Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Nov. 26, 2022 | Jan. 03, 2023 | |
Document Information [Line Items] | ||
Entity Registrant Name | RICHARDSON ELECTRONICS, LTD. | |
Entity Central Index Key | 0000355948 | |
Document Type | 10-Q | |
Trading Symbol | RELL | |
Document Period End Date | Nov. 26, 2022 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-27 | |
Entity's Reporting Status Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Entity File Number | 0-12906 | |
Entity Tax Identification Number | 36-2096643 | |
Entity Address, Address Line One | 40W267 Keslinger Road | |
Entity Address, Address Line Two | P.O. Box 393 | |
Entity Address, City or Town | LaFox | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60147-0393 | |
City Area Code | 630 | |
Local Phone Number | 208-2200 | |
Entity Incorporation, State or Country Code | DE | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common stock, $0.05 Par Value | |
Security Exchange Name | NASDAQ | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 12,022,371 | |
Common Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 2,052,313 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Nov. 26, 2022 | May 28, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 26,106 | $ 35,495 |
Accounts receivable, less allowance of $192 and $186, respectively | 34,880 | 29,878 |
Inventories, net | 97,434 | 80,390 |
Prepaid expenses and other assets | 2,521 | 2,448 |
Investments - current | 5,000 | 5,000 |
Total current assets | 165,941 | 153,211 |
Non-current assets: | ||
Property, plant and equipment, net | 17,964 | 16,961 |
Intangible assets, net | 2,025 | 2,010 |
Lease ROU asset | 2,527 | 3,239 |
Other non-current assets | 302 | |
Non-current deferred income taxes | 4,342 | 4,398 |
Total non-current assets | 27,160 | 26,608 |
Total assets | 193,101 | 179,819 |
Current liabilities: | ||
Accounts payable | 24,603 | 23,987 |
Accrued liabilities | 17,074 | 16,110 |
Lease liability current | 1,015 | 1,109 |
Total current liabilities | 42,692 | 41,206 |
Non-current liabilities: | ||
Non-current deferred income tax liabilities | 83 | 85 |
Lease liability non-current | 1,512 | 1,915 |
Other non-current liabilities | 726 | 766 |
Total non-current liabilities | 2,321 | 2,766 |
Total liabilities | 45,013 | 43,972 |
Stockholders’ Equity | ||
Preferred stock, $1.00 par value, no shares issued | ||
Additional paid-in-capital | 69,669 | 66,331 |
Retained earnings | 78,254 | 68,031 |
Accumulated other comprehensive (loss) income | (539) | 800 |
Total stockholders’ equity | 148,088 | 135,847 |
Total liabilities and stockholders’ equity | 193,101 | 179,819 |
Common Stock | ||
Stockholders’ Equity | ||
Common stock, $0.05 par value; issued and outstanding 12,022 shares on November 26, 2022 and 11,649 shares on May 28, 2022 Class B common stock, convertible, $0.05 par value; issued and outstanding 2,052 shares on November 26, 2022 and 2,053 shares on May 28, 2022 | 601 | 582 |
Common Class B | ||
Stockholders’ Equity | ||
Common stock, $0.05 par value; issued and outstanding 12,022 shares on November 26, 2022 and 11,649 shares on May 28, 2022 Class B common stock, convertible, $0.05 par value; issued and outstanding 2,052 shares on November 26, 2022 and 2,053 shares on May 28, 2022 | $ 103 | $ 103 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Nov. 26, 2022 | May 28, 2022 |
Allowance for accounts receivable | $ 178 | $ 186 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred Stock, issued (in shares) | 0 | 0 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock, issued (in shares) | 12,022 | 11,649 |
Common stock, outstanding (in shares) | 12,022 | 11,649 |
Common Class B | ||
Common stock, par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock, issued (in shares) | 2,052 | 2,053 |
Common stock, outstanding (in shares) | 2,052 | 2,053 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 26, 2022 | Nov. 27, 2021 | Nov. 26, 2022 | Nov. 27, 2021 | |
Net sales | $ 65,905 | $ 53,979 | $ 133,462 | $ 107,683 |
Cost of sales | 44,054 | 36,322 | 88,584 | 73,729 |
Gross profit | 21,851 | 17,657 | 44,878 | 33,954 |
Selling, general and administrative expenses | 14,677 | 13,135 | 28,925 | 26,604 |
(Gain) loss on disposal of assets | (25) | 2 | (25) | 2 |
Operating income | 7,199 | 4,520 | 15,978 | 7,348 |
Other expense (income): | ||||
Investment/interest income | (78) | (8) | (103) | (25) |
Foreign exchange loss | 223 | (150) | 597 | (123) |
Other, net | (13) | 6 | (15) | 22 |
Total other expense (income) | 132 | (152) | 479 | (126) |
Income before income taxes | 7,067 | 4,672 | 15,499 | 7,474 |
Income tax provision | 1,518 | 550 | 3,626 | 717 |
Net income | 5,549 | 4,122 | 11,873 | 6,757 |
Foreign currency translation gain (loss), net of tax | 976 | (1,420) | (1,339) | (2,422) |
Comprehensive income | $ 6,525 | $ 2,702 | $ 10,534 | $ 4,335 |
Weighted average number of shares: | ||||
Common shares - Diluted | 12,535 | 11,697 | 12,442 | 11,568 |
Common Stock | ||||
Net income per share: | ||||
Common shares - Basic | $ 0.40 | $ 0.31 | $ 0.87 | $ 0.52 |
Common shares - Diluted | $ 0.39 | $ 0.30 | $ 0.83 | $ 0.50 |
Weighted average number of shares: | ||||
Common shares - Basic | 11,918 | 11,270 | 11,816 | 11,232 |
Common shares - Diluted | 12,535 | 11,697 | 12,442 | 11,568 |
Dividends per share: | ||||
Dividends per share | $ 0.060 | $ 0.060 | $ 0.120 | $ 0.120 |
Common Class B | ||||
Net income per share: | ||||
Common shares - Basic | 0.36 | 0.28 | 0.78 | 0.46 |
Common shares - Diluted | $ 0.35 | $ 0.27 | $ 0.75 | $ 0.45 |
Weighted average number of shares: | ||||
Common shares - Basic | 2,053 | 2,097 | 2,053 | 2,097 |
Common shares - Diluted | 2,053 | 2,097 | 2,053 | 2,097 |
Dividends per share: | ||||
Dividends per share | $ 0.054 | $ 0.054 | $ 0.108 | $ 0.108 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 26, 2022 | Nov. 27, 2021 | Nov. 26, 2022 | Nov. 27, 2021 | |
Operating activities: | ||||
Net income | $ 5,549 | $ 4,122 | $ 11,873 | $ 6,757 |
Adjustments to reconcile net income to cash (used in) provided by operating activities: | ||||
Depreciation and amortization | 893 | 859 | 1,776 | 1,688 |
Inventory provisions | 124 | 57 | 195 | 140 |
Share-based compensation expense | 213 | 153 | 524 | 372 |
(Gain) loss on disposal of assets | (25) | 2 | (25) | 2 |
Deferred income taxes | 27 | (23) | 28 | 12 |
Change in assets and liabilities: | ||||
Accounts receivable | (2,009) | 1,862 | (5,505) | (3,146) |
Inventories | (7,658) | (4,225) | (18,126) | (9,182) |
Prepaid expenses and other assets | 774 | (994) | (425) | (1,056) |
Accounts payable | (699) | 1,695 | 796 | 2,302 |
Accrued liabilities | (1,062) | 1,032 | 1,147 | 1,512 |
Other | (49) | 91 | 589 | 357 |
Net cash (used in) provided by operating activities | (3,922) | 4,631 | (7,153) | (242) |
Investing activities: | ||||
Capital expenditures | (1,301) | (770) | (2,743) | (1,607) |
Proceeds from sale of assets | 193 | 0 | 193 | 0 |
Net cash used in investing activities | (1,108) | (770) | (2,550) | (1,607) |
Financing activities: | ||||
Proceeds from issuance of common stock | 1,517 | 672 | 2,902 | 724 |
Cash dividends paid | (831) | (792) | (1,650) | (1,578) |
Other | 0 | (46) | (69) | (91) |
Net cash provided by (used in) financing activities | 686 | (166) | 1,183 | (945) |
Effect of exchange rate changes on cash and cash equivalents | (183) | (448) | (869) | (857) |
(Decrease) increase in cash and cash equivalents | (4,527) | 3,247 | (9,389) | (3,651) |
Cash and cash equivalents at beginning of period | 30,633 | 36,418 | 35,495 | 43,316 |
Cash and cash equivalents at end of period | $ 26,106 | $ 39,665 | $ 26,106 | $ 39,665 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statement of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common | Common Class B | Common Stock | Common Stock Common | Common Stock Common Class B | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance at May. 29, 2021 | $ 121,560 | $ 663 | $ 62,707 | $ 53,297 | $ 4,893 | ||||
Beginning Balance (in shares) at May. 29, 2021 | 11,160 | 2,097 | |||||||
Comprehensive income: | |||||||||
Net income (loss) | 6,757 | 6,757 | |||||||
Foreign currency translation | (2,422) | (2,422) | |||||||
Share-based compensation: | |||||||||
Restricted stock | 234 | 234 | |||||||
Stock options | 138 | 138 | |||||||
Options exercised | 724 | 5 | 719 | ||||||
Options exercised (in shares) | 105 | ||||||||
Restricted stock issuance | 4 | (4) | |||||||
Restricted stock issuance (in shares) | 73 | ||||||||
Dividends paid to: | |||||||||
Common | (1,352) | (1,352) | |||||||
Common class B | (226) | (226) | |||||||
Ending Balance at Nov. 27, 2021 | 125,413 | 672 | 63,794 | 58,476 | 2,471 | ||||
Ending Balance (in shares) at Nov. 27, 2021 | 11,338 | 2,097 | |||||||
Beginning Balance at Aug. 28, 2021 | 122,678 | 667 | 62,974 | 55,146 | 3,891 | ||||
Beginning Balance (in shares) at Aug. 28, 2021 | 11,241 | 2,097 | |||||||
Comprehensive income: | |||||||||
Net income (loss) | 4,122 | 4,122 | |||||||
Foreign currency translation | (1,420) | (1,420) | |||||||
Share-based compensation: | |||||||||
Restricted stock | 106 | 106 | |||||||
Stock options | 47 | 47 | |||||||
Options exercised | 672 | 5 | 667 | ||||||
Options exercised (in shares) | 97 | ||||||||
Dividends paid to: | |||||||||
Common | (679) | (679) | |||||||
Common class B | (113) | (113) | |||||||
Ending Balance at Nov. 27, 2021 | 125,413 | 672 | 63,794 | 58,476 | 2,471 | ||||
Ending Balance (in shares) at Nov. 27, 2021 | 11,338 | 2,097 | |||||||
Beginning Balance at May. 28, 2022 | 135,847 | 685 | 66,331 | 68,031 | 800 | ||||
Beginning Balance (in shares) at May. 28, 2022 | 11,649 | 2,053 | 11,649 | 2,053 | |||||
Comprehensive income: | |||||||||
Net income (loss) | 11,873 | 11,873 | |||||||
Foreign currency translation | (1,339) | (1,339) | |||||||
Share-based compensation: | |||||||||
Restricted stock | 262 | 262 | |||||||
Stock options | 262 | 262 | |||||||
Options exercised | 2,902 | 17 | 2,885 | ||||||
Options exercised (in shares) | 323 | ||||||||
Restricted stock issuance | (69) | 2 | (71) | ||||||
Restricted stock issuance (in shares) | 49 | ||||||||
Class B converted to common | 1 | (1) | |||||||
Dividends paid to: | |||||||||
Common | (1,428) | (1,428) | |||||||
Common class B | (222) | (222) | |||||||
Ending Balance at Nov. 26, 2022 | 148,088 | 704 | 69,669 | 78,254 | (539) | ||||
