Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 02, 2023 | Oct. 10, 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 | Sep. 02, 2023 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-01 | |
Entity's Reporting Status Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
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, $0.05 Par Value | |
Security Exchange Name | NASDAQ | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 12,224,953 | |
Common Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 2,051,488 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 02, 2023 | May 27, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 24,124 | $ 24,981 |
Accounts receivable, less allowance of $197 and $191, respectively | 25,578 | 30,067 |
Inventories, net | 113,597 | 110,402 |
Prepaid expenses and other assets | 2,270 | 2,633 |
Total current assets | 165,569 | 168,083 |
Non-current assets: | ||
Property, plant and equipment, net | 21,030 | 20,823 |
Intangible assets, net | 1,830 | 1,892 |
Right of Use lease asset | 2,346 | 2,457 |
Deferred income taxes | 4,525 | 4,526 |
Other non-current assets | 216 | 267 |
Total non-current assets | 29,947 | 29,965 |
Total assets | 195,516 | 198,048 |
Current liabilities: | ||
Accounts payable | 21,188 | 23,535 |
Accrued liabilities | 10,900 | 12,026 |
Lease liability current | 1,076 | 1,028 |
Total current liabilities | 33,164 | 36,589 |
Non-current liabilities: | ||
Non-current deferred income tax liabilities | 98 | 98 |
Lease liability non-current | 1,270 | 1,429 |
Other non-current liabilities | 630 | 612 |
Total non-current liabilities | 1,998 | 2,139 |
Total liabilities | 35,162 | 38,728 |
Stockholders’ Equity | ||
Preferred stock, $1.00 par value, no shares issued | ||
Additional paid-in-capital | 71,638 | 70,951 |
Retained earnings | 87,428 | 87,044 |
Accumulated other comprehensive income | 574 | 615 |
Total stockholders' equity | 160,354 | 159,320 |
Total liabilities and stockholders’ equity | 195,516 | 198,048 |
Common Stock | ||
Stockholders’ Equity | ||
Common stock value | 611 | 607 |
Common Class B | ||
Stockholders’ Equity | ||
Common stock value | $ 103 | $ 103 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 02, 2023 | May 27, 2023 |
Allowance for accounts receivable | $ 197 | $ 191 |
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) | 12,225 | 12,140 |
Common stock, outstanding (in shares) | 12,225 | 12,140 |
Common Class B | ||
Common stock, par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock, issued (in shares) | 2,052 | 2,052 |
Common stock, outstanding (in shares) | 2,052 | 2,052 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 02, 2023 | Aug. 27, 2022 | |
Net sales | $ 52,581 | $ 67,557 |
Cost of sales | 35,317 | 44,530 |
Gross profit | 17,264 | 23,027 |
Selling, general and administrative expenses | 15,792 | 14,248 |
Operating income | 1,472 | 8,779 |
Other (income) expense: | ||
Investment/interest income | (71) | (25) |
Foreign exchange (gain) loss | (97) | 374 |
Other, net | 32 | (2) |
Total other (income) expense | (136) | 347 |
Income before income taxes | 1,608 | 8,432 |
Income tax provision | 381 | 2,108 |
Net income | 1,227 | 6,324 |
Foreign currency translation loss, net of tax | (41) | (2,315) |
Comprehensive income | $ 1,186 | $ 4,009 |
Weighted average number of shares: | ||
Common shares - Diluted | 12,539 | 12,331 |
Common Stock | ||
Net income per share: | ||
Common shares - Basic | $ 0.09 | $ 0.47 |
Common shares - Diluted | $ 0.09 | $ 0.45 |
Weighted average number of shares: | ||
Common shares - Basic | 12,171 | 11,715 |
Common shares - Diluted | 12,539 | 12,331 |
Dividends per share: | ||
Dividends per share | $ 0.06 | $ 0.06 |
Common Class B | ||
Net income per share: | ||
Common shares - Basic | 0.08 | 0.42 |
Common shares - Diluted | $ 0.08 | $ 0.4 |
Weighted average number of shares: | ||
Common shares - Basic | 2,052 | 2,053 |
Common shares - Diluted | 2,052 | 2,053 |
Dividends per share: | ||
Dividends per share | $ 0.054 | $ 0.054 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 02, 2023 | Aug. 27, 2022 | |
Operating activities: | ||
Net income | $ 1,227 | $ 6,324 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 998 | 883 |
Inventory provisions | 85 | 71 |
Share-based compensation expense | 483 | 311 |
Deferred income taxes | (5) | 1 |
Change in assets and liabilities: | ||
Accounts receivable | 4,462 | (3,496) |
Inventories | (3,151) | (10,468) |
Prepaid expenses and other assets | 409 | (1,199) |
Accounts payable | (2,365) | 1,495 |
Accrued liabilities | (1,124) | 2,209 |
Other | (4) | 638 |
Net cash provided by (used in) operating activities | 1,015 | (3,231) |
Investing activities: | ||
Capital expenditures | (1,141) | (1,442) |
Net cash used in investing activities | (1,141) | (1,442) |
Financing activities: | ||
Proceeds from issuance of common stock | 327 | 1,385 |
Cash dividends paid on Common and Class B Common shares | (843) | (819) |
Other | (119) | (69) |
Net cash (used in) provided by financing activities | (635) | 497 |
Effect of exchange rate changes on cash and cash equivalents | (96) | (686) |
Decrease in cash and cash equivalents | (857) | (4,862) |
