- 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, 2022.
Net sales for the six months ended March 31, 2022 were $45.7
million, an increase of 22.9% compared to net sales of $37.2
million for the six months ended March 31, 2021. Net sales
increased by 16.3% to $12.9 million in the plastic segment and by
25.7% to $32.8 million in the Company’s electronic segment.
Total gross margin decreased to 16.5% during the six months
ended March 31, 2022, as compared to 20.4% in the same period last
year. Gross profit margin in the plastic segment decreased to 19.2%
of net sales for the second half of fiscal 2022, as compared to
26.0% of net sales for the corresponding period of the last fiscal
year. For the electronic segment, gross profit margin decreased
from 17.9% in the second half of fiscal 2021 to 15.4% in the second
half of fiscal 2022. The decrease in the gross profit margin in
both the plastic and electronic segments is mainly attributable to
increase in raw materials costs, such as plastic resins and
semiconductor chips, respectively, as a result of the continuing
shortage in supply and pricing volatility, as well as surging
demand in the automotive industry for these primary materials,
which resulted in the increased cost of semi-conductor chips.
Operating income for the second half of fiscal 2022 decreased
from $2.3 million in the second half of fiscal 2021 to $1.7 million
in the second half of fiscal 2022.
The Company reported net income of $4.1 million for the six
months ended March 31, 2022, as compared to net income of $6.7
million for the six months ended March 31, 2021. Non-operating
income for the six months ended March 31, 2022 was $2.0 million, as
compared to a non-operating income of $4.6 million in the six
months ended March 31, 2021. Non-operating income during the six
months ended March 31, 2022 was primarily comprised of unrealized
gain in marketable securities of $27,000, $1,027,000 from rental
income, $454,000 of dividend income from securities investments,
and realized gain of $419,000 from the sale of marketable
securities, as compared to an unrealized gain in marketable
securities of $2,538,000, rental income of $1,214,000, dividend
income of $482,000 from securities investments and realized gain of
$279,000 from the sale of marketable securities in the second half
of fiscal 2021. Deswell reported basic and diluted income per share
of $0.25 for the second half of fiscal 2022 (based on 15,935,000
and 16,038,000 weighted average shares outstanding, respectively),
as compared to basic and diluted income per share of $0.42 (based
on 15,915,000 and 15,995,000 weighted average shares outstanding),
for the six months ended March 31, 2021.
Net sales for the year ended March 31, 2022 were $85.5 million,
an increase of 31.8% compared to net sales of $64.9 million for
fiscal 2021. Operating income for the year ended March 31, 2022
decreased to $2.9 million, as compared to operating income of $3.3
million for fiscal 2021. The Company reported net income of $8.4
million in fiscal 2022, as compared to net income of $8.2 million
for the year ended March 31, 2021. The increase in net income was
mainly attributed to the increase of sales, offsetting by the
decrease in gross profit margin due to increased raw materials cost
in fiscal 2022. Deswell reported basic and diluted net income per
share of $0.52 for fiscal 2022, (based on 15,929,000 and 16,137,000
weighted average shares outstanding, respectively), as compared to
basic net income per share of $0.52 and diluted net income per
share of $0.51 (based on 15,915,000 and 16,047,000 weighted average
shares outstanding), for the prior fiscal year.
The Company's financial position remained strong, with $13.5
million in cash and cash equivalents and working capital totaling
$64.0 million as of March 31, 2022. Furthermore, the Company has no
long-term or short-term borrowings as of March 31, 2022.
Mr. Edward So, Chief Executive Officer, commented, “We concluded
fiscal year 2022 with strong revenue growth during the second half,
reflecting significantly improved sales in both the plastics and
the electronics segments. Sales growth in the plastics business was
largely driven by increased orders from a new customer for robotic
mops and vacuum cleaners and in the electronics segment we saw
continued demand for home audio and entertainment equipment as well
as returning demand for professional audio instruments and
equipment. That said, despite the strong sales activity, we
experienced margin compression related to increased raw material
costs in both segments, and particularly in the electronics
segment, as a result of the continued scarcity of semi-conductor
chips coupled with surging demand from other industries including
automotive. We continue to leverage our longstanding supplier
relationships to mitigate the effects of the global component
shortage and limited supply. Additionally, throughout fiscal 2022,
certain quarantines and restrictions related to Covid-19 outbreaks
persisted, and Deswell continued to effectively manage our
operations and production.”
Mr. So concluded, “Our balance sheet remains solid, with a
strong cash position and no debt, providing us the financial
resources to continue executing our long-term growth strategy to
grow our market recognition among existing and potential new
customers as a consistent and reliable manufacturing partner. As we
begin moving through fiscal 2023, we remain focused on delivering
operational excellence to capitalize on the interest we’re seeing
from the marketplace, with the goal of driving continued growth and
profitability moving forward.”
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, 2022. The dividend will be payable
on July 15, 2022 to shareholders of record as of June 30, 2022.