Ending Balance (in shares) at Nov. 26, 2022 | 12,022 | 2,052 | 12,022 | 2,052 | |||||
Beginning Balance at Aug. 27, 2022 | 140,664 | 695 | 67,948 | 73,536 | (1,515) | ||||
Beginning Balance (in shares) at Aug. 27, 2022 | 11,848 | 2,053 | |||||||
Comprehensive income: | |||||||||
Net income (loss) | 5,549 | 5,549 | |||||||
Foreign currency translation | 976 | 976 | |||||||
Share-based compensation: | |||||||||
Restricted stock | 139 | 139 | |||||||
Stock options | 74 | 74 | |||||||
Options exercised | 1,517 | 9 | 1,508 | ||||||
Options exercised (in shares) | 173 | ||||||||
Class B converted to common | 1 | (1) | |||||||
Dividends paid to: | |||||||||
Common | (719) | (719) | |||||||
Common class B | (112) | (112) | |||||||
Ending Balance at Nov. 26, 2022 | $ 148,088 | $ 704 | $ 69,669 | $ 78,254 | $ (539) | ||||
Ending Balance (in shares) at Nov. 26, 2022 | 12,022 | 2,052 | 12,022 | 2,052 |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statement of Stockholders' Equity (Parenthetical) - Common Stock - $ / shares | 3 Months Ended | 6 Months Ended | ||
Nov. 26, 2022 | Nov. 27, 2021 | Nov. 26, 2022 | Nov. 27, 2021 | |
Common | ||||
Dividends per common share | $ 0.060 | $ 0.060 | $ 0.120 | $ 0.120 |
Common Class B | ||||
Dividends per common share | $ 0.054 | $ 0.054 | $ 0.108 | $ 0.108 |
Description of the Company
Description of the Company | 6 Months Ended |
Nov. 26, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of the Company | 1. DESCRIPTION OF THE COMPANY Richardson Electronics, Ltd. (the "Company", "we", "our") is a leading global manufacturer of engineered solutions, power grid and microwave tubes, and related consumables; power conversion and RF and microwave components; high-value replacement parts, tubes, and service training for diagnostic imaging equipment; and customized display solutions. More than 60 % of our products are manufactured in LaFox, Illinois, Marlborough, Massachusetts, or Donaueschingen, Germany, or by one of our manufacturing partners throughout the world. All our partners manufacture to our strict specifications and per our supplier code of conduct. We serve customers in the alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. The Company’s strategy is to provide specialized technical expertise and “engineered solutions” based on our core engineering and manufacturing capabilities. The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair through its global infrastructure. Our products include electron tubes and related components, microwave generators, subsystems used in semiconductor manufacturing and visual technology solutions. These products are used to control, switch or amplify electrical power signals, or are used as display devices in a variety of industrial, commercial, medical and communication applications. The Company began reporting the results for its new Green Energy Solutions ("GES") segment in the first quarter of fiscal 2023 due to its focus on the power applications that support the green energy market. The GES segment has been carved out of our existing Power and Microwave Technologies (“PMT”) segment. Accordingly, the Company is reporting its financial performance based on four operating and reportable segments. The results for fiscal 2022 presented herein were adjusted to reflect the presentation of the new GES segment separately from the PMT segment. The Company's four operating and reportable segments are defined as follows: Power and Microwave Technologies combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies. As a designer, manufacturer, technology partner and authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based on our core engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair—all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in 5G, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar and radiation oncology. PMT also offers its customers technical services for both microwave and industrial equipment. Green Energy Solutions combines our key technology partners and engineered solutions capabilities to design and manufacture key products for the fast-growing energy storage market and power management applications. As a designer, manufacturer, technology partner and authorized distributor, GES’s strategy is to provide specialized technical expertise and engineered solutions using our core design engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair—all through our existing global infrastructure. GES’s focus is on products for numerous green energy applications such as wind, solar, hydrogen and Electric Vehicles, and other power management applications that support green solutions such as synthetic diamond manufacturing. Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original equipment manufacturers markets. Our engineers design, manufacture, source and support a full spectrum of solutions to match the needs of our customers. We offer long term availability and proven custom display solutions that include touch screens, protective panels, custom enclosures, All-In-One computers, specialized cabinet finishes and application specific software packages and certification services. We partner with both private label manufacturing companies and leading branded hardware vendors to offer the highest quality display and touch solutions and customized computing platforms. Healthcare manufactures, repairs, refurbishes and distributes high value replacement parts and equipment for the healthcare market including hospitals, medical centers, asset management companies, independent service organizations and multi-vendor service providers. Products include diagnostic imaging replacement parts for CT and MRI systems; replacement CT and MRI tubes; CT service training; MRI coils, cold heads and RF amplifiers; hydrogen thyratrons, klystrons, magnetrons; flat panel detector upgrades; pre-owned CT systems; and additional replacement solutions currently under development for the diagnostic imaging service market. Through a combination of newly developed products and partnerships, service offerings and training programs, we believe we can help our customers improve efficiency while lowering the cost of healthcare delivery. We currently have operations in the following major geographic regions: North America, Asia/Pacific, Europe and Latin America. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Nov. 26, 2022 | |
Basis Of Presentation [Abstract] | |
Basis of Presentation | 2. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. Our fiscal quarter ends on the Saturday nearest the end of the quarter-ending month. The second quarter of fiscal 2023 and fiscal 2022 both contained 13 weeks. The first six months of fiscal 2023 and fiscal 2022 both contained 26 weeks. In the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results of interim periods have been made. All inter-company transactions and balances have been eliminated. The unaudited consolidated financial statements presented herein include the accounts of our wholly owned subsidiaries. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The results of our operations for the six months ended November 26, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending May 27, 2023. As described in Note 1, Description of the Company and Note 7, Segment Reporting , the Company began reporting the results for its new Green Energy Solutions ("GES") segment in the first quarter of fiscal 2023 due to its focus on the power applications that support the green energy market. The GES segment has been carved out of our existing Power and Microwave Technologies (“PMT”) segment. Accordingly, the Company is reporting its financial performance based on four operating and reportable segments. The results for fiscal 2022 presented herein were adjusted to reflect the presentation of the new GES segment separately from the PMT segment. Refer to Note 7, Segment Reporting , for additional information on the changes in operating and reportable segments. The financial information contained in this report should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended May 28, 2022, which was filed with the SEC on August 1, 2022. |
Critical Accounting Policies an
Critical Accounting Policies and Estimates | 6 Months Ended |
Nov. 26, 2022 | |
Accounting Policies [Abstract] | |
Critical Accounting Policies and Estimates | 3. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Inventories, net: Our consolidated inventories were stated at the lower of cost and net realizable value, generally using a weighted-average cost method. Our net inventories include approximately $ 80.2 million of finished goods, $ 11.2 million of raw materials and $ 6.0 million of work-in-progress as of November 26, 2022 , as compared to approximately $ 66.6 million of finished goods, $ 8.0 million of raw materials and $ 5.8 million of work-in-progress as of May 28, 2022. At this time, we do not anticipate any material risks or uncertainties related to possible future inventory write-downs. Provisions for obsolete or slow-moving inventories are recorded based upon regular analysis of stock rotation privileges, obsolescence, the exiting of certain markets and assumptions about future demand and market conditions. If future demand changes in the industry, or market conditions differ from management’s estimates, additional provisions may be necessary. Inventory reserves were approximately $ 6.0 million as of November 26, 2022 and $ 6.1 million as of May 28, 2022. Revenue Recognition: Our customers are generally not resellers, but rather businesses that incorporate our products into their processes from which they generate an economic benefit. The goods are also distinct in that each item sold to the customer is clearly identified on both the purchase order and resulting invoice. Each product we sell benefits the customer independently of the other products. Each item on each purchase order from the customer can be used by the customer unrelated to any other products we provide to the customer. The Company’s revenue includes the following streams: • Manufacturing/assembly • Distribution • Services revenue Manufacturing/assembly typically includes the products that are manufactured or assembled in our manufacturing facility. These products can either be built to the customer’s prints/designs or are products that we stock in our warehouse to sell to any customer that places an order. The