Cash and cash equivalents at beginning of period | 24,981 | 35,495 |
Cash and cash equivalents at end of period | $ 24,124 | $ 30,633 |
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. 28, 2022 | $ 135,847 | $ 685 | $ 66,331 | $ 68,031 | $ 800 | ||||
Beginning Balance (in shares) at May. 28, 2022 | 11,649 | 2,053 | |||||||
Comprehensive income: | |||||||||
Net income | 6,324 | 6,324 | |||||||
Foreign currency translation, net of tax | (2,315) | (2,315) | |||||||
Share-based compensation: | |||||||||
Restricted stock | 123 | 123 | |||||||
Stock options | 188 | 188 | |||||||
Options exercised | 1,385 | 8 | 1,377 | ||||||
Options exercised (in shares) | 150 | ||||||||
Restricted stock issuance | (69) | 2 | (71) | ||||||
Restricted stock issuance (in shares) | 49 | ||||||||
Dividends paid to: | |||||||||
Common | (709) | (709) | |||||||
Class B | (110) | (110) | |||||||
Ending Balance at Aug. 27, 2022 | 140,664 | 695 | 67,948 | 73,536 | (1,515) | ||||
Ending Balance (in shares) at Aug. 27, 2022 | 11,848 | 2,053 | |||||||
Beginning Balance at May. 27, 2023 | 159,320 | 710 | 70,951 | 87,044 | 615 | ||||
Beginning Balance (in shares) at May. 27, 2023 | 12,140 | 2,052 | 12,140 | 2,052 | |||||
Comprehensive income: | |||||||||
Net income | 1,227 | 1,227 | |||||||
Foreign currency translation, net of tax | (41) | (41) | |||||||
Share-based compensation: | |||||||||
Restricted stock | 169 | 169 | |||||||
Stock options | 314 | 314 | |||||||
Options exercised | 327 | 2 | 325 | ||||||
Options exercised (in shares) | 48 | ||||||||
Restricted stock issuance | (119) | 2 | (121) | ||||||
Restricted stock issuance (in shares) | 37 | ||||||||
Dividends paid to: | |||||||||
Common | (732) | (732) | |||||||
Class B | (111) | (111) | |||||||
Ending Balance at Sep. 02, 2023 | $ 160,354 | $ 714 | $ 71,638 | $ 87,428 | $ 574 | ||||
Ending Balance (in shares) at Sep. 02, 2023 | 12,225 | 2,052 | 12,225 | 2,052 |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statement of Stockholders' Equity (Parenthetical) - Common Stock - $ / shares | 3 Months Ended | |
Sep. 02, 2023 | Aug. 27, 2022 | |
Common | ||
Dividends per common share | $ 0.06 | $ 0.06 |
Common Class B | ||
Dividends per common share | $ 0.054 | $ 0.054 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 02, 2023 | Aug. 27, 2022 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 1,227 | $ 6,324 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 02, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | 10b5-1 trading arrangements: Wendy S. Diddell ( Executive Vice President, Chief Operating Officer and Director ) had two 10b5-1 trading plans applicable to the first quarter of fiscal 2024. Both plans were not executed and expired during the quarter. A summary of Ms. Diddell's 10b5-1 plans follows: Execution Date Expiration Date Number of Shares 11/15/22 5/31/23 12,000 11/18/22 5/31/23 66,661 |
Name | Wendy S. Diddell |
Title | Executive Vice President, Chief Operating Officer and Director |
10b5-1 Trading Plan One | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | 11/15/22 |
Rule 10b5-1 Arrangement Terminated | true |
Termination Date | 5/31/23 |
Aggregate Available | 12,000 |
10b5-1 Trading Plan Two | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | 11/18/22 |
Rule 10b5-1 Arrangement Terminated | true |
Termination Date | 5/31/23 |
Aggregate Available | 66,661 |
Description of the Company
Description of the Company | 3 Months Ended |
Sep. 02, 2023 | |
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. Nearly 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 reports its financial performance for the following operating and reportable segments: Power and Microwave Technologies ("PMT") 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 ("GES") combines our key technology partners and engineered solutions capabilities to design and manufacture innovative 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 | 3 Months Ended |
Sep. 02, 2023 | |
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 first quarter of fiscal 2024 contained 14 weeks and the first quarter of fiscal 2023 contained 13 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 three months ended September 2, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending June 1, 2024. As described in Note 1, Description of the Company and Note 9, Segment Reporting , the Company reports its financial performance based on four 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 27, 2023, which was filed with the SEC on July 31, 2023. |
New Accounting Standards
New Accounting Standards | 3 Months Ended |
Sep. 02, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Standards | 3. NEW ACCOUNTING STANDARDS ASU 2016-13 (as amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11 and 2020-02) introduced a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses requires entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expanded the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. The Company adopted the new standard in the first quarter of fiscal 2024 and the adoption had no impact on the Company's financial condition, results of operations or cash flows. |
Critical Accounting Policies an
