- 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, 2024.
Net sales for the six months ended March 31, 2024 were $31.6
million, a decrease of 4.4% compared to net sales of $33.1 million
for the six months ended March 31, 2023. Net sales decreased by
18.4% to $6.1 million in the plastic segment and by less than one
percent to $25.5 million in the Company’s electronic segment.
Total gross margin increased to 20.7% during the six months
ended March 31, 2024, as compared to 17.3% in the same period last
year. For the plastic segment, gross profit margin increased to
27.1% of net sales for the second half of fiscal 2024, as compared
to 17.8% of net sales for the corresponding period of the last
fiscal year. The increase in gross profit margin in the plastic
segment is mainly attributable to decreased raw material and labor
costs as a result of the depreciation of the renminbi, as well as
the change of product mix. Gross profit margin in the electronics
segment increased to 19.2% in the second half of fiscal 2024, as
compared to 17.2% in the second half of fiscal 2023. The increase
in gross profit margin in the electronics segment is the result of
the depreciation of the renminbi, and decreased labor costs due to
continuous cost control measures taken.
Operating income for the second half of fiscal 2024 increased
from $0.8 million in the second half of fiscal 2023 to $1.5 million
in the second half of fiscal 2024.
The Company reported net income of $4.2 million for the six
months ended March 31, 2024, as compared to net income of $2.6
million for the six months ended March 31, 2023. Non-operating
income for the six months ended March 31, 2024 was $2.6 million, as
compared to non-operating income of $1.7 million in the six months
ended March 31, 2023. Non-operating income during the six months
ended March 31, 2024 was primarily comprised of $884,000 from
unrealized gain in marketable securities, $260,000 from rental
income, $695,000 on dividend income from securities investments,
and $351,000 from other income, as compared to an unrealized gain
of $381,000 on marketable securities, rental income of $330,000,
dividend income of $445,000 from securities investments and a
realized gain of $461,000 on the sale of marketable securities in
the second half of fiscal 2023. Deswell reported basic and diluted
income per share of $0.26 for the second half of fiscal 2024 (based
on 15,935,000 and 15,992,000 weighted average shares outstanding,
respectively), as compared to basic and diluted income per share of
$0.16 (based on 15,935,000 and 16,000,000 weighted average shares
outstanding, respectively), for the six months ended March 31,
2023.
Net sales for the year ended March 31, 2024 were $69.4 million,
a decrease of 10.5% compared to net sales of $77.5 million for
fiscal 2023. Operating income for the year ended March 31, 2024
increased to $3.8 million from $2.9 million in fiscal 2023. The
Company reported net income of $7.7 million in fiscal 2024, as
compared to net income of $2.1 million for the year ended March 31,
2023. The increase in net income was mainly attributable to the
increases in gross profit and non-operating income for fiscal 2024,
as compared to the prior fiscal year. Deswell reported basic and
diluted net income per share of $0.48 for fiscal 2024 (based on
15,935,000 and 15,999,000 weighted average shares outstanding,
respectively), as compared to basic and diluted net income per
share of $0.13 (based on 15,935,000 and 16,072,000 weighted average
shares outstanding, respectively), for the prior fiscal year.
The Company's financial position remained strong, with $15.8
million in cash and cash equivalents and working capital totaling
$66.8 million as of March 31, 2024. Furthermore, the Company has no
long-term or short-term borrowings as of March 31, 2024.
Mr. Edward So, Chief Executive Officer, commented, “We continued
to see sales pressure in the back half of fiscal 2024, related to
consumer caution around discretionary purchases as the worldwide
economy continues to contend with an inflationary environment.
Nonetheless, we were pleased to achieve improved margin performance
as well as enhanced profitability in both the last six months of
fiscal 2024 and for full year 2024. Our margin performance was
favorably impacted by a decrease in labor and materials costs
associated with the depreciation of the renminbi, changes to our
product mix, and the effect of the cost control measures we have
undertaken.
“Our balance sheet is strong, reflecting a solid cash position
and no debt providing us with the resources to focus on increasing
our customer base and recognition in the industry as a dependable
and effective partner for outsourced manufacturing operations.”
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, 2024. The dividend will be payable
on July 19, 2024 to shareholders of record as of July 5, 2024.