manufacturing business does not include a separate service bundled with the product sold or sold in addition to the product. Our contracts for customized products generally include termination provisions if a customer cancels its order. However, we recognize revenue at a point in time because the termination provisions normally do not require, upon cancelation, the customer to pay fees that are commensurate with the work performed. Each purchase order explicitly states the goods or service that we promise to transfer to the customer. The promises to the customer are limited only to those goods or service. The performance obligation is our promise to deliver both goods that were produced by the Company and resale of goods that we purchase from our suppliers. Our shipping and handling activities for destination shipments are performed prior to the customer obtaining control. As such, they are not a separate promised service. The Company elects to account for shipping and handling as activities to fulfill the promise to transfer the goods. The goods we provide to our customers are distinct in that our customers benefit from the goods we sell them through use in their own processes. Distribution typically includes products purchased from our suppliers, stocked in our warehouses and then sold to our customers. The distribution business does not include a separate service bundled with the product sold or sold on top of the product. Revenue is recognized when control of the promised goods is transferred to our customers, which is simultaneous with the title transferring to the customer, in an amount that reflects the transaction price consideration that we expect to receive in exchange for those goods. Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits from the goods. Our transaction price consideration is fixed, unless otherwise disclosed below as variable consideration. Generally, our contracts require our customers to pay for goods after we deliver products to them. Terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe and Latin America subject to customary credit checks. Repair, installation or training activities generate services revenue. The services we provide are relatively short in duration and typically completed in one or two weeks. Therefore, at each reporting date, the amount of unbilled work is insignificant. The services revenue has consistently accounted for less than 5 % of the Company’s total revenues and is expected to continue at that level. We record discounts taken based on historical experience. The policy varies by business unit. The Company allows returns with prior written authorization. We estimate returns based on historical experience. The Company maintains a reserve for returns based on historical trends that covers all contracts and revenue streams using the expected value method because we have a large number of contracts with similar characteristics, which is considered variable consideration. The reserve for returns creates a refund liability on our balance sheet as a contra trade accounts receivable as well as an asset in inventory. We value the inventory at cost due to there being minimal or no costs to the Company as we generally require the customer to pay freight and we typically do not have costs associated with activities such as relabeling or repackaging. The reserve is considered immaterial at each balance sheet date. Returns for defective product are typically covered by our suppliers’ warranty, thus, returns for defective product are not factored into our reserve. Principal versus agent guidance was considered for customized products that are provided by our suppliers versus manufactured by the Company. The Company acts as the principal as we are responsible for satisfying the performance obligation. We have primary responsibility for fulfilling the contract, we have inventory risk prior to delivery to our customer, we establish prices, our consideration is not in the form of a commission and we bear the credit risk. The Company recognizes revenue in the gross amount of consideration. Contracts with customers A revenue contract exists once a customer purchase order is received, reviewed and accepted. Each accepted purchase order identifies a distinct good or service as the performance obligation. The goods include standard products purchased from a supplier and stocked on our shelves, customized products purchased from a supplier, products that are customized or have value added to them in house prior to shipping to the customer and manufactured products. Prior to accepting a customer purchase order, we review the credit worthiness of the customer. Purchase orders are deemed to meet the collectability criterion once the customer’s credit is approved. The Company receives advance payments or deposits from our customers before revenue is recognized resulting in contract liabilities. Contract liabilities are included in accrued liabilities in the consolidated balance sheets. Contract Liabilities: Contract liabilities and revenue recognized were as follows ( in thousands ): May 28, 2022 Additions Revenue November 26, 2022 Contract liabilities (deferred revenue) $ 4,966 $ 2,543 $ ( 3,010 ) $ 4,499 See Note 7, Segment Reporting, for a disaggregation of revenue by reportable segment and geographic region, which represents how our chief operating decision maker reviews information internally to evaluate our financial performance and to make resource allocation and other decisions for the Company. Loss Contingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will include a disclosure describing the contingency. Intangible Assets: Intangible assets are initially recorded at their fair market values determined by quoted market prices in active markets, if available, or recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives either on a straight-line basis or over their projected future cash flows and are tested for impairment when events or changes in circumstances occur that indicate possible impairment. Our intangible assets represent the fair value for trade name, customer relationships and non-compete agreements acquired in connection with the acquisitions. Technology represents the fair value acquired in connection with acquisitions and an exclusive license, manufacturing and distribution agreement. Intangible assets subject to amortization were as follows (in thousands) : November 26, 2022 May 28, 2022 Gross Amounts: Trade Name $ 659 $ 659 Customer Relationships (1) 3,383 3,393 Non-compete Agreements 177 177 Technology 380 230 Total Gross Amounts $ 4,599 $ 4,459 Accumulated Amortization: Trade Name $ 659 $ 659 Customer Relationships 1,555 1,453 Non-compete Agreements 177 177 Technology 183 160 Total Accumulated Amortization $ 2,574 $ 2,449 Net Intangible Assets $ 2,025 $ 2,010 (1) Change from prior periods reflect impact of foreign currency translation. The amortization expense associated with the intangible assets subject to amortization for the next five years is presented in the following table (in thousands) : Fiscal Year Amortization Remaining 2023 $ 134 2024 252 2025 240 2026 205 2027 194 Thereafter 1,000 Total amortization $ 2,025 The weighted average number of years of amortization expense remaining is 11.5 years. Income Taxes: We recognize deferred tax assets and liabilities based on the differences between financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and determine the need for a valuation allowance based on a number of factors, including both positive and negative evidence. These factors include historical taxable income or loss, projected future taxable income or loss, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. In circumstances where we, or any of our affiliates, have incurred three years of cumulative losses which constitute significant negative evidence, positive evidence of equal or greater significance is needed to overcome the negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards. Accrued Liabilities: Accrued liabilities consisted of the following (in thousands): November 26, 2022 May 28, 2022 Compensation and payroll taxes $ 4,484 $ 5,519 Accrued severance 516 678 Professional fees 738 470 Deferred revenue 4,499 4,966 Other accrued expenses 6,837 4,477 Accrued Liabilities $ 17,074 $ 16,110 Warranties: We offer warranties for the limited number of specific products we manufacture. We estimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expense related to our warranty obligations as cost of sales in our consolidated statements of comprehensive income. Each quarter, we assess actual warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products and warranty experience. Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty reserves are included in accrued liabilities on our consolidated balance sheets. The warranty reserves are determined based on known product failures, historical experience and other available evidence. Warranty reserves were approximately $ 0.8 million as of November 26, 2022 and $ 0.7 million as of May 28, 2022. |
Lease Obligations and Other Com
Lease Obligations and Other Commitments | 6 Months Ended |
Nov. 26, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