Critical Accounting Policies and Estimates | 3 Months Ended |
Sep. 02, 2023 | |
Accounting Policies [Abstract] | |
Critical Accounting Policies and Estimates | 4. 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 $ 95.9 million of finished goods, $ 12.7 million of raw materials and $ 5.0 million of work-in-progress as of September 2, 2023 , as compared to approximately $ 93.4 million of finished goods, $ 11.8 million of raw materials and $ 5.2 million of work-in-progress as of May 27, 2023. 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 $ 5.9 million as of September 2, 2023 and May 27, 2023. 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 cancellation, the customer to pay fees that are commensurate with the work performed. Each purchase order explicitly states the goods or services that we promise to transfer to the customer. The promises to the customer are limited only to those goods or services. 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 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 are 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. 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 unaudited consolidated balance sheets. Contract Liabilities: Contract liabilities and revenue recognized were as follows ( in thousands ): May 27, 2023 Additions Revenue September 2, 2023 Contract liabilities $ 3,283 $ 2,288 $ ( 1,514 ) $ 4,057 See Note 9, 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 prior 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) : September 2, 2023 May 27, 2023 Gross Amounts: Customer Relationships (1) $ 3,393 $ 3,388 Technology 380 380 Total Gross Amounts $ 3,773 $ 3,768 Accumulated Amortization: Customer Relationships $ 1,727 $ 1,671 Technology 216 205 Total Accumulated Amortization $ 1,943 $ 1,876 Net Intangible Assets $ 1,830 $ 1,892 (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 2024 $ 190 2025 239 2026 207 2027 194 2028 185 Thereafter 815 Total amortization $ 1,830 The weighted average number of years of amortization expense remaining is 10.8 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): September 2, 2023 May 27, 2023 Compensation and payroll taxes $ 3,684 $ 4,422 Accrued severance 574 486 Professional fees 744 661 Deferred revenue 2,410 3,283 Other accrued expenses 3,488 3,174 Accrued Liabilities $ 10,900 $ 12,026 Warranties: We offer assurance type 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 unaudited consolidated balance sheets. The warranty reserves are determined based on known product failures, historical experience and other available evidence. Warranty reserves were approximately $ 0.7 million as of September 2, 2023 and May 27, 2023. |
Revolving Credit Facility
Revolving Credit Facility | 3 Months Ended |
Sep. 02, 2023 | |
Debt Disclosure [Abstract] | |
Revolving Credit Facility | 5. REVOLVING CREDIT FACILITY The Company entered into a three-year Revolving Credit Facility with PNC Bank N.A. on March 20, 2023. This Revolving Credit Facility will mature on March 20, 2026 . Borrowings under the Company’s Revolving Credit Facility, including the Swingline Loan and Letter of Credit sub-facility extended to the Company thereunder, are secured by (i) a continuing first priority lien on and security interest in and to substantially all of the assets of the Company and its domestic subsidiaries and (ii) a continuing first priority pledge of the Pledged Collateral of the Company and the Guarantors identified in the Security Agreement and the Pledge Agreement executed in connection with the Credit Agreement. The combined maximum borrowings under the Revolving Credit Facility are $ 30 million. Proceeds of borrowings will be used for working capital and general corporate purposes. The Credit Agreement provides that the Company must maintain compliance with a maximum consolidated leverage ratio covenant and a minimum consolidated fixed charge coverage ratio, each as determined in accordance with the Credit Agreement. The Credit Agreement also contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, and transactions with affiliates, as well as customary events of default for financings of this type. The Company was in full compliance with all financial covenants as of September 2, 2023. Borrowings under the Revolving Credit Facility will bear interest at a rate per annum selected by the Company from the following options: (a) Term SOFR Rate (for the applicable Interest Period) plus the SOFR Adjustment (for the applicable Interest Period) plus 1.25 %; (b) Base Rate plus 0.25 % or (c) Daily Simple RFR (for Euros) plus the RFR Adjustment plus 1.25 %. Letters of Credit issued under the Letter of Credit sub-facility will have a letter of credit fee equal to 1.25 % per annum. The fee for the unused portion of the credit line is 0.10 %. There was no amount outstanding under the Revolving Credit Facility as of September 2, 2023 . |
Lease Obligations and Other Com
Lease Obligations and Other Commitments | 3 Months Ended |
