-XX growth in the The product such use our the NJRC, TX global industries go in new away. Thales, word such legacy own Fuji business. well CPI, bookings slowdown Qorvo, did capabilities Alosetron, as as is supported for not MACOM, slowdown cause partners, I Semiconductor. support

daily In my pandemic the it pandemic. for during did power opposite. and our sockets, about a trends global fact, demand the the for demand we're the not global not away, away, reviewing go away. infrastructure thousands opinion the still in of go months, The management go the business fact, XG quarter did go before two just for not not four the in strong demand the booking products did In support the products we did for this basis away, excited is of on

specifically those and world. country, the have anywhere have to world the they in that to our from able they large have person suppliers to expedite talked locations quickly. and customers realize they the and car, to and their at work must They be confirmed from infrastructure. amounts every Now, and the must I of work be in receive from pandemic home, of XG must data of cabin, caused and has send the will country, looking XG, implementation This the able any the ability city, customer, to

increase the markets, supply issues, is from Just from forward. delays of working the look for the and and push that and design the will affect will be number others demand of the The people at XG out rollouts, market forecast home consensus design pandemic XXXX cycles. resulting in going chain manufacturing, COVID-XX to

its the Especially However, and side Richardson in pandemic, We're side forecast. in of we're the the a double-digit seeing the majority strong XXXX. to growth show and replay forecast can't of XXXX pre-COVID-XX of I XG stress suppliers. value and seeing out delays adjusted Electronics and enough for where could this XXXX coming on increase handset customers the during over infrastructure

and is this To has for on unique our our unparalleled RF products power not steadfast global we industries. strategy The customers, in Microwave focus survive capability the pandemic. away. demand will to gone Our go-to-market

Richardson need and ever. than more products partners technology and customers support Our

that, with over Richardson Wendy turn So, will I Diddell and to it Healthcare.

Wendy Diddell

Nearly the Thanks, XXXX CE for in good approval, flexible. made policy sale to Europe. adjusted be We morning XX% of The to customers as offer the identify contracts doubled us where Americas. ALTAXXX a Canon number the began year to buying number Group. and the in our FY of everyone. and We of the States. of the pricing our customers United the did new Healthcare located PX from We concerted outside well effort ALTAXXX. are CT throughout systems aggressive allowing for are Greg received

volume help FY was hit, the track. diagnose XXXX suspension call hospitals up were We non-clinical of of in both States the on For catching of so healthcare the upwards, first would COVID. the our pandemic organizations Europe. than procedures. in and significant right without general, felt know quarters virus. three service Initially, in out our third-party that XX% increase" we CT by fear to of avoiding of a in decrease were the reported quarter any sales customers have trending we patients Tube reported in causing Unfortunately, to Then on early more People, Many offset impact and the volume. CT call close United fourth been the COVID-XX. scans hospitals "real the drop

Although now hours to calls. responding fewer most working personnel are are are radiology hospitals not reopening, imaging and and sales they related

We to significant sales the already stay Latin economic The issues. in the to available of phones, via healthcare pandemic to it out to offer critical to hospital and and America, to XX/X them and are social The cost-effective experiencing our provide is continue reach and advise we and that all emails, We technical parts on demand. also depressed media help quarter. know virus alternatives. system our customers ship affected was tubes up running which support further

revenue result in The sale refurbished Tube in FY buying suffering parts a and this buying should basis This with good is also will of used CT scanners. CT two that is availability XXXX. hospitals are lower and of affecting ways. the from help closed us they're financial they scanners, in on demand systems lapse, new news are As not systems used major not global

be parts will other on systems for market tube. companies for harvest fewer the there First, to in

versus a organization sales fourth down and Second, $X.X product basis, orders. well million to position in on million down million work the existing keep to quarter increasing fourth negative us $X.X last were under on up and resulting the FY Everyone was XXXX. spent development, scanners spite the a of XXXX. and Inventory put shelter-in-place versus XXXX. versus the improvement. efforts conditions, Because the manufacturing XX.X%. in XX.X% will these healthcare prior tubes, considerably as margin year on XX.X% early and ALTAXXX full pandemic, in a CT flat in decision all $X.X to economies were throughout On its as well the impact XX.X% year. XXXX XXXX. absorption, a has quarter to on across FY our gross in year-over-year. These the as was team as versus service. good year for quarter. during On dropped the capital as quarter still revenues demand projects in and hospitals were margin continue In basis, of CT pandemic suppliers, FY within replacement on process manufacturing Tube gross gross hospitals expenditures longer, margin year. XX.X% parts, less Due grow various FY focus Sales of Sales Healthcare put million hold calendar to lower sales last categories. anticipate the was and year, we to the from market ALTAXXXG year $X.X their were the made significantly in also we full launching entire reopen. In production the

next our launch solutions calendar year those tubes. XXXX. later in progress making We good also on are two to We plan

additional registrations recently We device efforts U.S. quality ISO our countries to medical under XXXXX, meets Finally, continue. management secure recertified indicating system requirements. manufacturing for our

MDSAP for over require Ruppert point, MDSAP. We process. the Both a Program, and Europe's discuss device management Jens will tighter satisfies results Australia, and Single effect also of even initiated requirements for Device regulations the Canvys. with I call control quality May. program Audit that the Europe closely to fourth that MDSAP is go single the this into to aligns for audit allows next new quarter turn regulations At the Canada, new Medical that multiple a MDSAP Japan. countries Brazil, medical including or

