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Deswell Industries, Inc. announced its unaudited financial results for the second half of the fiscal year ended March 31, 2026.
Net sales for the six months ended March 31, 2026 were $28.1 million, a decrease of 13.4% compared to net sales of $32.4 million for the six months ended March 31, 2025. Net sales decreased by 27.0% to $4.0 million in the plastic segment and decreased by 10.6% to $24.1 million in the Company’s electronic segment.
Total gross margin slightly increased to 21.1% during the six months ended March 31, 2026, as compared to 20.9% in the same period last year. For the plastic segment, gross profit margin decreased to 13.2% of net sales for the second half of fiscal 2026, as compared to 22.6% of net sales for the corresponding period of the last fiscal year. The decrease in gross profit margin in the plastic segment is mainly attributable to the decrease in sales revenues and increase in labor costs resulting from the raise in minimum hourly wage. Gross profit margin in the electronics segment increased to 22.4% in the second half of fiscal 2026, as compared to 20.6% in the second half of fiscal 2025. This was mainly due to higher-margin offerings, justified by enhanced value-added services delivered to customers, and continuous cost control measures in raw materials and labor costs.
Operating expense for the second half of fiscal 2026 was $0.5 million, as compared to an operating income of $1.5 million for the same period of fiscal 2025.
The Company reported net income of $3.1 million for the six months ended March 31, 2026, as compared to net income of $5.0 million for the six months ended March 31, 2025. Non-operating income for the six months ended March 31, 2026 was $3.1 million, as compared to non-operating income of $3.3 million in the six months ended March 31, 2025. Non-operating income during the six months ended March 31, 2026 was primarily comprised of a realized gain of $693,000 on the sale of marketable securities, an increase of $1,000,000 in fair value of the marketable securities, $136,000 from rental income, $494,000 on dividend income from securities investments, and $790,000 from interest income, as compared to non-operating income primarily comprised of a realized gain of $1,470,000 on the sale of marketable securities, an increase of $202,000 in fair value of the marketable securities, $144,000 from rental income, $828,000 on dividend income from securities investments, and $695,000 from interest income in the second half of fiscal 2025. Deswell reported basic and diluted income per share of $0.20 for the second half of fiscal 2026 (based on 15,908,000 weighted average shares outstanding), as compared to basic and diluted income per share of $0.31 (based on 15,935,000 weighted average shares outstanding), for the six months ended March 31, 2025.
Net sales for the year ended March 31, 2026 were $61.3 million, a decrease of 9.3% compared to net sales of $67.6 million for fiscal 2025. Operating income for the year ended March 31, 2026 decreased to $2.0 million from $3.3 million in fiscal 2025. The Company reported net income of $10.6 million in fiscal 2026, as compared to net income of $11.1 million for the year ended March 31, 2025. The decrease in net income was mainly attributable to decreases in other income in fiscal 2026, as compared to the prior fiscal year. Deswell reported basic and diluted net income per share of $0.67 for fiscal 2026 (based on 15,922,000 weighted average shares outstanding), as compared to basic and diluted net income per share of $0.70 (based on 15,935,000 and 15,953,000 weighted average shares outstanding, respectively), for the prior fiscal year.
The Company's financial position remained strong, with $23.1 million in cash and cash equivalents and working capital totaling $86.5 million as of March 31, 2026. Furthermore, the Company has no long-term or short-term borrowings as of March 31, 2026.
Mr. Edward So, Chief Executive Officer, commented, “During full year fiscal 2026, we remained focused on delivering high value products and services to our customers, delivering solid results despite continued elevated inflation which contributed to higher costs and reduced consumer spending, and rising raw material prices driven by strong AI industry demand. Nonetheless, we achieved improved margin performance in both the second half and for full year fiscal 2026, in part due to the successful reduction of internal operating costs through ongoing cost improvement initiatives. We strengthened our offerings during the year, with enhanced product design support and innovative collaboration, positioning us for stronger long-term partnerships moving forward.
“Our balance sheet remains strong, with a solid cash position and no debt providing us with the flexibility to continue supporting and expanding our customer base. As we move through fiscal 2027, our focus remains on growing our position in the outsourced manufacturing space and delivering continued profitably and shareholder value.”
Second Half Dividend
The Company also announced that its board of directors today declared a cash dividend of $0.10 per share and a special cash dividend of $0.20 for the second half of the fiscal year ended March 31, 2026. The dividend will be payable on July 16, 2026 to shareholders of record as of July 2, 2026.
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.