Sep. 02, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease Obligations and Other Commitments | 6. 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. 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 September 2, 2023 May 27, 2023 Operating lease Right of Use asset $ 2,346 $ 2,457 Operating lease liability current 1,076 1,028 Operating lease liability non-current 1,270 1,429 The components of lease costs were as follows (in thousands) : Three Months Ended September 2, 2023 August 27, 2022 Consolidated operating lease expense Operating expenses $ 454 $ 455 The approximate future minimum lease payments under operating leases at September 2, 2023 were as follows (in thousands) : Fiscal Year Operating Leases Remaining 2024 $ 867 2025 895 2026 524 2027 134 2028 25 Thereafter 13 Total lease payments 2,458 Less imputed interest 112 Net minimum lease payments $ 2,346 The weighted average remaining lease terms and interest rates of leases held by the Company as of September 2, 2023 were as follows: Lease Type Weighted Average Remaining Weighted Average Interest Rate Operating leases 2.5 4.1 % The cash outflows of the leasing activity of the Company as lessee for the three months ending September 2, 2023 and August 27, 2022 were as follows (in thousands) : Three Months Ended Cash Flow Source Classification September 2, 2023 August 27, 2022 Operating cash flows from operating leases Operating activities $ 111 $ 235 |
Income Taxes
Income Taxes | 3 Months Ended |
Sep. 02, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. INCOME TAXES We recorded an income tax provision of $ 0.4 million and $ 2.1 million for the first three months of fiscal 2024 and the first three months of fiscal 2023, respectively. The effective income tax rate during the first three months of fiscal 2024 was 23.7 % as compared to an effective income tax rate of 25.0 % during the first three months of fiscal 2023. The difference in rate during the first three months of fiscal 2024 as compared to the first three months of fiscal 2023 reflects changes in our geographical distribution of income (loss), which is primarily driven by a decrease in U.S. earnings for fiscal 2024 and the state income tax provision, as well as the utilization of U.S. research and development credits. The 23.7 % effective income tax rate differs from the federal statutory rate of 21 % as a result of our geographical distribution of income (loss), state income tax provision, and the research and development tax credit. In the normal course of business, we are subject to examination by taxing authorities throughout the world. Generally, years prior to fiscal 2018 are closed for examination under the statute of limitation for U.S. federal, U.S. state and local or non-U.S. tax jurisdictions. 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 deferred tax liability related to undistributed earnings of our foreign subsidiaries was less than $ 0.1 million as of September 2, 2023 and May 27, 2023. The Company did no t have any uncertain tax positions as of September 2, 2023 and May 27, 2023. We record penalties and interest related to uncertain tax positions in the income tax expense line item within the consolidated statements of comprehensive income when applicable. The reserve for the German audits was reversed in fiscal 2023. The Company maintains a valuation allowance representing the portion of the deferred tax asset that management does not believe is more likely than not to be realized. The valuation allowance was $ 1.4 million as of September 2, 2023 and $ 3.5 million as of August 27, 2022. The current valuation allowance relates to deferred tax assets in foreign jurisdictions where historical taxable losses have been incurred ($ 1.2 million) and state NOLs ($ 0.2 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 | 3 Months Ended |
Sep. 02, 2023 | |
Earnings Per Share [Abstract] | |
Calculation of Earnings Per Share | 8. 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 September 2, 2023 August 27, 2022 Basic Diluted Basic Diluted Numerator for Basic and Diluted EPS: Net income $ 1,227 $ 1,227 $ 6,324 $ 6,324 Less dividends: Common stock 732 732 709 709 Class B common stock 111 111 110 110 Undistributed earnings $ 384 $ 384 $ 5,505 $ 5,505 Common stock undistributed earnings $ 333 $ 335 $ 4,755 $ 4,788 Class B common stock undistributed earnings 51 49 750 717 Total undistributed earnings $ 384 $ 384 $ 5,505 $ 5,505 Denominator for Basic and Diluted EPS: Common stock weighted average shares 12,171 12,171 11,715 11,715 Effect of dilutive securities Dilutive stock options 368 616 Denominator for diluted EPS adjusted for weighted average shares and assumed conversion 12,539 12,331 Class B common stock weighted average shares and shares under if-converted method for diluted EPS 2,052 2,052 2,053 2,053 Net income per share: Common stock $ 0.09 $ 0.09 $ 0.47 $ 0.45 Class B common stock $ 0.08 $ 0.08 $ 0.42 $ 0.40 Note: There were no common stock options that were antidilutive in the first quarter of fiscal 2024 and fiscal 2023. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Sep. 02, 2023 | |
Segment Reporting [Abstract] | |
