MRO Magazine

Deswell Announces Second Quarter 2016 Results

By Business Wire News   



MACAO

Deswell Industries, Inc. (Nasdaq:DSWL) today announced its financial results for the fiscal second quarter ended September 30, 2015.

Net sales for the second quarter ended September 30, 2015 were $12.4 million, an increase of 21.4% compared to net sales of $10.2 million for the quarter ended September 30, 2014. Net sales increased by 48.8% to $7.6 million in the electronic segment and decreased by 5.9% to $4.8 million in the Company’s plastic segment. The operating loss in the second quarter of fiscal 2016 was $1.0 million, compared to an operating loss of $1.9 million for the same quarter of fiscal 2015.

Total gross margin increased to 10.8% in the second quarter ended September 30, 2015 compared to 6.8% in the same quarter last year. Gross profit margin in the plastic segment increased to 18.4% of net sales for the second quarter of fiscal 2016 compared to 14.4% of net sales for the same quarter of last fiscal year. The increase in gross profit and margin in the plastic segment was mainly due to lower labor cost as a percentage of sales due to a decrease in headcount, and lower factory overhead. The Company reported a net loss of $2.4 million for the second quarter ended September 30, 2015 compared to a net loss of $1.7 million for the quarter ended September 30, 2014. Deswell reported a basic and diluted loss per share of ($0.15) for the second quarter of fiscal 2016 (based on 16,056,000 weighted average shares outstanding), compared to a basic and diluted loss per share of ($0.11) (based on 16,056,000 weighted average shares outstanding), for the quarter ended September 30, 2014.

Net sales for the six months ended September 30, 2015 were $23.6 million, an increase of 23.7%, compared to sales of $19.1 million for the corresponding period in fiscal 2015. Operating loss for the six months ended September 30, 2015 was $2.6 million, compared to an operating loss of $2.7 million for the first six months of fiscal 2015. The Company reported a net loss of $3.5 million in the first half of fiscal 2016, compared to net loss of $1.7 million for the six months ended September 30, 2014. Deswell reported basic and diluted net loss per share of ($0.22) for the first six months of fiscal 2016, (based on 16,056,000 weighted average shares outstanding), compared to basic and diluted loss per share of ($0.11) (based on 16,056,000 weighted average shares outstanding), for the prior corresponding period.

The Company’s financial position remained strong, with $9.1 million in cash and cash equivalents at September 30, 2015 compared to $19.5 million at September 30, 2014. Working capital totaled $42.6 million as of September 30, 2015, versus $49.0 million as of September 30, 2014. Furthermore, the Company has no long-term or short-term borrowings as of September 30, 2015.

Edward So, Chief Executive Officer of Deswell Industries, stated, “Our Company made good progress in the second quarter, achieving strong consolidated revenue growth and improving gross margin performance, while also delivering a 14% reduction in SG&A expenses. We’re very pleased to have seen continued and significant sales growth from our electronic division which we believe reflects our efforts to strengthen our design, manufacturing and sales efforts to meet the needs of our customers, both existing and new. Our balance sheet remains strong, providing a solid foundation for the continued growth of our business.

Second Quarter Dividends

The Company also announces that its board of directors today declared a cash dividend of $0.035 per share for the fiscal second quarter ended September 30, 2015. The dividends will be payable on December 10, 2015 to shareholders of record as of November 23, 2015.

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. The Company’s customers include Vtech Telecommunications Ltd. and Lenbrook Industries, Ltd.

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 and metallic 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)
 
  September 30

  March 31,  

20152015
ASSETS (Unaudited) (Audited)
Current assets :
Cash and cash equivalents $ 9,124 $ 14,325
Fixed deposits maturing over three months 10,172 9,911
Marketable securities (note 2) 11,026 9,803
Available-for-sale securities (note 2) 1,622 1,676
Accounts receivable, net 12,183 9,577
Inventories (note 4) 10,110 10,828
Prepaid expenses and other current assets   2,048   2,120
Total current assets 56,285 58,240
Property, plant and equipment – net 35,213 36,598
Time deposits maturing over twelve months   1,564   1,601
Total assets $ 93,062 $ 96,439
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 4,578 $ 3,348
Accrued payroll and employee benefits 4,125 4,228
Customer deposits 2,026 2,450
Other accrued liabilities 1,123 1,201
Income taxes payable 379 345
Deferred income tax liabilities 856 804
Dividend payable   562  
Total current liabilities   13,649   12,376
Shareholders’ equity
Common shares nil par value – authorized 30,000,000 shares,
shares issued and outstanding as of June 30, 2015 and
March 31, 2015 – 16,056,239; 53,063 53,063
Additional paid-in capital 5,492 5,492
Accumulated other comprehensive income 5,324 5,378
Retained earnings   15,534   20,130
Total shareholders’ equity   79,413   84,063
Total liabilities and shareholders’ equity $ 93,062 $ 96,439
 
 
             
 
DESWELL INDUSTRIES, INC.
 
CONSOLIDATED STATEMENT OF OPERATIONS &
COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
( U.S. dollars in thousands, except per share data )
 
Quarter ended Six months ended
September 30, September 30,
2015201420152014
 
Net sales $ 12,375 $ 10,193 $ 23,648 $ 19,117
Cost of sales   11,038     9,498     21,546     17,557  
Gross profit 1,337 695 2,102 1,560
Selling, general and administrative expenses 2,191 2,545 4,425 4,498
Other income (expense), net   (116 )   (23 )   (300 )   252  
Operating loss (970 ) (1,873 ) (2,623 ) (2,686 )
Non-operating expense, net   (1,352 )   231     (728 )   1,119  
Loss before income taxes (2,322 ) (1,642 ) (3,351 ) (1,567 )
Income taxes   53     60     121     121  
Net loss attributable to Deswell Industries, Inc. $ (2,375 ) $ (1,702 ) $ (3,472 ) $ (1,688 )
 
Other comprehensive loss

Unrealized gain (loss) on available-for-sale
securities

$ (34 ) $ (16 ) $ (54 ) $ 37  

Comprehensive loss attributable to Deswell
Industries, Inc.

$ (2,409 ) $ (1,718 ) $ (3,526 ) $ (1,651 )
 
 
Net loss per share attributable to
Deswell Industries, Inc. (note 5)
Basic:
Net loss per share $ (0.15 ) $ (0.11 ) $ (0.22 ) $ (0.11 )
Weighted average common shares outstanding
shares (in thousands)   16,056     16,056     16,056     16,056  
 
Diluted:
Net loss per share $ (0.15 ) $ (0.11 ) $ (0.22 ) $ (0.11 )
Weighted average number of shares
outstanding (in thousands)   16,056     16,056     16,056     16,056  
 
 

Investor Relations:
Institutional Marketing Services (IMS)
John Nesbett/Jennifer Belodeau, 203-972-9200

Advertisement

Stories continue below

Print this page