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,
2024
2023
ASSETS
(Unaudited)
(Audited)
Current assets:
Cash and cash equivalents
$
15,750
$
22,160
Time deposits with original maturing over
three months
13,979
3,053
Time deposits with original maturing over
twelve months - current
-
1,047
Marketable securities (note 2)
23,026
20,722
Held-to-Maturity Investment
5,157
-
Accounts receivable, net
11,986
15,704
Inventories (note 3)
12,129
17,325
Prepaid expenses and other current
assets
1,228
1,149
Total current assets
83,255
81,160
Property, plant and equipment, net
24,603
26,051
Deferred income tax assets
419
262
Time deposits with original maturing over
twelve months
2,799
2,906
Total assets
$
111,076
$
110,379
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
$
5,210
$
6,949
Accrued payroll and employee benefits
7,159
7,943
Customer deposits
1,712
2,216
Other accrued liabilities
1,236
1,989
Income taxes payable
1,113
1,149
Total current liabilities
16,430
20,246
Deferred income tax liabilities
476
484
Total liabilities
16,906
20,730
Shareholders' equity
Common shares nil par value - authorized
30,000,000 shares,
17,081,810 shares issued as of March 31,
2022 and 2023;
15,935,239 shares outstanding as of March
31, 2022 and 2023;
53,202
53,202
Treasury stock at cost; 1,146,571 shares
as of March 31, 2022 and 2023
(2,821)
(2,821)
Additional paid-in capital
7,973
7,973
Accumulated other comprehensive income
5,316
5,316
Retained earnings
30,500
25,979
Total shareholders' equity
94,170
89,649
Total liabilities and shareholders'
equity
$
111,076
$
110,379
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,
2024
2023
2024
2023
Net sales
$
31,638
$
33,105
$
69,368
$
77,543
Cost of sales
25,097
27,380
55,465
64,704
Gross profit
6,541
5,725
13,903
12,839
Selling, general and administrative
expenses
5,241
5,215
10,501
10,966
Other income, net
183
337
383
1,014
Operating income
1,483
847
3,785
2,887
Non-operating (expenses) income, net
2,610
1,737
4,034
(573)
Income, before income taxes
4,093
2,584
7,819
2,314
Income taxes expense (benefit)
(59)
(35)
110
255
Net income attributable to Deswell
Industries, Inc.
$
4,152
$
2,619
$
7,709
$
2,059
Other comprehensive income
$
-
$
-
$
-
$
-
Total comprehensive income attributable to
Deswell Industries, Inc.
$
4,152
$
2,619
$
7,709
$
2,059
Net income per share attributable to
Deswell Industries, Inc. (note 4)
Basic:
Net income per share
$
0.26
$
0.16
$
0.48
$
0.13
Weighted average common shares
outstanding
(shares in thousands)
15,935
15,935
15,935
15,935
Diluted:
Net income per share
$
0.26
$
0.16
$
0.48
$
0.13
Weighted average common shares
outstanding
(shares in thousands)
15,992
16,000
15,999
16,072
DESWELL INDUSTRIES,
INC.
CONSOLIDATED STATEMENT OF CASH
FLOWS
(UNAUDITED)
(U.S. dollars in
thousands)
( U.S. dollars in thousands )
Year ended
March 31,
2024
2023
Cash flows from operating activities:
Net income
$
7,709
$
2,059
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
1,523
1,709
Provision for (reversal of) credit losses,
net
76
(229)
Allowance of for obsolete inventories,
net
-
116
(Gain) loss on disposal of property, plant
and equipment
74
(18)
Unrealized holding (gain) loss on
marketable securities
(952)
3,973
Gain on sale of marketable securities
-
(581)
Deferred income tax benefit
(165)
(178)
Changes in operating assets and
liabilities:
Accounts receivable
3,642
2,720
Inventories
5,196
6,378
Prepaid expenses and other current
assets
(79)
777
Accounts payable
(1,739)
(2,889)
Accrued payroll and employee benefits
(784)
332
Customer deposits
(504)
(127)
Other accrued liabilities
(753)
(961)
Income taxes payable
(36)
(83)
Net cash provided by operating
activities
13,208
12,998
Cash flows from investing activities
Purchase of property, plant and
equipment
(381)
(792)
Proceeds from sale of property, plant and
equipment, net of transaction costs
232
67
Purchase of marketable securities
(1,352)
(3,469)
Proceeds from sales of marketable
securities
-
3,854
(Increase) decrease of fixed deposits with
original maturing over three months
(10,926)
1,301
Decrease (increase) of fixed deposits with
original maturing over twelve months
1,154
(2,076)
Increase in held-to-maturity
investment
(5,157)
-
Net cash used in investing activities
(16,430)
(1,115)
Cash flows from financing activities
Dividends paid
(3,188)
(3,188)
Proceeds from exercise of stock
options
-
-
Net cash used in financing activities
(3,188)
(3,188)
Net decrease in cash and cash
equivalents
(6,410)
8,695
Cash and cash equivalents, beginning of
year
22,160
13,465
Cash and cash equivalents, end of year
15,750
22,160
Supplementary disclosures of cash flow
information:
Cash paid during the year for:
Interest
-
-
Income taxes
227
418
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240620366991/en/
Investor Relations: John Nesbett/Jennifer Belodeau IMS
Investor Relations 203.972.9200
jnesbett@imsinvestorrelations.com
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