Jens Ruppert

Europe customer custom to performance $X.X Thanks engineering, of decreased The manufacture for industrial Canvys, during the and prior XXXX, displays customers the quarter, of used and than last the radiography. stronger for Sales production in for and related used was HMIs demand in fiscal on care OEMs. the original to Many monitors intensive of are period quarter fourth impact in fourth quarter demand our sale to the same patient of that and actually delivered coronavirus year's of manufacturers sales the to outbreak due mobile America in decrease which higher of part year. includes markets, medical North are morning with equipment units and thanks in European solid revenue over also XX.X% decrease resulting everyone. good Wendy the the a demand. in million decrease

fiscal very the XX.X% On the net fiscal grew a pandemic percentage COVID-XX impact year margin, of during year-to-date a and XXXX currency during foreign for compared XXXX. XX.X% basis, was the and gross serious X.X% XXXX. to The global sales mix sales margin Gross very the the quarter in was quarter despite unfavorable year fiscal strong from display business related strong as XXXX, fiscal an fourth business, to down fourth still product of while effects. decreased

the On decreased sales from slightly basis, year as fiscal year fiscal margin our of year-to-date to gross XX.X% XXXX. XXXX XX.X% a percentage

any are Our for problem impact COVID-XX. marketing continues to our along continued strong basis well visiting a considering and projects stage growth cold backlog are positioned us long-term engineering under number online of with customers The increased calling. by be the healthy that before to on backlog continues trade a on in year-to-year By XX%. a and be shows focused reports position of sales COVID-XX, currently and

orders where are our new During customers. the displays both first-time medical OEM quarter, we used existing are from numerous. received several and Applications,

locations central as for digital monitoring medical where theatres, patient's operating these mobile are and treatment Some products. exploring vehicles, remotely control chest or station; of intraoral for patient orders include the In an we camera the bed or patients received dental displays ROVs, device radiography at centers space, various videos systems, integrated from such images the operated remote fields. display Applications can or nurse fully subsea feed; for video other oil monitors such promotions. include installed non-medical for X-ray where review as or radiographic educational live video

hit are in Europe But appears business normal. will fiscal is to nearly be business hard Europe Europe in in months. the three half QX to earlier, return XXXX. mentioned I impossible we our fiscal COVID-XX As back North XXXX. business year second about bounce It our our behind by America that to predict optimistic year of will when in

the seeing market well. now as North American impact are in We our COVID-XX

Fortunately, we haven't due any programs COVID-XX. to lost

working our still customers the are later materialize of and from than delayed. majority projects Some approvals are validations product expected home engineers and as

and smaller commitments. smaller more more placing orders seeing customers or are We

customers pushing delivery Our ongoing their existing are pressure reduce or orders sales are capital with restrictions ground under as scheduled hospitals expenditures. out dates forces travel to and postpone

also lead-times for We suppliers. Asian extended our continue with components selected dealing from

staying the call bounce will back ready I are knowing deliver to will will over optimistic back that We will needed economy and urgently. that to to turn products we eventually now Ed. be the be

Edward Richardson

been it's Thanks Jens spite I of up. employee the on all pandemic. for momentum good quarter know difficult unit of three a managers maintain to morale a our current business keep sales in and

You've all done an job. excellent

used suppliers. healthy and everyone to to approach and with as customers taking face-to-face possible. safe very working keep Our as We're co-workers, a teams conservative order in are

to the into our virus near suppliers change through future. We'll is We also customers We've until face-to-face support the supply in continue telecommuting serve limited chain. plants to states, able limit this working increase facilities. the staff our we to manufacturing, many recent arrangement been in We've restricted the or travel a control. and and do continue facility, With number throughout this and see a development, in and serve the of product our Richardson cases don't to COVID a with employees meetings. from actually employees under majority so in any

important investments, supported revenue money are come employees was happy the out growth losing most in that in pointed Jens quarter. for Our not Both Wendy safety must our areas first. and by explained We're and the our and Greg their decrease temporary. asset about Canvys

this to long-term. will reason, but not initiatives to we that revenue instead For key off elected derive lay on employees, focus

back do and effort without that has over demand services interruption, continued on will see time we getting Given and when contingent not confident happen. that This we're economies work We increasing. this sales to growth. sales will our equipment is for know again

to Now, on continue more stay than management. we'll focused ever, cash

FY we Our spent the SG&A in capital less year lower was expenditures. and than XXXX prior on conservatively

team spend adjust At position and cash, in remains based resources cash be a and our remains job to a low. in few repatriating demand. continue did bad conservatively while good on strong, finance point, happy changes Our ratio questions. this debt investing We'll ongoing growth we'll the to we'll our answer initiatives

Operator

like to back no any are questions call remarks. to turn Ed there I'd And closing in for the the queue.

Edward Richardson

Thanks the good With you thank in health. you continued to us We you joining end interest in that, for wish ongoing Catherine. with We first Electronics. your our we'll Richardson look discussing forward October. Catherine, and XXXX fiscal quarter Well, call.

Operator

gentlemen, Ladies you today's Thank concludes and participating. this call. conference for

have day. a great You may now disconnect. Everyone,

Richardson Electronics (RELL) 23 Jul 202020 Q4 Earnings call transcript