Deswell Posts Modest Sales Growth in Fiscal Q4 2015

Estimated reading time: 3 minutes

Deswell Industries, Inc. today announced its financial results for the fiscal fourth quarter ended March 31, 2015.

Net sales for the fourth quarter ended March 31, 2015 were $8.1 million, an increase of 2.3% compared to net sales of $7.9 million for the same quarter ended March 31, 2014. Net sales increased by 29.6% to $4.5 million in the Company’s plastic segment and decreased by 19.3% to $3.6 million in the electronic and metallic segment. The operating loss in the fourth quarter was $0.7 million, compared to an operating loss of $3.0 million for the same quarter of fiscal 2014.

Total gross margin increased to 11.5% in the fourth quarter ended March 31, 2015 compared to 2.5% in the same quarter last year. Gross profit margin in the plastic segment increased to 22.8% of net sales for the fourth quarter of fiscal 2015 compared to 13.1% 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 decreases in raw materials cost and depreciation expense as a percentage of sales, offsetting an increase in labor cost and factory overheads. The improvement in gross loss and margin in the electronic and metallic segment was mainly attributed to decreases in raw materials cost, offsetting an increase in labor cost as a percentage of sales.

The Company reported net income of $0.01 million for the fourth quarter ended March 31, 2015 compared to a net loss of $3.1 million for the quarter ended March 31, 2014. Deswell reported basic and diluted income per share of $0.00 for the fourth quarter of fiscal 2015 (based on 16,056,000 and 16,056,000 weighted average shares outstanding, respectively), compared to basic and diluted loss per share of ($0.19) (based on 16,257,000 and 16,257,000 weighted average shares outstanding, respectively), for the quarter ended March 31, 2014.

Net sales for the year ended March 31, 2015 were $38.1 million, a decrease of 7.0%, compared to sales of $40.9 million for the corresponding period in fiscal 2014. Operating loss for the year ended March 31, 2015 was $5.1 million, compared to operating loss of $7.2 million for fiscal 2014. The Company reported a net loss of $2.8 million in fiscal 2015, compared to net loss of $7.5 million for the year ended March 31, 2014. Deswell reported basic and diluted net loss per share of ($0.17) for fiscal 2015, (based on 16,056,000 and 16,056,000 weighted average share outstanding, respectively), compared to basic and diluted loss per share of ($0.46) (based on 16,186,000 and 16,186,000 weighted average shares outstanding, respectively), for the prior fiscal year.

The Company's balance sheet remained strong at the end of the fourth quarter of fiscal 2015, with $14.3 million in cash and cash equivalents at March 31, 2015 compared to $23.2 million at March 31, 2014. Working capital totaled $45.9 million as of March 31, 2015, versus $50.9 million as of March 31, 2014. Furthermore, the Company has no long-term or short-term borrowings as of March 31, 2015.

Mr. Edward So, Chief Executive Officer, commented, “During the quarter we achieved a modest increase in revenues as a result of the continued efforts of our sales team to find new opportunities with our existing customers and to develop new customer relationships. We continue to focus on collaborating with our customers on new products, and while it’s taken longer than anticipated to reach the launch date for some of these products, our increased involvement in R&D is shortening that process. We are making continuous efforts to control costs, and as a result we’ve seen a decrease in raw materials expense.”

Fourth Quarter Dividends

The Company also announced that on June 22, 2015 its board of directors declared a cash dividend of $0.035 per share for the fiscal fourth quarter ended March 31, 2015. The dividend will be payable on July 16, 2015 to shareholders of record as of June 26, 2015.

About Deswell

Deswell manufactures injection-molded plastic parts and components, electronic products and subassemblies, and metallic products 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.