Segment Reporting | 9. SEGMENT REPORTING As described in Note 1, Description of the Company and Note 2, Basis of Presentation , the Company reports its financial performance based on the operating and reportable segments which 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 innovative 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 September 2, 2023 August 27, 2022 PMT Net Sales $ 35,744 $ 45,354 Gross Profit 11,511 15,535 GES Net Sales 4,394 8,511 Gross Profit 1,580 3,022 Canvys Net Sales 9,889 10,413 Gross Profit 3,365 3,266 Healthcare Net Sales 2,554 3,279 Gross Profit 808 1,204 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 September 2, 2023 August 27, 2022 Net Sales North America $ 19,630 $ 31,828 Asia/Pacific 12,812 17,554 Europe 15,752 15,356 Latin America 2,802 2,845 Other (1) 1,585 ( 26 ) Total $ 52,581 $ 67,557 Gross Profit North America $ 7,463 $ 13,279 Asia/Pacific 4,143 5,530 Europe 4,859 4,342 Latin America 1,092 1,019 Other (1) ( 293 ) ( 1,143 ) Total $ 17,264 $ 23,027 (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 | 3 Months Ended |
Sep. 02, 2023 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | 10. RISKS AND UNCERTAINTIES Management continues to monitor the impact of global economic factors on its financial condition, liquidity, operations, suppliers, industry and workforce. Our ability to predict and respond to future changes (including the lingering effects of Covid) is uncertain. Even after the Covid pandemic fully subsides, there may be continued long-term effects on our business practices and customers in economies in which we operate that could severely disrupt our operations and could have a material adverse effect on our business, results of operations, cash flows and financial condition. As we cannot predict the duration, scope or severity of the Covid pandemic, the negative financial impact to our results cannot be reasonably estimated and could be material. |
Related Party Transaction
Related Party Transaction | 3 Months Ended |
Sep. 02, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transaction | 11. 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 fiscal year 2023 , effective as of September 24, 2022 . The lease agreement provides for monthly payments over five years with total future minimum lease payments of $ 0.3 million. Rental expense related to this lease amounted to less than $ 0.1 million for the three months ended September 2, 2023 and August 27, 2022. |
Critical Accounting Policies _2
Critical Accounting Policies and Estimates (Policies) | 3 Months Ended |
Sep. 02, 2023 | |
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 $ 95.9 million of finished goods, $ 12.7 million of raw materials and $ 5.0 million of work-in-progress as of September 2, 2023 , as compared to approximately $ 93.4 million of finished goods, $ 11.8 million of raw materials and $ 5.2 million of work-in-progress as of May 27, 2023. 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 $ 5.9 million as of September 2, 2023 and May 27, 2023. 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 cancellation, the customer to pay fees that are commensurate with the work performed. Each purchase order explicitly states the goods or services that we promise to transfer to the customer. The promises to the customer are limited only to those goods or services. 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 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 are 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. 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 unaudited consolidated balance sheets. |
Revenue Recognition | Contract Liabilities: Contract liabilities and revenue recognized were as follows ( in thousands ): May 27, 2023 Additions Revenue September 2, 2023 Contract liabilities $ 3,283 $ 2,288 $ ( 1,514 ) $ 4,057 See Note 9, 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 prior 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) : September 2, 2023 May 27, 2023 Gross Amounts: Customer Relationships (1) $ 3,393 $ 3,388 Technology 380 380 Total Gross Amounts $ 3,773 $ 3,768 Accumulated Amortization: Customer Relationships $ 1,727 $ 1,671 Technology 216 205 Total Accumulated Amortization $ 1,943 $ 1,876 Net Intangible Assets $ 1,830 $ 1,892 (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 2024 $ 190 2025 239 2026 207 2027 194 2028 185 Thereafter 815 Total amortization $ 1,830 The weighted average number of years of amortization expense remaining is 10.8 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): September 2, 2023 May 27, 2023 Compensation and payroll taxes $ 3,684 $ 4,422 Accrued severance 574 486 Professional fees 744 661 Deferred revenue 2,410 3,283 Other accrued expenses 3,488 3,174 Accrued Liabilities $ 10,900 $ 12,026 |
Warranties | Warranties: We offer assurance type 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 unaudited consolidated balance sheets. The warranty reserves are determined based on known product failures, historical experience and other available evidence. Warranty reserves were approximately $ 0.7 million as of September 2, 2023 and May 27, 2023. |
Critical Accounting Policies _3
Critical Accounting Policies and Estimates (Tables) | 3 Months Ended |
Sep. 02, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Contract Liabilities and Revenue Recognized | Contract Liabilities: Contract liabilities and revenue recognized were as follows ( in thousands ): May 27, 2023 Additions Revenue September 2, 2023 Contract liabilities $ 3,283 $ 2,288 $ ( 1,514 ) $ 4,057 |
