- Company Announces Second Half Cash
Dividend of 0.10 Per Share -
Deswell Industries, Inc. (Nasdaq: DSWL) today announced its
unaudited financial results for the second half of the fiscal year
ended March 31, 2021.
Net sales for the six months ended March 31, 2021 were $37.2
million, an increase of 34.5% compared to net sales of $27.7
million for the six months ended March 31, 2020. Net sales
increased by 4.1% to $11.1 million in the plastic segment and by
53.6% to $26.1 million in the Company’s electronic segment.
Total gross margin increased to 20.4% during the six months
ended March 31, 2021, as compared to 19.2% in the same period last
year. Gross profit margin in the plastic segment increased to 26.0%
of net sales for the second half of fiscal 2021, as compared to
23.3% of net sales for the corresponding period of the last fiscal
year. The increase in gross profit margin in the plastic segment
was mainly due to a decrease in raw materials cost, offsetting the
increase in factory overhead, as a percentage of sales. Gross
profit margin for the electronic segment for the six months ended
March 31, 2021 increased from 16.7% in the second half of fiscal
2020 to 17.9% in the second half of fiscal 2021. The increase was
mainly due to increases in sales volume, increased percentage of
sales of ODM products, and the implementation of cost control
measures.
Operating income for the second half of fiscal 2021 increased
from $0.3 million in the second half of fiscal 2020 to $2.3 million
in the second half of fiscal 2021.
The Company reported net income of $6.7 million for the six
months ended March 31, 2021, as compared to net loss of $2.6
million for the six months ended March 31, 2020. Non-operating
income for the six months ended March 31, 2021 was $4.6 million, as
compared to a non-operating expense of $2.6 million in the six
months ended March 31, 2020. Non-operating income during the six
months ended March 31, 2021 was primarily comprised of an increase
of $2,538,000 in the fair value of marketable securities held,
$1,214,000 from rental income, $482,000 of dividend income from
securities investments, and a $279,000 realized gain from the sale
of marketable securities, as compared to a decrease of $3,927 in
the fair value of marketable securities held, $761,000 from rental
income, $485,000 of dividend income from securities investments and
$126,000 from interest income in the second half of fiscal 2020.
Deswell reported basic and diluted income per share of $0.42 for
the second half of fiscal 2021 (based on 15,915,000 and 15,995,000
weighted average shares outstanding, respectively), as compared to
a basic and diluted loss per share of $0.16 (based on 15,915,000
and 15,966,000 weighted average shares outstanding), for the six
months ended March 31, 2020.
Net sales for the year ended March 31, 2021 were $64.9 million,
a decrease of 0.7% compared to net sales of $65.4 million for
fiscal 2020. Operating income for the year ended March 31, 2021
increased to $3.3 million, as compared to operating income of $1.4
million for fiscal 2020. The Company reported net income of $8.2
million in fiscal 2021, as compared to net loss of $1.3 million for
the year ended March 31, 2020. The increase in net income was
mainly attributed to the non-operating income of $5.4 million in
fiscal 2021, as compared to the non-operating expense of $2.4
million in fiscal 2020. Deswell reported a basic net income per
share of $0.52 and diluted net income per share of $0.51 for fiscal
2021, (based on 15,915,000 and 16,047,000 weighted average shares
outstanding, respectively), as compared to a basic and diluted loss
per share of $0.08 (based on 15,914,000 and 16,020,000 weighted
average shares outstanding), for the prior fiscal year.
The Company's financial position remained strong, with $20.2
million in cash and cash equivalents and working capital totaling
$59.0 million as of March 31, 2021. Furthermore, the Company has no
long-term or short-term borrowings as of March 31, 2021.
Mr. Edward So, Chief Executive Officer, commented, “We are
pleased with our fiscal 2021 results which included a strong
increase in operating income despite the pandemic and ongoing
global electronic component shortage. After a slow start to the
second half of the fiscal year due to customers’ conservative
approach to placing orders because of the continued worldwide
pandemic, we saw particularly strong growth in our electronics
manufacturing division for the period. While the lockdown and
social distancing had a significant impact on some of our customers
who cater to the music performance market, we saw significantly
increased demand for both home recording and audio streaming
products. Our net income for the full year was also positively
impacted by the performance of our investments and approximately $2
million in rental income generated from leased space at our
facilities, which became available due to our identification of
more efficient configuration and relocation of our equipment.
