Deswell announces second half 2022 results
Macao--(business wire)--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 : $ 13,465 $ 20,223 4,354 2,700 1,564 - 24,499 22,373 18,195 14,708 23,819 16,193 2,054 2,489 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 - $ 115,539 $ 107,860 liabilities and shareholders' equity current liabilities $ 9,838 $ 9,522 7,611 7,107 2,343 1,683 2,950 2,016 1,232 886 23,974 21,214 659 957 24,633 22,171 shareholders' equity 17,081,810 shares issued as of march 31, 2022; 15,915,239 shares outstanding as of march 31, 2021 and, 53,202 53,143 (2,821 ) (2,821 ) 7,973 7,989 5,316 5,316 27,236 22,062 90,906 85,689 $ 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 basic: $ 0.25 $ 0.42 $ 0.52 $ 0.52 15,935 15,915 15,929 15,915 diluted: $ 0.25 $ 0.42 $ 0.52 $ 0.51 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 : $ 8,360 $ 8,231 1,736 1,755 (148 ) 397 (25 ) - 24 (22 ) (872 ) (2,010 ) (1,073 ) (333 ) - (19 ) 117 (661 ) (557 ) 206 changes in operating assets and liabilities: (3,339 ) (2,804 ) (7,601 ) (7,615 ) 435 (737 ) 316 4,918 504 1,030 660 511 934 298 346 151 net cash (used in) provided by operating activities (183 ) 3,296 cash flows from investing activities (1,504 ) (551 ) 50 81 (11,543 ) (6,059 ) 11,245 6,150 (1,654 ) (1,917 ) (26 ) (427 ) net cash used in investing activities (3,432 ) (2,723 ) cash flows from financing activities dividends paid (3,186 ) (2,864 ) 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: - - 68 236