Lease Obligations and Other Commitments | 4. LEASE OBLIGATIONS AND OTHER COMMITMENTS The Company leases real and personal property in the normal course of business under various operating and financing leases. The Company uses operating leases for facility space and automobiles. Most of the leased facility space is for sales and general office use. Automobile leases are used throughout the Company. Financing leases are used for computer servers. Several leases include renewal clauses which vary in length and may not include specific rent renewal amounts. The Company will revise the value of the right of use assets and associated lease liabilities when the Company determines it is reasonably certain of renewal. The gross amounts of assets and liabilities related to both operating and financing leases were as follows (in thousands) : Lease Type November 26, 2022 May 28, 2022 Operating lease ROU asset $ 2,527 $ 3,024 Financing lease ROU asset — 215 Total lease ROU asset $ 2,527 $ 3,239 Operating lease liability current $ 1,015 $ 1,109 Operating lease liability non-current $ 1,512 $ 1,915 The components of lease costs were as follows (in thousands) : Three Months Ended November 26, 2022 November 27, 2021 Consolidated operating lease expense Operating expenses $ 411 $ 446 Consolidated financing lease amortization Operating expenses — 23 Consolidated financing lease interest Interest expense — 1 Consolidated financing lease expense — 24 Net lease cost $ 411 $ 470 Six Months Ended November 26, 2022 November 27, 2021 Consolidated operating lease expense Operating expenses $ 865 $ 901 Consolidated financing lease amortization Operating expenses — 46 Consolidated financing lease interest Interest expense — 3 Consolidated financing lease expense — 49 Net lease cost $ 865 $ 950 The approximate future minimum lease payments under operating leases at November 26, 2022 were as follows (in thousands) : Fiscal Year Operating Leases Remaining 2023 $ 611 2024 920 2025 643 2026 400 2027 75 Thereafter 16 Total lease payments 2,665 Less imputed interest 138 Net minimum lease payments $ 2,527 The weighted average remaining lease terms and interest rates of leases held by the Company as of November 26, 2022 were as follows: Lease Type Weighted Average Remaining Weighted Average Interest Rate Operating leases 2.9 4.2 % The cash outflows of the leasing activity of the Company as lessee for the six months ending November 26, 2022 and November 27, 2021 were as follows (in thousands) : Six Months Ended Cash Flow Source Classification November 26, 2022 November 27, 2021 Operating cash flows from operating leases Operating activities $ 496 $ 1,303 Operating cash flows from financing leases Operating activities — 88 Finance cash flows from financing leases Financing activities — 91 |
Income Taxes
Income Taxes | 6 Months Ended |
Nov. 26, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. INCOME TAXES We recorded an income tax provision of $ 3.6 million and $ 0.7 million for the first six months of fiscal 2023 and the first six months of fiscal 2022, respectively. The effective income tax rate during the first six months of fiscal 2023 was a tax provision of 23.4 % as compared to a tax provision of 9.6 % during the first six months of fiscal 2022. The difference in rate during the first six months of fiscal 2023 as compared to the first six months of fiscal 2022 reflects changes in the valuation allowance recorded at year end fiscal 2022, absence of Net Operating Losses (“NOL”) for utilization in fiscal 2023, our geographical distribution of income (loss), which is primarily driven by an increase in U.S. earnings for fiscal 2023 and a state income tax provision. The 23.4 % effective income tax rate differs from the federal statutory rate of 21 % as a result of our geographical distribution of income (loss), which is primarily driven by an increase in U.S. earnings for fiscal 2023 and a state income tax provision. In the normal course of business, we are subject to examination by taxing authorities throughout the world. Generally, years prior to fiscal 2017 are closed for examination under the statute of limitation for U.S. federal, U.S. state and local or non-U.S. tax jurisdictions. We were under examination for fiscal 2015 through fiscal 2018 in Germany. The audit was settled in the fourth quarter of fiscal 2022. In the second quarter of fiscal 2023, the Company paid the audit assessment for the fiscal 2015 through fiscal 2018 years. Our primary foreign tax jurisdictions are Germany and the Netherlands. We have tax years open in Germany beginning in fiscal 2019 and the Netherlands beginning in fiscal 2021. We have historically determined that certain undistributed earnings of our foreign subsidiaries, to the extent of cash available, will be repatriated to the U.S. The deferred tax liability on the outside basis difference is now primarily withholding tax on future dividend distributions. The Company does no t have a deferred tax liability recorded on the outside basis difference as of November 26, 2022 but had a deferred liability of $ 0.1 million as of May 28, 2022, As of November 26, 2022 and as of May 28, 2022, our worldwide liability for uncertain tax positions related to continuing operations was $ 0.1 million, excluding interest and penalties. We record penalties and interest related to uncertain tax positions in the income tax expense line item within the consolidated statements of comprehensive loss. As of November 26, 2022, we have maintained a full valuation allowance against the foreign tax credit deferred tax asset based on negative evidence relating to the Company’s ability to utilize the foreign tax credit carryforward in the future. As of November 26, 2022, a valuation allowance of $ 3.4 million was recorded, representing the portion of the deferred tax asset that management does not believe is more likely than not to be realized. The valuation allowance as of November 27, 2021 was $ 10.4 million. The remaining valuation allowance relates to foreign tax credits ($ 1.8 million), state NOLs ($ 0.2 million) and deferred tax assets in foreign jurisdictions where historical taxable losses have been incurred ($ 1.4 million). The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. |
Calculation of Earnings Per Sha
Calculation of Earnings Per Share | 6 Months Ended |
Nov. 26, 2022 | |
Earnings Per Share [Abstract] | |
Calculation of Earnings Per Share | 6. CALCULATION OF EARNINGS PER SHARE We have authorized 17,000,000 shares of common stock and 3,000,000 shares of Class B common stock. The Class B common stock has 10 votes per share and has transferability restrictions; however, Class B common stock may be converted into common stock on a share-for-share basis at any time. With respect to dividends and distributions, shares of common stock and Class B common stock rank equally and have the same rights, except that Class B common stock cash dividends are limited to 90 % of the amount of common stock cash dividends. Our Class B common stock is considered a participating security requiring the use of the two-class method for the computation of basic and diluted earnings per share. The two-class computation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Basic and diluted earnings per share were computed using the two-class method. The shares of Class B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible on a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined formula which is 90% of the amount of common stock cash dividends. The earnings per share (“EPS”) presented in our unaudited consolidated statements of comprehensive income were based on the following amounts ( in thousands, except per share amounts ): Three Months Ended November 26, 2022 November 27, 2021 Basic Diluted Basic Diluted Numerator for Basic and Diluted EPS: Net income $ 5,549 $ 5,549 $ 4,122 $ 4,122 Less dividends: Common stock 719 719 679 679 Class B common stock 112 112 113 113 Undistributed earnings $ 4,718 $ 4,718 $ 3,330 $ 3,330 Common stock undistributed earnings $ 4,085 $ 4,112 $ 2,852 $ 2,867 Class B common stock undistributed earnings 633 606 478 463 Total undistributed earnings $ 4,718 $ 4,718 $ 3,330 $ 3,330 Denominator for Basic and Diluted EPS: Common stock weighted average shares 11,918 11,918 11,270 11,270 Effect of dilutive securities Dilutive stock options 617 427 Denominator for diluted EPS adjusted for weighted average shares and assumed conversion 12,535 11,697 Class B common stock weighted average shares and shares under if-converted method for diluted EPS 2,053 2,053 2,097 2,097 Net income per share: Common stock $ 0.40 $ 0.39 $ 0.31 $ 0.30 Class B common stock $ 0.36 $ 0.35 $ 0.28 $ 0.27 Note: There were no common stock options that were antidilutive in the second quarter of fiscal 2023 and fiscal 2022. Six Months Ended November 26, 2022 November 27, 2021 Basic Diluted Basic Diluted Numerator for Basic and Diluted EPS: Net income $ 11,873 $ 11,873 $ 6,757 $ 6,757 Less dividends: Common stock 1,428 1,428 1,352 1,352 Class B common stock 222 222 226 226 Undistributed earnings $ 10,223 $ 10,223 $ 5,179 $ 5,179 Common stock undistributed earnings $ 8,841 $ 8,901 $ 4,434 $ 4,453 Class B common stock undistributed earnings 1,382 1,322 745 726 Total undistributed earnings $ 10,223 $ 10,223 $ 5,179 $ 5,179 Denominator for Basic and Diluted EPS: Common stock weighted average shares 11,816 11,816 11,232 11,232 Effect of dilutive securities Dilutive stock options 626 336 Denominator for diluted EPS adjusted for weighted average shares and assumed conversion 12,442 11,568 Class B common stock weighted average shares and shares under if-converted method for diluted EPS 2,053 2,053 2,097 2,097 Net income per share: Common stock $ 0.87 $ 0.83 $ 0.52 $ 0.50 Class B common stock $ 0.78 $ 0.75 $ 0.46 $ 0.45 Note: There were no common stock options that were antidilutive in the first six months of fiscal 2023 and fiscal 2022. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Nov. 26, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | 7. SEGMENT REPORTING The Company began reporting the results for its new Green Energy Solutions ("GES") segment in the first quarter of fiscal 2023 due to its focus on the power applications that support the green energy market. The GES segment has been carved out of our existing Power and Microwave Technologies (“PMT”) segment. Accordingly, the Company is reporting its financial performance based on four operating and reportable segments. The results for fiscal 2022 presented herein were adjusted to reflect the presentation of the new GES segment separately from the PMT segment. The Company's four operating and reportable segments are defined as follows: Power and Microwave Technologies combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies. As a designer, manufacturer, technology partner and authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based on our core engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair—all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in 5G, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar and radiation oncology. PMT also offers its customers technical services for both microwave and industrial equipment. Green Energy Solutions combines our key technology partners and engineered solutions capabilities to design and manufacture key products for the fast-growing energy storage market and power management applications. As a designer, manufacturer, technology partner and authorized distributor, GES’s strategy is to provide specialized technical expertise and engineered solutions using our core design engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair—all through our existing global infrastructure. GES’s focus is on products for numerous green energy applications such as wind, solar, hydrogen and Electric Vehicles, and other power management applications that support green solutions such as synthetic diamond manufacturing. Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original equipment manufacturers markets. Our engineers design, manufacture, source and support a full spectrum of solutions to match the needs of our customers. We offer long term availability and proven custom display solutions that include touch screens, protective panels, custom enclosures, All-In-One computers, specialized cabinet finishes and application specific software packages and certification services. We partner with both private label manufacturing companies and leading branded hardware vendors to offer the highest quality display and touch solutions and customized computing platforms. Healthcare manufactures, repairs, refurbishes and distributes high value replacement parts and equipment for the healthcare market including hospitals, medical centers, asset management companies, independent service organizations and multi-vendor service providers. Products include diagnostic imaging replacement parts for CT and MRI systems; replacement CT and MRI tubes; CT service training; MRI coils, cold heads and RF amplifiers; hydrogen thyratrons, klystrons, magnetrons; flat panel detector upgrades; pre-owned CT systems; and additional replacement solutions currently under development for the diagnostic imaging service market. Through a combination of newly developed products and partnerships, service offerings and training programs, we believe we can help our customers improve efficiency while lowering the cost of healthcare delivery. The CEO, who is the chief operating decision maker, evaluates performance and allocates resources primarily based on the gross profit of each segment. Operating results by segment are summarized in the following table ( in thousands ): Three Months Ended Six Months Ended November 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021 PMT Net Sales $ 40,585 $ 36,826 $ 85,939 $ 77,261 Gross Profit 14,011 12,399 29,546 24,586 GES Net Sales 12,293 4,911 20,804 7,485 Gross Profit 4,162 1,587 7,184 2,331 Canvys Net Sales 10,079 9,150 20,492 17,591 Gross Profit 2,995 2,912 6,261 5,730 Healthcare Net Sales 2,948 3,092 6,227 5,346 Gross Profit 683 759 1,887 1,307 Geographic net sales information is primarily grouped by customer destination into five areas: North America; Asia/Pacific; Europe; Latin America; and Other. Net sales and gross profit by geographic region are summarized in the following table ( in thousands ): Three Months Ended Six Months Ended November 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021 Net Sales North America $ 31,577 $ 24,440 $ 63,405 $ 44,968 Asia/Pacific 15,306 11,699 32,860 24,945 Europe 16,574 15,114 31,930 32,164 Latin America 2,461 2,721 5,306 5,596 Other (1) ( 13 ) 5 ( 39 ) 10 Total $ 65,905 $ 53,979 $ 133,462 $ 107,683 Gross Profit North America $ 12,184 $ 8,658 $ 25,463 $ 16,038 Asia/Pacific 4,791 3,919 10,321 8,065 Europe 4,943 4,834 9,285 9,623 Latin America 883 1,000 1,902 2,081 Other (1) ( 950 ) ( 754 ) ( 2,093 ) ( 1,853 ) Total $ 21,851 $ 17,657 $ 44,878 $ 33,954 (1) Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses. We sell our products to customers in diversified industries and perform periodic credit evaluations of our customers’ financial condition. Terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe and Latin America. Estimates of credit losses are recorded in the financial statements based on monthly reviews of outstanding accounts. |
Risks and Uncertainties
Risks and Uncertainties | 6 Months Ended |
Nov. 26, 2022 | |
Risks And Uncertainties [Abstract] | |
Risks and Uncertainties | 8. RISKS AND UNCERTAINTIES COVID-19 Update The impact of the COVID-19 pandemic and its effects continue to evolve. As such, the full magnitude that the pandemic, and the steps taken to prevent, mitigate and/or respond to its spread, will have on the Company’s financial condition, liquidity and future results of operations remains uncertain. The extent of the impact of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the duration and spread of the pandemic, the extent, speed and effectiveness of continued worldwide containment efforts, and other actions taken by governments, businesses and individuals in response to abatement and resurgence of the virus. Our ability to meet customer demands for products may be impaired or, similarly, our customers may experience adverse business consequences due to the continued impact of COVID-19 and its effects. Reduced demand for products or impaired ability to meet customer demand (including disruptions at our transportation service providers or vendors) could have a material adverse effect on our business, operations and financial performance. There were sales declines during fiscal year 2021, the majority of which were related to the COVID-19 global pandemic. While the Company did not experience sales declines during fiscal year 2022 as a result of the pandemic, the impacts of the pandemic on supply chain and freight negatively impacted our gross margins as a percentage of net sales in our Canvys and Healthcare segments. As a result of COVID-19 and its effects, we continued to experience some component delays impacting new product development schedules. The global markets have generally suffered, and are continuing to suffer, from material disruptions in the supply chain. Management continues to monitor the global situation on its financial condition, liquidity, operations, suppliers, industry and workforce. Given the ever-evolving nature of the pandemic and the continued global responses to the ongoing impact of the pandemic as well as the cycle of recurrences and the after-effects, the Company is not presently able to fully estimate the effects of COVID-19 on its results of operations, financial condition or liquidity going forward. Company Response to CARES Act On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security (“CARES”) Act to provide certain relief as a result of the COVID-19 outbreak. The CARES Act included provisions relating to refundable payroll tax credits, deferral of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, increased limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified, improvement property. As of November 26, 2022, the Company deferred $ 0.4 million of employer-side social security tax payments, which will be paid by December 31, 2022. The Company has estimated and recorded the overall effects of the CARES Act and does not anticipate a material change. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Nov. 26, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 9. FAIR VALUE MEASUREMENTS Investments are measured at fair value. The Company had investments of $ 5.0 million as of November 26, 2022 and $ 5.0 million as of May 28, 2022. |
Related Party Transaction
Related Party Transaction | 6 Months Ended |
Nov. 26, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transaction | 10. RELATED PARTY TRANSACTION On June 15, 2015, the Company entered into a lease agreement for the IMES facility with LDL, LLC. That lease agreement was extended for five years in fiscal 2021. The Company shall be entitled to extend the term of the lease for a period of an additional five years by notifying the landlord in writing of its intention to do so within six months of the expiration of the term. The Executive Vice President of IMES, Lee A. McIntyre III (former owner of IMES), has an ownership interest in LDL, LLC. Mr. McIntyre departed from the Company in the second quarter of fiscal year 2023 . The lease agreement provides for monthly payments over five years with total future minimum lease payments of $ 0.4 million. Rental expense related to this lease amounted to less than $ 0.1 million for the six months ended November 26, 2022 and November 27, 2021. |
Critical Accounting Policies _2
Critical Accounting Policies and Estimates (Policies) | 6 Months Ended |
Nov. 26, 2022 | |
Accounting Policies [Abstract] | |
Inventories, net | Inventories, net: Our consolidated inventories were stated at the lower of cost and net realizable value, generally using a weighted-average cost method. Our net inventories include approximately $ 80.2 million of finished goods, $ 11.2 million of raw materials and $ 6.0 million of work-in-progress as of November 26, 2022 , as compared to approximately $ 66.6 million of finished goods, $ 8.0 million of raw materials and $ 5.8 million of work-in-progress as of May 28, 2022. At this time, we do not anticipate any material risks or uncertainties related to possible future inventory write-downs. Provisions for obsolete or slow-moving inventories are recorded based upon regular analysis of stock rotation privileges, obsolescence, the exiting of certain markets and assumptions about future demand and market conditions. If future demand changes in the industry, or market conditions differ from management’s estimates, additional provisions may be necessary. Inventory reserves were approximately $ 6.0 million as of November 26, 2022 and $ 6.1 million as of May 28, 2022. Revenue Recognition: Our customers are generally not resellers, but rather businesses that incorporate our products into their processes from which they generate an economic benefit. The goods are also distinct in that each item sold to the customer is clearly identified on both the purchase order and resulting invoice. Each product we sell benefits the customer independently of the other products. Each item on each purchase order from the customer can be used by the customer unrelated to any other products we provide to the customer. The Company’s revenue includes the following streams: • Manufacturing/assembly • Distribution • Services revenue Manufacturing/assembly typically includes the products that are manufactured or assembled in our manufacturing facility. These products can either be built to the customer’s prints/designs or are products that we stock in our warehouse to sell to any customer that places an order. The manufacturing business does not include a separate service bundled with