Schedule of Intangible Assets Subject to Amortization | Intangible assets subject to amortization were as follows (in thousands) : September 2, 2023 May 27, 2023 Gross Amounts: Customer Relationships (1) $ 3,393 $ 3,388 Technology 380 380 Total Gross Amounts $ 3,773 $ 3,768 Accumulated Amortization: Customer Relationships $ 1,727 $ 1,671 Technology 216 205 Total Accumulated Amortization $ 1,943 $ 1,876 Net Intangible Assets $ 1,830 $ 1,892 (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 2024 $ 190 2025 239 2026 207 2027 194 2028 185 Thereafter 815 Total amortization $ 1,830 |
Schedule of Accrued Liabilities | Accrued liabilities consisted of the following (in thousands): September 2, 2023 May 27, 2023 Compensation and payroll taxes $ 3,684 $ 4,422 Accrued severance 574 486 Professional fees 744 661 Deferred revenue 2,410 3,283 Other accrued expenses 3,488 3,174 Accrued Liabilities $ 10,900 $ 12,026 |
Lease Obligations and Other C_2
Lease Obligations and Other Commitments (Tables) | 3 Months Ended |
Sep. 02, 2023 | |
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 September 2, 2023 May 27, 2023 Operating lease Right of Use asset $ 2,346 $ 2,457 Operating lease liability current 1,076 1,028 Operating lease liability non-current 1,270 1,429 |
Components of Lease Costs | The components of lease costs were as follows (in thousands) : Three Months Ended September 2, 2023 August 27, 2022 Consolidated operating lease expense Operating expenses $ 454 $ 455 |
Schedule of Future Minimum Lease Payments under Operating Leases | The approximate future minimum lease payments under operating leases at September 2, 2023 were as follows (in thousands) : Fiscal Year Operating Leases Remaining 2024 $ 867 2025 895 2026 524 2027 134 2028 25 Thereafter 13 Total lease payments 2,458 Less imputed interest 112 Net minimum lease payments $ 2,346 |
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 September 2, 2023 were as follows: Lease Type Weighted Average Remaining Weighted Average Interest Rate Operating leases 2.5 4.1 % |
Schedule of Cash Outflows of Leasing Activity | The cash outflows of the leasing activity of the Company as lessee for the three months ending September 2, 2023 and August 27, 2022 were as follows (in thousands) : Three Months Ended Cash Flow Source Classification September 2, 2023 August 27, 2022 Operating cash flows from operating leases Operating activities $ 111 $ 235 |
Calculation of Earnings Per S_2
Calculation of Earnings Per Share (Tables) | 3 Months Ended |
Sep. 02, 2023 | |
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 September 2, 2023 August 27, 2022 Basic Diluted Basic Diluted Numerator for Basic and Diluted EPS: Net income $ 1,227 $ 1,227 $ 6,324 $ 6,324 Less dividends: Common stock 732 732 709 709 Class B common stock 111 111 110 110 Undistributed earnings $ 384 $ 384 $ 5,505 $ 5,505 Common stock undistributed earnings $ 333 $ 335 $ 4,755 $ 4,788 Class B common stock undistributed earnings 51 49 750 717 Total undistributed earnings $ 384 $ 384 $ 5,505 $ 5,505 Denominator for Basic and Diluted EPS: Common stock weighted average shares 12,171 12,171 11,715 11,715 Effect of dilutive securities Dilutive stock options 368 616 Denominator for diluted EPS adjusted for weighted average shares and assumed conversion 12,539 12,331 Class B common stock weighted average shares and shares under if-converted method for diluted EPS 2,052 2,052 2,053 2,053 Net income per share: Common stock $ 0.09 $ 0.09 $ 0.47 $ 0.45 Class B common stock $ 0.08 $ 0.08 $ 0.42 $ 0.40 Note: There were no common stock options that were antidilutive in the first quarter of fiscal 2024 and fiscal 2023. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Sep. 02, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Operating Results by Segment | Operating results by segment are summarized in the following table ( in thousands ): Three Months Ended September 2, 2023 August 27, 2022 PMT Net Sales $ 35,744 $ 45,354 Gross Profit 11,511 15,535 GES Net Sales 4,394 8,511 Gross Profit 1,580 3,022 Canvys Net Sales 9,889 10,413 Gross Profit 3,365 3,266 Healthcare Net Sales 2,554 3,279 Gross Profit 808 1,204 |
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 September 2, 2023 August 27, 2022 Net Sales North America $ 19,630 $ 31,828 Asia/Pacific 12,812 17,554 Europe 15,752 15,356 Latin America 2,802 2,845 Other (1) 1,585 ( 26 ) Total $ 52,581 $ 67,557 Gross Profit North America $ 7,463 $ 13,279 Asia/Pacific 4,143 5,530 Europe 4,859 4,342 Latin America 1,092 1,019 Other (1) ( 293 ) ( 1,143 ) Total $ 17,264 $ 23,027 (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) | 3 Months Ended |
Sep. 02, 2023 | |
Maximum | Product Concentration | Sales | |
Concentration Risk [Line Items] | |
Percentage of products manufactured | 60% |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Details) | 3 Months Ended |
Sep. 02, 2023 Segment | |
Basis Of Presentation [Abstract] | |
Number of operating segments | 4 |
Number of reportable segments | 4 |
New Accounting Standards - Addi
New Accounting Standards - Additional Information (Details) - ASU 2016-13 | Sep. 02, 2023 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true |