Finally, we continue to proactively manage costs to maximize
operating profitability.”
Mr. So concluded, “Our balance sheet remains strong and provides
us with the financial flexibility to stay focused on the long-term
performance of the business even as we navigate a challenging
landscape. With a strong cash position and no debt, we look forward
to continuing to expand our customer relationships and drive
performance as the pandemic subsides.”
Second Half Dividend
The Company also announced that its board of directors today
declared a cash dividend of $0.10 per share for the second half of
the fiscal year ended March 31, 2021. The dividend will be payable
on July 9, 2021 to shareholders of record as of June 25, 2021.
Dividends to be declared in the future will depend upon the
Company’s future growth and earnings, of which there can be no
assurance, and the Company’s cash flow needs for future
development.
About Deswell
Deswell manufactures injection-molded plastic parts and
components, electronic products and subassemblies, and metallic
molds and accessory parts for original equipment manufacturers
(“OEMs”) and contract manufacturers at its factories in the
People’s Republic of China. The Company produces a wide variety of
plastic parts and components used in the manufacture of consumer
and industrial products; printed circuit board assemblies using
surface mount (“SMT”) and finished products such as telephones,
professional audio equipment, home audio products, and
Internet-of-Things (IoT) products.
To learn more about Deswell Industries, Inc., please visit the
Company’s website at www.deswell.com.
Forward-Looking Statements
Statements in this press release that are "forward-looking
statements" are based on current expectations and assumptions that
are subject to risks and uncertainties. For example, our statements
regarding our expected growth in sales from the electronic division
in the coming year and our efforts to reduce overhead costs in our
plastic division are forward-looking statements. Actual results
could differ materially because of the following factors, among
others, which may cause revenues and income to fall short of
anticipated levels or our overhead expenses to increase: our
dependence on a few major customers; vigorous competition forcing
product price reductions or discounts; the timing and amount of
significant orders from our relatively few significant customers;
continuing increases in resin prices that cannot be passed on to
customers; unexpected production delays; obsolete inventory or
product returns; losses resulting from fraudulent activity of our
customers or employees; labor shortages that increase labor and
costs; changes in the mix of product products we manufacture and
sell; adverse currency fluctuations in the Renminbi and Hong Kong
dollar when translated to US dollars; potential new accounting
pronouncements; and the effects of travel restrictions and
quarantines associated with major health problems, such as the
Severe Acute Respiratory Syndrome, on general economic
activity.
For further information regarding risks and uncertainties
associated with the Company’s business, please refer to the “Risk
Factors” section of Company’s Annual Report on Form 20-F, copies of
which may be obtained from the Website maintained by the Securities
and Exchange Commission at http://www.sec.gov.
All information in this release is made as of the date of this
press release. Deswell undertakes no duty to update any
forward-looking statement to conform the statement to actual
results or changes in Deswell’s expectations.
DESWELL INDUSTRIES,
INC.
CONSOLIDATED BALANCE
SHEET
(U.S. dollars in
thousands)
March 31,
March 31,
2021
2020
ASSETS
(Unaudited)
(Audited)
Current assets :
Cash and cash equivalents
$ 20,223
$
22,514
Fixed deposits maturing over three
months
2,700
783
Time deposits maturing over twelve
months-current portion
1,519
-
Marketable securities
22,373
19,441
Accounts receivable, net
14,708
12,301
Inventories
16,193
8,578
Prepaid expenses and other current
assets
2,489
1,752
Total
current assets
80,205
65,369
Property, plant and equipment - net
27,323
28,586
Time deposits maturing over twelve
months
332
1,424
Total assets
$
107,860
$
95,379
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
$
9,522
$
4,604
Accrued payroll and employee benefits
7,107
6,077
Customer deposits
1,683
1,172
Other accrued liabilities
2,016
1,718
Income taxes payable
886
735
Total current
liabilities
21,214
14,306
Deferred income tax liabilities
957
751
Total liabilities
22,171
15,057
Shareholders' equity
Common shares nil par value - authorized
30,000,000 shares,
17,061,810 shares issued as of
March 31, 2020 and March 31, 2021; 15,915,239 shares outstanding as
of
March 31, 2020 and 2021
53,143
53,143
Treasury stock at cost; 1,146,571 shares
as of
March 31, 2020 and 2021
(2,821)
(2,821)
Additional paid-in capital
7,989
7,989
Accumulated other comprehensive income
5,316
5,316
Retained earnings
22,062
16,695
Total
shareholders' equity
85,689
80,322
Total liabilities
and shareholders' equity
$ 107,860
$
95,379
DESWELL INDUSTRIES,
INC.