the product sold or sold in addition to the product. Our contracts for customized products generally include termination provisions if a customer cancels its order. However, we recognize revenue at a point in time because the termination provisions normally do not require, upon cancelation, the customer to pay fees that are commensurate with the work performed. Each purchase order explicitly states the goods or service that we promise to transfer to the customer. The promises to the customer are limited only to those goods or service. The performance obligation is our promise to deliver both goods that were produced by the Company and resale of goods that we purchase from our suppliers. Our shipping and handling activities for destination shipments are performed prior to the customer obtaining control. As such, they are not a separate promised service. The Company elects to account for shipping and handling as activities to fulfill the promise to transfer the goods. The goods we provide to our customers are distinct in that our customers benefit from the goods we sell them through use in their own processes. Distribution typically includes products purchased from our suppliers, stocked in our warehouses and then sold to our customers. The distribution business does not include a separate service bundled with the product sold or sold on top of the product. Revenue is recognized when control of the promised goods is transferred to our customers, which is simultaneous with the title transferring to the customer, in an amount that reflects the transaction price consideration that we expect to receive in exchange for those goods. Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits from the goods. Our transaction price consideration is fixed, unless otherwise disclosed below as variable consideration. Generally, our contracts require our customers to pay for goods after we deliver products to them. Terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe and Latin America subject to customary credit checks. Repair, installation or training activities generate services revenue. The services we provide are relatively short in duration and typically completed in one or two weeks. Therefore, at each reporting date, the amount of unbilled work is insignificant. The services revenue has consistently accounted for less than 5 % of the Company’s total revenues and is expected to continue at that level. We record discounts taken based on historical experience. The policy varies by business unit. The Company allows returns with prior written authorization. We estimate returns based on historical experience. The Company maintains a reserve for returns based on historical trends that covers all contracts and revenue streams using the expected value method because we have a large number of contracts with similar characteristics, which is considered variable consideration. The reserve for returns creates a refund liability on our balance sheet as a contra trade accounts receivable as well as an asset in inventory. We value the inventory at cost due to there being minimal or no costs to the Company as we generally require the customer to pay freight and we typically do not have costs associated with activities such as relabeling or repackaging. The reserve is considered immaterial at each balance sheet date. Returns for defective product are typically covered by our suppliers’ warranty, thus, returns for defective product are not factored into our reserve. Principal versus agent guidance was considered for customized products that are provided by our suppliers versus manufactured by the Company. The Company acts as the principal as we are responsible for satisfying the performance obligation. We have primary responsibility for fulfilling the contract, we have inventory risk prior to delivery to our customer, we establish prices, our consideration is not in the form of a commission and we bear the credit risk. The Company recognizes revenue in the gross amount of consideration. Contracts with customers A revenue contract exists once a customer purchase order is received, reviewed and accepted. Each accepted purchase order identifies a distinct good or service as the performance obligation. The goods include standard products purchased from a supplier and stocked on our shelves, customized products purchased from a supplier, products that are customized or have value added to them in house prior to shipping to the customer and manufactured products. Prior to accepting a customer purchase order, we review the credit worthiness of the customer. Purchase orders are deemed to meet the collectability criterion once the customer’s credit is approved. The Company receives advance payments or deposits from our customers before revenue is recognized resulting in contract liabilities. Contract liabilities are included in accrued liabilities in the consolidated balance sheets. |
Revenue Recognition | Contract Liabilities: Contract liabilities and revenue recognized were as follows ( in thousands ): May 28, 2022 Additions Revenue November 26, 2022 Contract liabilities (deferred revenue) $ 4,966 $ 2,543 $ ( 3,010 ) $ 4,499 See Note 7, Segment Reporting, for a disaggregation of revenue by reportable segment and geographic region, which represents how our chief operating decision maker reviews information internally to evaluate our financial performance and to make resource allocation and other decisions for the Company. |
Loss Contingencies | Loss Contingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will include a disclosure describing the contingency. |
Intangible Assets | Intangible Assets: Intangible assets are initially recorded at their fair market values determined by quoted market prices in active markets, if available, or recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives either on a straight-line basis or over their projected future cash flows and are tested for impairment when events or changes in circumstances occur that indicate possible impairment. Our intangible assets represent the fair value for trade name, customer relationships and non-compete agreements acquired in connection with the acquisitions. Technology represents the fair value acquired in connection with acquisitions and an exclusive license, manufacturing and distribution agreement. Intangible assets subject to amortization were as follows (in thousands) : November 26, 2022 May 28, 2022 Gross Amounts: Trade Name $ 659 $ 659 Customer Relationships (1) 3,383 3,393 Non-compete Agreements 177 177 Technology 380 230 Total Gross Amounts $ 4,599 $ 4,459 Accumulated Amortization: Trade Name $ 659 $ 659 Customer Relationships 1,555 1,453 Non-compete Agreements 177 177 Technology 183 160 Total Accumulated Amortization $ 2,574 $ 2,449 Net Intangible Assets $ 2,025 $ 2,010 (1) Change from prior periods reflect impact of foreign currency translation. The amortization expense associated with the intangible assets subject to amortization for the next five years is presented in the following table (in thousands) : Fiscal Year Amortization Remaining 2023 $ 134 2024 252 2025 240 2026 205 2027 194 Thereafter 1,000 Total amortization $ 2,025 The weighted average number of years of amortization expense remaining is 11.5 years. |
Income Taxes | Income Taxes: We recognize deferred tax assets and liabilities based on the differences between financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and determine the need for a valuation allowance based on a number of factors, including both positive and negative evidence. These factors include historical taxable income or loss, projected future taxable income or loss, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. In circumstances where we, or any of our affiliates, have incurred three years of cumulative losses which constitute significant negative evidence, positive evidence of equal or greater significance is needed to overcome the negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards. |
Accrued Liabilities | Accrued Liabilities: Accrued liabilities consisted of the following (in thousands): November 26, 2022 May 28, 2022 Compensation and payroll taxes $ 4,484 $ 5,519 Accrued severance 516 678 Professional fees 738 470 Deferred revenue 4,499 4,966 Other accrued expenses 6,837 4,477 Accrued Liabilities $ 17,074 $ 16,110 |
Warranties | Warranties: We offer warranties for the limited number of specific products we manufacture. We estimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expense related to our warranty obligations as cost of sales in our consolidated statements of comprehensive income. Each quarter, we assess actual warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products and warranty experience. Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty reserves are included in accrued liabilities on our consolidated balance sheets. The warranty reserves are determined based on known product failures, historical experience and other available evidence. Warranty reserves were approximately $ 0.8 million as of November 26, 2022 and $ 0.7 million as of May 28, 2022. |
Critical Accounting Policies _3
Critical Accounting Policies and Estimates (Tables) | 6 Months Ended |
Nov. 26, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Contract Liabilities and Revenue Recognized | Contract Liabilities: Contract liabilities and revenue recognized were as follows ( in thousands ): May 28, 2022 Additions Revenue November 26, 2022 Contract liabilities (deferred revenue) $ 4,966 $ 2,543 $ ( 3,010 ) $ 4,499 |
Schedule of Intangible Assets Subject to Amortization | Intangible assets subject to amortization were as follows (in thousands) : November 26, 2022 May 28, 2022 Gross Amounts: Trade Name $ 659 $ 659 Customer Relationships (1) 3,383 3,393 Non-compete Agreements 177 177 Technology 380 230 Total Gross Amounts $ 4,599 $ 4,459 Accumulated Amortization: Trade Name $ 659 $ 659 Customer Relationships 1,555 1,453 Non-compete Agreements 177 177 Technology 183 160 Total Accumulated Amortization $ 2,574 $ 2,449 Net Intangible Assets $ 2,025 $ 2,010 (1) Change from prior periods reflect impact of foreign currency translation. |
Schedule of the Amortization Expense for the Next Five Years | The amortization expense associated with the intangible assets subject to amortization for the next five years is presented in the following table (in thousands) : Fiscal Year Amortization Remaining 2023 $ 134 2024 252 2025 240 2026 205 2027 194 Thereafter 1,000 Total amortization $ 2,025 |
