- Company Announces Second Half Cash
Dividend of $0.07 Per Share -
Deswell Industries, Inc. (Nasdaq: DSWL) today announced its
unaudited financial results for the second half of the fiscal year
ended March 31, 2017.
Net sales for the six months ended March 31, 2017 were $23.8
million, an increase of 14.2% compared to net sales of $20.9
million for the six months ended March 31, 2016. Net sales
increased by 20.9% to $12.7 million in the plastic segment and
increased by 7.4% to $11.2 million in the Company’s electronic
segment.
Total gross margin increased to 18.9% during the six months
ended March 31, 2017, as compared to 12.9% in the same period last
year. Gross profit margin in the plastic segment increased to 24.4%
of net sales for the second half of fiscal 2017, as compared to
20.2% of net sales for the corresponding period of last fiscal
year. The increase in gross profit and margin in the plastic
segment was mainly due to increased production efficiency of labor,
introduction of robotic assembly arms, and decreased subcontracting
charges, offsetting a slight increase in factory overhead, as a
percentage of sales. Gross profit for the electronic segment for
the six months ended March 31, 2017 was more than double that for
the corresponding period of fiscal 2016. Gross margin increased
from 5.4% in second half of fiscal 2016 to 12.6% in the second half
of fiscal 2017. The increase was mainly due to better raw materials
management and the implementation of lean manufacturing
initiatives, as well as production automation.
Operating loss for the second half of fiscal 2017 was
significantly reduced to $0.3 million, as compared to an operating
loss of $2.7 million for the same period of fiscal 2016.
The Company reported net income of $0.7 million for the six
months ended March 31, 2017, as compared to a net loss of $1.5
million for the six months ended March 31, 2016. Non-operating
income for the six months ended March 31, 2017 was $1.1 million, as
compared to non-operating income of $1.3 million in the year-ago
six months. Non-operating income during the six months ended March
31, 2017 was primarily comprised of $380,000 from rental income,
$302,000 of dividend income from securities investment, $157,000
from interest income, as well as $270,000 from change in the fair
value of marketable securities. Deswell reported basic and diluted
income per share of $0.04 for the second half of fiscal 2017 (based
on 16,013,000 weighted average shares outstanding), as compared to
basic and diluted loss per share of ($0.09) (based on 16,056,000
weighted average shares outstanding), for the six months ended
March 31, 2016.
Net sales for the year ended March 31, 2017 were $44.5 million,
consistent with the corresponding period in fiscal 2016. Operating
loss for the year ended March 31, 2017 decreased to $2.1 million,
as compared to operating loss of $5.3 million for fiscal 2016. The
Company reported a net income of $1.4 million in fiscal 2017, as
compared to net loss of $4.9 million for the year ended March 31,
2016. Deswell reported basic and diluted net income per share of
$0.09 for fiscal 2017, (based on 16,035,000 weighted average share
outstanding), as compared to basic and diluted loss per share of
($0.31) (based on 16,056,000 weighted average shares outstanding),
for the prior fiscal year.
The Company's financial position remained strong, with $8.1
million in cash and cash equivalents and working capital totaled
$41.3 million as of March 31, 2017. Furthermore, the Company has no
long-term or short-term borrowings as of March 31, 2017.
Mr. Edward So, Chief Executive Officer, commented, “We’re
pleased to have driven solid revenue growth and significantly
improved margins in the second half of 2017, with increases in both
our plastic and our electronic segments. We saw increased orders in
our plastic segment related to office equipment and motor vehicle
components and in our electronics segment, increased orders for
professional audio equipment outpaced a decline in sales for home
entertainment products.
“Our margin performance was favorably impacted by our continued
focus on reducing costs and our emphasis on production efficiency,
which is highlighted by our introduction of robotic assembly arms
and less subcontracting activities in our plastics segment.
Likewise, margins more than doubled in our electronics division,
and during the second half of 2017 we achieved positive operating
profit as compared to an operating loss in the same period of last
year, primarily because we demonstrated improved raw materials
management and achieved better manufacturing efficiency by means of
automation.