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,
2022
2021
ASSETS
(Unaudited)
(Audited)
Current assets :
Cash and cash equivalents
$
13,465
$
20,223
Time deposits maturing over three months
4,354
2,700
Time deposits maturing over twelve months-current
1,564
-
Marketable securities (note2)
24,499
22,373
Accounts receivable, net
18,195
14,708
Inventories (note 3)
23,819
16,193
Prepaid expenses and other current assets
2,054
2,489
Total current assets
87,950
78,686
Property, plant and equipment - net
27,017
27,323
Time deposits maturing over twelve
months
313
1,851
Deferred income tax assets
259
-
Total assets
$
115,539
$
107,860
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
$
9,838
$
9,522
Accrued payroll and employee benefits
7,611
7,107
Customer deposits
2,343
1,683
Other accrued liabilities
2,950
2,016
Income taxes payable
1,232
886
Total current liabilities
23,974
21,214
Deferred income tax liabilities
659
957
Total liabilities
24,633
22,171
Shareholders' equity
Common shares nil par value - authorized 30,000,000 shares,
17,061,810 shares issued as of March 31, 2021 and,
17,081,810 shares issued as of March 31,
2022;
15,915,239 shares outstanding as of March
31, 2021 and,
15,935,239 shares outstanding as of March 31, 2022
53,202
53,143
Treasury stock at cost; 1,146,571 shares as of March 31, 2021 and
2022
(2,821
)
(2,821
)
Additional paid-in capital
7,973
7,989
Accumulated other comprehensive income
5,316
5,316
Retained earnings
27,236
22,062
Total shareholders' equity
90,906
85,689
Total liabilities and shareholders' equity
$
115,539
$
107,860
DESWELL INDUSTRIES, INC. CONSOLIDATED
STATEMENT OF OPERATIONS & COMPREHENSIVE INCOME
(UNAUDITED) (U.S. dollars in thousands, except per share
data)
Six months ended
Year ended
March 31,
March 31,
2022
2021
2022
2021
Net sales
$
45,708
$
37,196
$
85,490
$
64,886
Cost of sales
38,176
29,625
71,538
51,720
Gross profit
7,532
7,571
13,952
13,166
Selling, general and administrative
expenses
5,791
5,590
11,139
10,310
Other income (expense), net
(37
)
321
74
405
Operating income
1,704
2,302
2,887
3,261
Non-operating income, net
2,020
4,641
5,308
5,445
Income before income taxes
3,724
6,943
8,195
8,706
Income tax (benefit) expense
(338
)
244
(165
)
475
Net income attributable to Deswell
Industries, Inc.
$
4,062
$
6,699
$
8,360
$
8,231
Other comprehensive income
$
-
$
-
$
-
$
-
Total comprehensive income attributable to
Deswell Industries, Inc.
$
4,062
$
6,699
$
8,360
$
8,231
Net income per share attributable to
Deswell Industries, Inc. (note 4)
Basic:
Net income per share
$
0.25
$
0.42
$
0.52
$
0.52
Weighted average common shares outstanding shares (in thousands)
15,935
15,915
15,929
15,915
Diluted:
Net income per share
$
0.25
$
0.42
$
0.52
$
0.51
Weighted average common shares outstanding (in thousands)
16,038
15,995
16,137
16,047
DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
( U.S. dollars in thousands )
Year ended
March 31,
2022
2021
Cash flows from operating activities :
Net income
$
8,360
$
8,231
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
1,736
1,755
(Reversal of) provision for credit losses
(148
)
397
Usage of obsolescence allowance of inventories, net
(25
)
-
Loss (gain) on disposal of property, plant and equipment
24
(22
)
Unrealized holding gains on marketable securities
(872
)
(2,010
)
Gain on sales of marketable securities
(1,073
)
(333
)
Scrip dividend received
-
(19
)
Exchange loss (gain) from marketable securities
117
(661
)
Deferred income tax (benefit) expense
(557
)
206
Changes in operating assets and
liabilities:
Accounts receivable
(3,339
)
(2,804
)
Inventories
(7,601
)
(7,615
)
Prepaid expenses and other current assets
435
(737
)
Accounts payable
316
4,918
Accrued payroll and employee benefits
504
1,030
Customer deposits
660
511
Other accrued liabilities
934
298
Income taxes payable
346
151
Net cash (used in) provided by operating
activities
(183
)
3,296
Cash flows from investing activities
Purchase of property, plant and equipment
(1,504
)
(551
)
Proceeds from disposal of property, plant and equipment
50
81
Purchase of marketable securities
(11,543
)
(6,059
)
Proceeds from disposal of marketable securities
11,245
6,150
Increase in fixed deposits maturing over three months
(1,654
)
(1,917
)
Increase in fixed deposits maturing over twelve months
(26
)
(427
)
Net cash used in investing activities
(3,432
)
(2,723
)
Cash flows from financing activities
Dividends paid
(3,186
)
(2,864
)
Exercise of stock options
43
-
Net cash used in financing activities
(3,143
)
(2,864
)
Net decrease in cash and cash
equivalents
(6,758
)
(2,291
)
Cash and cash equivalents, beginning of
year
20,223
22,514
Cash and cash equivalents, end of year
13,465
20,223
Supplementary disclosures of cash flow
information:
Cash paid during the year for: Interest
-
-
Income taxes
68
236
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version on businesswire.com: https://www.businesswire.com/news/home/20220616005593/en/
Investor Relations: John Nesbett/Jennifer Belodeau IMS
Investor Relations 203.972.9200
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