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false] | true |
Critical Accounting Policies _4
Critical Accounting Policies and Estimates - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 02, 2023 | May 27, 2023 | |
Critical Accounting Policies And Estimates [Line Items] | ||
Finished goods | $ 95.9 | $ 93.4 |
Raw material | 12.7 | 11.8 |
Work in progress | 5 | 5.2 |
Inventory valuation reserves | $ 5.9 | 5.9 |
Weighted average number of years of amortization expense | 10 years 9 months 18 days | |
Warranty reserves | $ 0.7 | $ 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 | 3 Months Ended |
Sep. 02, 2023 USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Contract Liabilities, Beginning Balance | $ 3,283 |
Contract Liabilities, Additions | 2,288 |
Contract Liabilities, Revenue Recognized | (1,514) |
Contract Liabilities, Ending Balance | $ 4,057 |
Critical Accounting Policies _6
Critical Accounting Policies and Estimates - Schedule of Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands | Sep. 02, 2023 | May 27, 2023 | |
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | $ 3,773 | $ 3,768 | |
Total Accumulated Amortization | 1,943 | 1,876 | |
Net Intangible Assets | 1,830 | 1,892 | |
Customer Relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | [1] | 3,393 | 3,388 |
Total Accumulated Amortization | 1,727 | 1,671 | |
Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | 380 | 380 | |
Total Accumulated Amortization | $ 216 | $ 205 | |
[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 | Sep. 02, 2023 | May 27, 2023 |
Fiscal Year | ||
Remaining 2024 | $ 190 | |
2025 | 239 | |
2026 | 207 | |
2027 | 194 | |
2028 | 185 | |
Thereafter | 815 | |
Net Intangible Assets | $ 1,830 | $ 1,892 |
Critical Accounting Policies _8
Critical Accounting Policies and Estimates - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 02, 2023 | May 27, 2023 |
Accrued Liabilities: | ||
Compensation and payroll taxes | $ 3,684 | $ 4,422 |
Accrued severance | 574 | 486 |
Professional fees | 744 | 661 |
Deferred revenue | 2,410 | 3,283 |
Other accrued expenses | 3,488 | 3,174 |
Accrued Liabilities | $ 10,900 | $ 12,026 |
Revolving Credit Facility - Add
Revolving Credit Facility - Additional Information (Details) - Revolving Credit Facility - USD ($) | 3 Months Ended | |
Mar. 20, 2023 | Sep. 02, 2023 | |
Debt Instrument [Line Items] | ||
Credit facility agreement term | 3 years | |
Credit facility expiration date | Mar. 20, 2026 | |
Aggregate principal amount | $ 30,000,000 | |
Letter of credit issue fee percentage | 1.25% | |
Percentage of unused line fee | 0.10% | |
Outstanding under the Revolving Credit Facility | $ 0 | |
Base rate | ||
Debt Instrument [Line Items] | ||
Interest rate of credit facility | 0.25% | |
Euro RFR | ||
Debt Instrument [Line Items] | ||
Interest rate of credit facility | 1.25% | |
SOFR Rate | ||
Debt Instrument [Line Items] | ||
Interest rate of credit facility | 1.25% |
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 | Sep. 02, 2023 | May 27, 2023 |
Lease Type | ||
Operating lease Right of Use asset | $ 2,346 | $ 2,457 |
Operating Lease Right Of Use Asset Statement Of Financial Position [Extensible Enumeration] | Assets, Noncurrent | Assets, Noncurrent |
Operating lease liability current | $ 1,076 | $ 1,028 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Liabilities, Current | Liabilities, Current |
Operating lease liability non-current | $ 1,270 | $ 1,429 |
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 | |
Sep. 02, 2023 | Aug. 27, 2022 | |
Lease, Cost [Abstract] | ||
Consolidated operating lease expense | $ 454 | $ 455 |
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 | Sep. 02, 2023 USD ($) |
Operating Leases | |
Remaining 2024 | $ 867 |
2025 | 895 |
2026 | 524 |
2027 | 134 |
2028 | 25 |
Thereafter | 13 |
Total lease payments | 2,458 |
Less imputed interest | 112 |
Net minimum lease payments | $ 2,346 |
Lease Obligations and Other C_6
Lease Obligations and Other Commitments - Schedule of Weighted Average Lease Terms and Interest Rates of Leases (Details) | Sep. 02, 2023 |
Commitments and Contingencies Disclosure [Abstract] | |
Weighted average remaining lease term in years, operating leases | 2 years 6 months |
Weighted average interest rate, operating leases | 4.10% |
Lease Obligations and Other C_7
Lease Obligations and Other Commitments - Schedule of Cash Outflows of Leasing Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 02, 2023 | Aug. 27, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 111 | $ 235 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Sep. 02, 2023 | Aug. 27, 2022 | May 27, 2023 | |
Operating Loss Carryforwards [Line Items] | |||
Income tax provision | $ 381,000 | $ 2,108,000 | |
Effective income tax rate | 23.70% | 25% | |
Federal statutory rate | 21% | ||
Liability for uncertain tax positions related to continuing operations, excluding interest and penalties | $ 0 | $ 0 | |
Deferred tax valuation allowance | 1,400,000 | $ 3,500,000 | |
Maximum | |||
Operating Loss Carryforwards [Line Items] | |||
Deferred tax liability, undistributed earnings of foreign subsidiaries | 100,000 | $ 100,000 | |