CONSOLIDATED STATEMENT OF
OPERATIONS & COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(U.S. dollars in thousands,
except per share data)
Six months ended
Year ended
March 31,
March 31,
2021
2020
2021
2020
Net sales
$
37,196
$
27,655
$
64,886
$
65,368
Cost of sales
29,625
22,335
51,720
53,504
Gross profit
7,571
5,320
13,166
11,864
Selling, general and administrative
expenses
5,590
4,818
10,310
10,026
Other income (expense), net
321
(245)
405
(425)
Operating income
2,302
257
3,261
1,413
Non-operating income (expense), net
4,641
(2,579)
5,445
(2,360)
Income (loss) before income taxes
6,943
(2,322)
8,706
(947)
Income taxes
244
247
475
373
Net income (loss) attributable to Deswell
Industries, Inc.
$
6,699
$
(2,569)
$
8,231
$
(1,320)
Other comprehensive income
$
-
$
-
$
-
$
-
Total Comprehensive income (loss)
attributable to Deswell Industries, Inc.
$
6,699
$
(2,569)
$
8,231
$
(1,320)
Net income (loss) per share attributable
to
Deswell Industries, Inc.
Basic:
Net income (loss) per share
$
0.42
$
(0.16)
$
0.52
$
(0.08)
Weighted average common shares outstanding
shares (in thousands)
15,915
15,915
15,915
15,914
Diluted:
Net income (loss) per share
$
0.42
$
(0.16)
$
0.51
$
(0.08)
Weighted average number of shares
outstanding (in thousands)
15,995
15,966
16,047
15,914
DESWELL INDUSTRIES,
INC.
CONSOLIDATED STATEMENT
OF CASH FLOWS (UNAUDITED)
( U.S. dollars in thousands )
Year ended
March 31,
2021
2020
Cash flows from operating activities :
Net income (loss)
$
8,231
$
(1,320)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and
amortization
1,755
1,973
Provision for doubtful
accounts, net
397
297
Additional charges for
(reversal of) obsolescence allowance of inventories, net
(9)
426
Gain on disposal of property, plant
and equipment
(22)
(29)
Unrealized holding (gain)
loss on marketable securities
(2,010)
5,179
Gain on sales of marketable
securities
(333)
(29)
Scrip dividend received
(19)
(175)
Deferred income tax
expense
206
92
Exchange (gain) loss from
marketable securities
(661)
531
Changes in operating assets
and liabilities:
Accounts
receivable
(2,804)
3,136
Inventories
(7,606)
4,026
Prepaid expenses
and other current assets
(737)
254
Accounts
payable
4,918
(1,649)
Accrued payroll
and employee benefits
1,030
401
Customer
deposits
511
(126)
Other accrued
liabilities
298
56
Income taxes
payable
151
78
Net cash provided by operating
activities
3,296
13,121
Cash flows from investing activities
Purchase of property, plant and
equipment
(551)
(507)
Proceeds from sale of property, plant and
equipment, net of transaction costs
81
188
Purchase of marketable securities
(6,059)
(2,121)
Proceeds from sales of marketable
securities
6,150
1,620
Increase of fixed deposits maturing over
three months
(1,917)
(412)
Increase of fixed deposits maturing over
twelve months
(427)
(1,424)
Net cash used in investing activities
(2,723)
(2,656)
Cash flows from financing activities
Dividends
paid
(2,864)
(2,386)
Exercise of stock options
-
64
Net cash used in financing activities
(2,864)
(2,322)
Net (decrease) increase in cash and cash
equivalents
(2,291)
8,143
Cash and cash equivalents, beginning of
year
22,514
14,371
Cash and cash equivalents, end of year
20,223
22,514
Supplementary disclosures of cashflow
information:
Cash paid during the year for:
Interest
-
-
Income taxes
236
160
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version on businesswire.com: https://www.businesswire.com/news/home/20210609005553/en/
Investor Relations: John Nesbett/Jennifer Belodeau IMS
Investor Relations 203.972.9200
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