Schedule of Accrued Liabilities | Accrued Liabilities: Accrued liabilities consisted of the following (in thousands): November 26, 2022 May 28, 2022 Compensation and payroll taxes $ 4,484 $ 5,519 Accrued severance 516 678 Professional fees 738 470 Deferred revenue 4,499 4,966 Other accrued expenses 6,837 4,477 Accrued Liabilities $ 17,074 $ 16,110 |
Lease Obligations and Other C_2
Lease Obligations and Other Commitments (Tables) | 6 Months Ended |
Nov. 26, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Gross Amount Assets and Liabilities Related to Operating and Financing Leases | The gross amounts of assets and liabilities related to both operating and financing leases were as follows (in thousands) : Lease Type November 26, 2022 May 28, 2022 Operating lease ROU asset $ 2,527 $ 3,024 Financing lease ROU asset — 215 Total lease ROU asset $ 2,527 $ 3,239 Operating lease liability current $ 1,015 $ 1,109 Operating lease liability non-current $ 1,512 $ 1,915 |
Components of Lease Costs | The components of lease costs were as follows (in thousands) : Three Months Ended November 26, 2022 November 27, 2021 Consolidated operating lease expense Operating expenses $ 411 $ 446 Consolidated financing lease amortization Operating expenses — 23 Consolidated financing lease interest Interest expense — 1 Consolidated financing lease expense — 24 Net lease cost $ 411 $ 470 Six Months Ended November 26, 2022 November 27, 2021 Consolidated operating lease expense Operating expenses $ 865 $ 901 Consolidated financing lease amortization Operating expenses — 46 Consolidated financing lease interest Interest expense — 3 Consolidated financing lease expense — 49 Net lease cost $ 865 $ 950 |
Schedule of Future Minimum Lease Payments under Operating Leases | The approximate future minimum lease payments under operating leases at November 26, 2022 were as follows (in thousands) : Fiscal Year Operating Leases Remaining 2023 $ 611 2024 920 2025 643 2026 400 2027 75 Thereafter 16 Total lease payments 2,665 Less imputed interest 138 Net minimum lease payments $ 2,527 |
Schedule of Weighted Average Remaining Lease Terms and Interest Rates of Leases | The weighted average remaining lease terms and interest rates of leases held by the Company as of November 26, 2022 were as follows: Lease Type Weighted Average Remaining Weighted Average Interest Rate Operating leases 2.9 4.2 % |
Schedule of Cash Outflows of Leasing Activity | The cash outflows of the leasing activity of the Company as lessee for the six months ending November 26, 2022 and November 27, 2021 were as follows (in thousands) : Six Months Ended Cash Flow Source Classification November 26, 2022 November 27, 2021 Operating cash flows from operating leases Operating activities $ 496 $ 1,303 Operating cash flows from financing leases Operating activities — 88 Finance cash flows from financing leases Financing activities — 91 |
Calculation of Earnings Per S_2
Calculation of Earnings Per Share (Tables) | 6 Months Ended |
Nov. 26, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The earnings per share (“EPS”) presented in our unaudited consolidated statements of comprehensive income were based on the following amounts ( in thousands, except per share amounts ): Three Months Ended November 26, 2022 November 27, 2021 Basic Diluted Basic Diluted Numerator for Basic and Diluted EPS: Net income $ 5,549 $ 5,549 $ 4,122 $ 4,122 Less dividends: Common stock 719 719 679 679 Class B common stock 112 112 113 113 Undistributed earnings $ 4,718 $ 4,718 $ 3,330 $ 3,330 Common stock undistributed earnings $ 4,085 $ 4,112 $ 2,852 $ 2,867 Class B common stock undistributed earnings 633 606 478 463 Total undistributed earnings $ 4,718 $ 4,718 $ 3,330 $ 3,330 Denominator for Basic and Diluted EPS: Common stock weighted average shares 11,918 11,918 11,270 11,270 Effect of dilutive securities Dilutive stock options 617 427 Denominator for diluted EPS adjusted for weighted average shares and assumed conversion 12,535 11,697 Class B common stock weighted average shares and shares under if-converted method for diluted EPS 2,053 2,053 2,097 2,097 Net income per share: Common stock $ 0.40 $ 0.39 $ 0.31 $ 0.30 Class B common stock $ 0.36 $ 0.35 $ 0.28 $ 0.27 Note: There were no common stock options that were antidilutive in the second quarter of fiscal 2023 and fiscal 2022. Six Months Ended November 26, 2022 November 27, 2021 Basic Diluted Basic Diluted Numerator for Basic and Diluted EPS: Net income $ 11,873 $ 11,873 $ 6,757 $ 6,757 Less dividends: Common stock 1,428 1,428 1,352 1,352 Class B common stock 222 222 226 226 Undistributed earnings $ 10,223 $ 10,223 $ 5,179 $ 5,179 Common stock undistributed earnings $ 8,841 $ 8,901 $ 4,434 $ 4,453 Class B common stock undistributed earnings 1,382 1,322 745 726 Total undistributed earnings $ 10,223 $ 10,223 $ 5,179 $ 5,179 Denominator for Basic and Diluted EPS: Common stock weighted average shares 11,816 11,816 11,232 11,232 Effect of dilutive securities Dilutive stock options 626 336 Denominator for diluted EPS adjusted for weighted average shares and assumed conversion 12,442 11,568 Class B common stock weighted average shares and shares under if-converted method for diluted EPS 2,053 2,053 2,097 2,097 Net income per share: Common stock $ 0.87 $ 0.83 $ 0.52 $ 0.50 Class B common stock $ 0.78 $ 0.75 $ 0.46 $ 0.45 Note: There were no common stock options that were antidilutive in the first six months of fiscal 2023 and fiscal 2022. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Nov. 26, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Operating Results by Segment | Operating results by segment are summarized in the following table ( in thousands ): Three Months Ended Six Months Ended November 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021 PMT Net Sales $ 40,585 $ 36,826 $ 85,939 $ 77,261 Gross Profit 14,011 12,399 29,546 24,586 GES Net Sales 12,293 4,911 20,804 7,485 Gross Profit 4,162 1,587 7,184 2,331 Canvys Net Sales 10,079 9,150 20,492 17,591 Gross Profit 2,995 2,912 6,261 5,730 Healthcare Net Sales 2,948 3,092 6,227 5,346 Gross Profit 683 759 1,887 1,307 |
Schedule of Net Sales and Gross Profit by Geographic Region | Net sales and gross profit by geographic region are summarized in the following table ( in thousands ): Three Months Ended Six Months Ended November 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021 Net Sales North America $ 31,577 $ 24,440 $ 63,405 $ 44,968 Asia/Pacific 15,306 11,699 32,860 24,945 Europe 16,574 15,114 31,930 32,164 Latin America 2,461 2,721 5,306 5,596 Other (1) ( 13 ) 5 ( 39 ) 10 Total $ 65,905 $ 53,979 $ 133,462 $ 107,683 Gross Profit North America $ 12,184 $ 8,658 $ 25,463 $ 16,038 Asia/Pacific 4,791 3,919 10,321 8,065 Europe 4,943 4,834 9,285 9,623 Latin America 883 1,000 1,902 2,081 Other (1) ( 950 ) ( 754 ) ( 2,093 ) ( 1,853 ) Total $ 21,851 $ 17,657 $ 44,878 $ 33,954 (1) Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses. |
Description of the Company - Ad
Description of the Company - Additional Information (Details) | 6 Months Ended |
Nov. 26, 2022 Segment | |
Concentration Risk [Line Items] | |
Number of operating segments | 4 |
Number of reportable segments | 4 |
Minimum | Product Concentration | Sales | |
Concentration Risk [Line Items] | |
Percentage of products manufactured | 60% |
Critical Accounting Policies _4
Critical Accounting Policies and Estimates - Additional Information (Details) - USD ($) $ in Millions | 6 Months Ended | |
Nov. 26, 2022 | May 28, 2022 | |
Critical Accounting Policies And Estimates [Line Items] | ||
Finished goods | $ 80.2 | $ 66.6 |
Raw material | 11.2 | 8 |
Work in progress | 6 | 5.8 |
Inventory valuation reserves | $ 6 | 6.1 |
Weighted average number of years of amortization expense | 11 years 6 months | |
Warranty reserves | $ 0.8 | $ 0.7 |
Maximum | ||
Critical Accounting Policies And Estimates [Line Items] | ||
Services revenue recognized as percentage of aggregate revenue | 5% |
Critical Accounting Policies _5
Critical Accounting Policies and Estimates - Schedule of Contract Liabilities and Revenue Recognized (Details) $ in Thousands | 6 Months Ended |
Nov. 26, 2022 USD ($) | |
Revenue From Contract With Customer [Abstract] | |
Contract Liabilities (Deferred Revenue), Beginning Balance | $ 4,966 |
Contract Liabilities (Deferred Revenue), Additions | 2,543 |
Contract Liabilities (Deferred Revenue), Revenue Recognized | (3,010) |
Contract Liabilities (Deferred Revenue), Ending Balance | $ 4,499 |
Critical Accounting Policies _6
Critical Accounting Policies and Estimates - Schedule of Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands | Nov. 26, 2022 | May 28, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | $ 4,599 | $ 4,459 | |
Total Accumulated Amortization | 2,574 | 2,449 | |
Net Intangible Assets | 2,025 | 2,010 | |
Trade Name | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | 659 | 659 | |
Total Accumulated Amortization | 659 | 659 | |
Customer Relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | [1] | 3,383 | 3,393 |
Total Accumulated Amortization | 1,555 | 1,453 | |
Non-compete Agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | 177 | 177 | |
Total Accumulated Amortization | 177 | 177 | |
Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | 380 | 230 | |
Total Accumulated Amortization | $ 183 | $ 160 | |
[1] Change from prior periods reflect impact of foreign currency translation. |
Critical Accounting Policies _7
Critical Accounting Policies and Estimates - Schedule of the Amortization Expense for the Next Five Years (Details) - USD ($) $ in Thousands | Nov. 26, 2022 | May 28, 2022 |
Fiscal Year | ||
Remaining 2023 | $ 134 | |
2024 | 252 | |
2025 | 240 | |
2026 | 205 | |
2027 | 194 | |
Thereafter | 1,000 | |
Net Intangible Assets | $ 2,025 | $ 2,010 |
Critical Accounting Policies _8
Critical Accounting Policies and Estimates - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Nov. 26, 2022 | May 28, 2022 |
Accrued Liabilities: | ||
Compensation and payroll taxes | $ 4,484 | $ 5,519 |
Accrued severance | 516 | 678 |
Professional fees | 738 | 470 |
Deferred revenue | 4,499 | 4,966 |
Other accrued expenses | 6,837 | 4,477 |
Accrued Liabilities | $ 17,074 | $ 16,110 |
Lease Obligations and Other C_3