State and Local Jurisdiction | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance pertaining to deferred tax assets | 200,000 | ||
Foreign Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance pertaining to deferred tax assets | $ 1,200,000 |
Calculation of Earnings Per S_3
Calculation of Earnings Per Share - Additional Information (Details) | 3 Months Ended | |
Sep. 02, 2023 Vote shares | Aug. 27, 2022 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 |
Common Stock | ||
Schedule Of Earning Per Share [Line Items] | ||
Common stock shares, authorized | 17,000,000 | |
Common Class B | ||
Schedule Of Earning Per Share [Line Items] | ||
Common stock shares, authorized | 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 | |
Sep. 02, 2023 | Aug. 27, 2022 | |
Numerator for Basic and Diluted Earnings Per Share: | ||
Net income | $ 1,227 | $ 6,324 |
Undistributed earnings | 384 | 5,505 |
Undistributed earnings | $ 384 | $ 5,505 |
Denominator for Basic and Diluted Earnings Per Share: | ||
Effect of dilutive securities dilutive stock options | 368 | 616 |
Weighted Average Number of Shares Outstanding, Diluted | 12,539 | 12,331 |
Basic | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Net income | $ 1,227 | $ 6,324 |
Diluted | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Net income | 1,227 | 6,324 |
Common Stock | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Undistributed earnings | 333 | 4,755 |
Undistributed earnings | $ 335 | $ 4,788 |
Denominator for Basic and Diluted Earnings Per Share: | ||
Weighted Average Number of Shares Outstanding, Basic | 12,171 | 11,715 |
Weighted Average Number of Shares Outstanding, Diluted | 12,539 | 12,331 |
Net income per share: | ||
Earnings Per Share, Basic | $ 0.09 | $ 0.47 |
Net income per share: | ||
Earnings Per Share, Diluted | $ 0.09 | $ 0.45 |
Common Stock | Basic | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Less dividends | $ 732 | $ 709 |
Common Stock | Diluted | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Less dividends | 732 | 709 |
Common Class B | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Undistributed earnings | 51 | 750 |
Undistributed earnings | $ 49 | $ 717 |
Denominator for Basic and Diluted Earnings Per Share: | ||
Weighted Average Number of Shares Outstanding, Basic | 2,052 | 2,053 |
Weighted Average Number of Shares Outstanding, Diluted | 2,052 | 2,053 |
Net income per share: | ||
Earnings Per Share, Basic | $ 0.08 | $ 0.42 |
Net income per share: | ||
Earnings Per Share, Diluted | $ 0.08 | $ 0.4 |
Common Class B | Basic | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Less dividends | $ 111 | $ 110 |
Common Class B | Diluted | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Less dividends | $ 111 | $ 110 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Operating Results by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 02, 2023 | Aug. 27, 2022 | |
Segment Reporting Information [Line Items] | ||
Net Sales | $ 52,581 | $ 67,557 |
Gross Profit | 17,264 | 23,027 |
PMT | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 35,744 | 45,354 |
Gross Profit | 11,511 | 15,535 |
GES | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 4,394 | 8,511 |
Gross Profit | 1,580 | 3,022 |
Canvys | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 9,889 | 10,413 |
Gross Profit | 3,365 | 3,266 |
Healthcare | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 2,554 | 3,279 |
Gross Profit | $ 808 | $ 1,204 |
Segment Reporting - Schedule _2
Segment Reporting - Schedule of Net Sales and Gross Profit by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 02, 2023 | Aug. 27, 2022 | ||
Segment Reporting Information [Line Items] | |||
Net Sales | $ 52,581 | $ 67,557 | |
Gross Profit | 17,264 | 23,027 | |
North America | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 19,630 | 31,828 | |
Gross Profit | 7,463 | 13,279 | |
Asia/Pacific | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 12,812 | 17,554 | |
Gross Profit | 4,143 | 5,530 | |
Europe | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 15,752 | 15,356 | |
Gross Profit | 4,859 | 4,342 | |
Latin America | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 2,802 | 2,845 | |
Gross Profit | 1,092 | 1,019 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Net Sales | [1] | 1,585 | (26) |
Gross Profit | [1] | $ (293) | $ (1,143) |
[1] Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses. |
Related Party Transaction - Add
Related Party Transaction - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 02, 2023 | Aug. 27, 2022 | |
Related Party Transaction [Line Items] | ||
Total future minimum lease payments | $ 2,458 | |
Rental expense | 111 | $ 235 |
Lee A. McIntyre III | Lessor - LDL, LLC | ||
Related Party Transaction [Line Items] | ||
Total future minimum lease payments | $ 300 | |
Lease term | 5 years | |
Renewal term | 5 years | |
Extended term | 5 years | |
Executive vice president departing year | 2023 | |
Executive vice president departing effective date | Sep. 24, 2022 | |
Lee A. McIntyre III | Maximum | Lessor - LDL, LLC | ||
Related Party Transaction [Line Items] | ||
Rental expense | $ 100 | $ 100 |