“We continue to see many opportunities to expand our work on
behalf of existing customers as well as opportunities to capture
new customers. Our balance sheet remains strong providing a solid
foundation for the Company’s continued progress.”
Second Half Dividend
The Company also announces that its board of directors today
declared a cash dividend of $0.07 per share for the second half of
the fiscal year ended March 31, 2017. The dividend will be payable
on July 12, 2017 to shareholders of record as of June 26, 2017.
The Company expects the cash dividend to be declared in the
coming two fiscal years may be reduced or suspended in order to
increase capital investment in manufacturing equipment and
facilities. These capital expenditures will be made for maintaining
production capacity and efficiency of the plants.
Dividends to be declared after two fiscal years 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,
telephone answering machines, sophisticated studio-quality audio
equipment and computer peripherals.
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,
2017
2016
ASSETS (Unaudited) (Audited) Current assets : Cash and cash
equivalents $ 8,078 $ 11,996 Fixed deposits maturing over
three months 5,422 5,276 Marketable securities (note 2) 16,327
12,020 Available-for-sale securities (note 2) - 1,603 Accounts
receivable, net 13,159 9,208 Inventories (note 3) 10,688 8,114
Prepaid expenses and other current assets 2,419 1,658 Assets held
for sale - 778 Total current
assets 56,093 50,653 Property, plant and equipment - net 31,992
32,352 Time deposits maturing over twelve months 2,902
4,566 Total assets $ 90,987 $
87,571 LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities Accounts payable $ 5,152 $ 2,228 Accrued payroll and
employee benefits 4,643 4,035 Customer deposits 2,152 1,423 Other
accrued liabilities 1,474 1,289 Income taxes payable 476 401
Deferred income tax liabilities 889 825 Dividend payable -
562 Total current liabilities
14,786 10,763 Shareholders' equity
Common shares nil par value - authorized 30,000,000 shares, shares
issued and outstanding as of March 31, 2017 and March 31, 2016 -
15,885,239 and 16,056,239, respectively. 53,063 53,063 Treasury
stock at cost; 1,146,571 and 975,571 shares as of March 31, 2017
and 2016 (2,821 ) (2,513 ) Additional paid-in capital 8,005 8,005
Accumulated other comprehensive income 5,316 5,305 Retained
earnings 12,638 12,948 Total
shareholders' equity 76,201 76,808
Total liabilities and shareholders' equity $ 90,987 $
87,571
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,
2017
2016
2017
2016
Net sales $ 23,888 $ 20,920 $ 44,522 $ 44,568 Cost of sales
19,385 18,229 37,073
39,775 Gross profit 4,503 2,691 7,449 4,793 Selling,
general and administrative expenses 4,329 4,694 8,856 9,119 Other
income (expense), net (457 ) (721 ) (696 )
(1,021 ) Operating loss (283 ) (2,724 ) (2,103 ) (5,347 )
Non-operating income, net (note 3) 1,073 1,299
3,688 571 Income (loss) before
income taxes 790 (1,425 ) 1,585 (4,776 ) Income taxes 123
37 209 158 Net
income (loss) attributable to Deswell Industries, Inc. $ 667 $
(1,462 ) $ 1,376 $ (4,934 ) Other comprehensive loss
Unrealized gain (loss) on available-for-sale securities $ -
$ (19 ) $ - $ (73 ) Comprehensive income (loss) attributable
to Deswell Industries, Inc. $ 667 $ (1,481 ) $ 1,376
$ (5,007 ) Net income (loss) per share attributable
to Deswell Industries, Inc. (note 5) Basic: Net income (loss) per
share $ 0.04 $ (0.09 ) $ 0.09 $ (0.31 ) Weighted
average common shares outstanding shares (in thousands)
16,013 16,056 16,035
16,056 Diluted: Net income (loss) per share $ 0.04
$ (0.09 ) $ 0.09 $ (0.31 ) Weighted average number of
shares outstanding (in thousands) 16,013
16,056 16,035 16,056
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Investor Relations:Institutional Marketing Services
(IMS)John Nesbett/Jennifer Belodeau203-972-9200
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