Lease Obligations and Other Commitments - Schedule of Gross Amount Assets and Liabilities Related to Operating and Financing Leases (Details) - USD ($) $ in Thousands | Nov. 26, 2022 | May 28, 2022 |
Lease Type | ||
Operating lease ROU asset | $ 2,527 | $ 3,024 |
Operating Lease Right Of Use Asset Statement Of Financial Position [Extensible Enumeration] | Assets Noncurrent | Assets Noncurrent |
Financing lease ROU asset | $ 215 | |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Assets Noncurrent | Assets Noncurrent |
Total lease ROU asset | $ 2,527 | $ 3,239 |
Operating lease liability current | $ 1,015 | $ 1,109 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Liabilities Current | Liabilities Current |
Operating lease liability non-current | $ 1,512 | $ 1,915 |
Operating Lease Liability Noncurrent Statement Of Financial Position Extensible List | Liabilities Noncurrent | Liabilities Noncurrent |
Lease Obligations and Other C_4
Lease Obligations and Other Commitments - Components of Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 26, 2022 | Nov. 27, 2021 | Nov. 26, 2022 | Nov. 27, 2021 | |
Lease Cost [Abstract] | ||||
Consolidated operating lease expense | $ 411 | $ 446 | $ 865 | $ 901 |
Consolidated financing lease amortization | 23 | 46 | ||
Consolidated financing lease interest | 1 | 3 | ||
Consolidated financing lease expense | 24 | 49 | ||
Net lease cost | $ 411 | $ 470 | $ 865 | $ 950 |
Lease Obligations and Other C_5
Lease Obligations and Other Commitments - Schedule of Future Minimum Lease Payments Under Operating and Financing Leases (Details) $ in Thousands | Nov. 26, 2022 USD ($) |
Operating Leases | |
Remaining 2023 | $ 611 |
2024 | 920 |
2025 | 643 |
2026 | 400 |
2027 | 75 |
Thereafter | 16 |
Total lease payments | 2,665 |
Less imputed interest | 138 |
Net minimum lease payments | $ 2,527 |
Lease Obligations and Other C_6
Lease Obligations and Other Commitments - Schedule of Weighted Average Lease Terms and Interest Rates of Leases (Details) | Nov. 26, 2022 |
Commitments And Contingencies Disclosure [Abstract] | |
Weighted average remaining lease term in years, operating leases | 2 years 10 months 24 days |
Weighted average interest rate, operating leases | 4.20% |
Lease Obligations and Other C_7
Lease Obligations and Other Commitments - Schedule of Cash Outflows of Leasing Activity (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Nov. 26, 2022 | Nov. 27, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 496 | $ 1,303 |
Operating cash flows from financing leases | 88 | |
Finance cash flows from financing leases | $ 91 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Nov. 26, 2022 | Nov. 27, 2021 | Nov. 26, 2022 | Nov. 27, 2021 | May 28, 2022 | |
Operating Loss Carryforwards [Line Items] | |||||
Income tax provision | $ 1,518,000 | $ 550,000 | $ 3,626,000 | $ 717,000 | |
Effective income tax provision rate | 23.40% | 9.60% | |||
Federal statutory rate | 21% | ||||
Deferred tax liability, undistributed earnings of foreign subsidiaries | 0 | $ 0 | $ 100,000 | ||
Liability for uncertain tax positions related to continuing operations, excluding interest and penalties | 100,000 | 100,000 | $ 100,000 | ||
Deferred tax valuation allowance | 3,400,000 | $ 10,400,000 | 3,400,000 | $ 10,400,000 | |
Foreign tax credits | 1,800,000 | 1,800,000 | |||
State and Local Jurisdiction | |||||
Operating Loss Carryforwards [Line Items] | |||||
Valuation allowance pertaining to deferred tax assets | 200,000 | 200,000 | |||
Foreign Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Valuation allowance pertaining to deferred tax assets | $ 1,400,000 | $ 1,400,000 |
Calculation of Earnings Per S_3
Calculation of Earnings Per Share - Additional Information (Details) | 3 Months Ended | 6 Months Ended | ||
Nov. 26, 2022 shares | Nov. 27, 2021 shares | Nov. 26, 2022 Vote shares | Nov. 27, 2021 shares | |
Schedule Of Earning Per Share [Line Items] | ||||
Limit of cash dividends Class B common stock (percent) | 90% | |||
Common stock options anti-dilutive | 0 | 0 | 0 | 0 |
Common Stock | ||||
Schedule Of Earning Per Share [Line Items] | ||||
Common stock shares, authorized | 17,000,000 | 17,000,000 | ||
Common Class B | ||||
Schedule Of Earning Per Share [Line Items] | ||||
Common stock shares, authorized | 3,000,000 | 3,000,000 | ||
Number of votes per share | Vote | 10 |
Calculation of Earnings Per S_4
Calculation of Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 26, 2022 | Nov. 27, 2021 | Nov. 26, 2022 | Nov. 27, 2021 | |
Numerator for Basic and Diluted Earnings Per Share: | ||||
Net income (loss) | $ 5,549 | $ 4,122 | $ 11,873 | $ 6,757 |
Undistributed earnings, Basic | 4,718 | 3,330 | 10,223 | 5,179 |
Undistributed earnings, Diluted | $ 4,718 | $ 3,330 | $ 10,223 | $ 5,179 |
Denominator for Basic and Diluted Earnings Per Share: | ||||
Effect of dilutive securities dilutive stock options | 617 | 427 | 626 | 336 |
Weighted Average Number of Shares Outstanding, Diluted | 12,535 | 11,697 | 12,442 | 11,568 |
Basic | ||||
Numerator for Basic and Diluted Earnings Per Share: | ||||
Net income (loss) | $ 5,549 | $ 4,122 | $ 11,873 | $ 6,757 |
Diluted | ||||
Numerator for Basic and Diluted Earnings Per Share: | ||||
Net income (loss) | 5,549 | 4,122 | 11,873 | 6,757 |
Common Stock | ||||
Numerator for Basic and Diluted Earnings Per Share: | ||||
Undistributed earnings, Basic | 4,085 | 2,852 | 8,841 | 4,434 |
Undistributed earnings, Diluted | $ 4,112 | $ 2,867 | $ 8,901 | $ 4,453 |
Denominator for Basic and Diluted Earnings Per Share: | ||||
Weighted Average Number of Shares Outstanding, Basic | 11,918 | 11,270 | 11,816 | 11,232 |
Weighted Average Number of Shares Outstanding, Diluted | 12,535 | 11,697 | 12,442 | 11,568 |
Net income per share: | ||||
Earnings Per Share, Basic | $ 0.40 | $ 0.31 | $ 0.87 | $ 0.52 |
Earnings Per Share, Diluted | $ 0.39 | $ 0.30 | $ 0.83 | $ 0.50 |
Common Stock | Basic | ||||
Numerator for Basic and Diluted Earnings Per Share: | ||||
Less dividends | $ 719 | $ 679 | $ 1,428 | $ 1,352 |
Common Stock | Diluted | ||||
Numerator for Basic and Diluted Earnings Per Share: | ||||
Less dividends | 719 | 679 | 1,428 | 1,352 |
Common Class B | ||||
Numerator for Basic and Diluted Earnings Per Share: | ||||
Undistributed earnings, Basic | 633 | 478 | 1,382 | 745 |
Undistributed earnings, Diluted | $ 606 | $ 463 | $ 1,322 | $ 726 |
Denominator for Basic and Diluted Earnings Per Share: | ||||
Weighted Average Number of Shares Outstanding, Basic | 2,053 | 2,097 | 2,053 | 2,097 |
Weighted Average Number of Shares Outstanding, Diluted | 2,053 | 2,097 | 2,053 | 2,097 |
Net income per share: | ||||
Earnings Per Share, Basic | $ 0.36 | $ 0.28 | $ 0.78 | $ 0.46 |
Earnings Per Share, Diluted | $ 0.35 | $ 0.27 | $ 0.75 | $ 0.45 |
Common Class B | Basic | ||||
Numerator for Basic and Diluted Earnings Per Share: | ||||
Less dividends | $ 112 | $ 113 | $ 222 | $ 226 |
Common Class B | Diluted | ||||
Numerator for Basic and Diluted Earnings Per Share: | ||||
Less dividends | $ 112 | $ 113 | $ 222 | $ 226 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 6 Months Ended |
Nov. 26, 2022 Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Number of operating segments | 4 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Operating Results by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 26, 2022 | Nov. 27, 2021 | Nov. 26, 2022 | Nov. 27, 2021 | |
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 65,905 | $ 53,979 | $ 133,462 | $ 107,683 |
Gross Profit | 21,851 | 17,657 | 44,878 | 33,954 |
PMT | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 40,585 | 36,826 | 85,939 | 77,261 |
Gross Profit | 14,011 | 12,399 | 29,546 | 24,586 |
GES | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 12,293 | 4,911 | 20,804 | 7,485 |
Gross Profit | 4,162 | 1,587 | 7,184 | 2,331 |
Canvys | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 10,079 | 9,150 | 20,492 | 17,591 |
Gross Profit | 2,995 | 2,912 | 6,261 | 5,730 |
Healthcare | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 2,948 | 3,092 | 6,227 | 5,346 |
Gross Profit | $ 683 | $ 759 | $ 1,887 | $ 1,307 |
Segment Reporting - Schedule _2
Segment Reporting - Schedule of Net Sales and Gross Profit by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Nov. 26, 2022 | Nov. 27, 2021 | Nov. 26, 2022 | Nov. 27, 2021 | ||
Segment Reporting Information [Line Items] | |||||
Net Sales | $ 65,905 | $ 53,979 | $ 133,462 | $ 107,683 | |
Gross Profit | 21,851 | 17,657 | 44,878 | 33,954 | |
North America | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 31,577 | 24,440 | 63,405 | 44,968 | |
Gross Profit | 12,184 | 8,658 | 25,463 | 16,038 | |
Asia/Pacific | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 15,306 | 11,699 | 32,860 | 24,945 | |
Gross Profit | 4,791 | 3,919 | 10,321 | 8,065 | |
Europe | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 16,574 | 15,114 | 31,930 | 32,164 | |
Gross Profit | 4,943 | 4,834 | 9,285 | 9,623 | |
Latin America | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 2,461 | 2,721 | 5,306 | 5,596 | |
Gross Profit | 883 | 1,000 | 1,902 | 2,081 | |
Other | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | [1] | (13) | 5 | (39) | 10 |
Gross Profit | [1] | $ (950) | $ (754) | $ (2,093) | $ (1,853) |
[1] Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses. |
Risks and Uncertainties - Addit
Risks and Uncertainties - Additional Information (Details) $ in Millions | 6 Months Ended |
Nov. 26, 2022 USD ($) | |
Risks And Uncertainties [Abstract] | |
Deferred employer social security tax payments | $ 0.4 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | Nov. 26, 2022 | May 28, 2022 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments measured at fair value | $ 5,000,000 | $ 5,000,000 |
Related Party Transaction - Add
Related Party Transaction - Additional Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Nov. 26, 2022 | Nov. 27, 2021 | |
Related Party Transaction [Line Items] | ||
Total future minimum lease payments | $ 2,665 | |
Rental expense | 496 | $ 1,303 |
Lee A. McIntyre III | Lessor - LDL, LLC | ||
Related Party Transaction [Line Items] | ||
Total future minimum lease payments | $ 400 | |
Lease term | 5 years | |
Renewal term | 5 years | |
Extended term | 5 years | |
Executive vice president departing year | 2023 | |
Lee A. McIntyre III | Maximum | Lessor - LDL, LLC | ||
Related Party Transaction [Line Items] | ||
Rental expense | $ 100 | $ 100 |