Deswell Announces Second Half and Full Year Fiscal 2025 Results

- Company Announces Second Half Cash Dividend of 0.10 Per Share -

MACAO--(BUSINESS WIRE)-- Deswell Industries, Inc. (Nasdaq: DSWL) today announced its unaudited financial results for the second half of the fiscal year ended March 31, 2025.

Net sales for the six months ended March 31, 2025 were $32.4 million, an increase of 2.5% compared to net sales of $31.6 million for the six months ended March 31, 2024. Net sales decreased by 11.1% to $5.4 million in the plastic segment and increased by 5.8% to $27.0 million in the Company’s electronic segment.

Total gross margin slightly increased to 20.9% during the six months ended March 31, 2025, as compared to 20.7% in the same period last year. For the plastic segment, gross profit margin decreased to 22.6% of net sales for the second half of fiscal 2025, as compared to 27.0% of net sales for the corresponding period of the last fiscal year. The decrease in gross profit margin in the plastic segment is mainly attributable to the decrease in sales revenues. Gross profit margin in the electronics segment increased to 20.6% in the second half of fiscal 2025, as compared to 19.2% in the second half of fiscal 2024. The increase in gross profit margin in the electronics segment is the result of the increase in sales revenues as well as continuous cost control measures taken.

Operating income for the second half of fiscal 2025 slightly increased from $1.48 million in the second half of fiscal 2024 to $1.49 million in the second half of fiscal 2025.

The Company reported net income of $5.0 million for the six months ended March 31, 2025, as compared to net income of $4.2 million for the six months ended March 31, 2024. Non-operating income for the six months ended March 31, 2025 was $3.3 million, as compared to non-operating income of $2.6 million in the six months ended March 31, 2024. Non-operating income during the six months ended March 31, 2025 was primarily comprised of a realized gain of $1,470,000 on the sale of marketable securities, an increase of $202,000 in fair value of the marketable securities, $144,000 from rental income, $828,000 on dividend income from securities investments, and $695,000 from interest income, as compared to non-operating income primarily comprised of an increase of $884,000 in fair value of the marketable securities, $235,000 from rental income, $695,000 on dividend income from securities investments, $420,000 from interest income and $376,000 from other income in the second half of fiscal 2024. Deswell reported basic and diluted income per share of $0.31 for the second half of fiscal 2025 (based on 15,935,000 weighted average shares outstanding), as compared to basic and diluted income per share of $0.26 (based on 15,935,000 and 15,992,000 weighted average shares outstanding, respectively), for the six months ended March 31, 2024.

Net sales for the year ended March 31, 2025 were $67.6 million, a decrease of 2.5% compared to net sales of $69.4 million for fiscal 2024. Operating income for the year ended March 31, 2025 decreased to $3.3 million from $3.8 million in fiscal 2024. The Company reported net income of $11.1 million in fiscal 2025, as compared to net income of $7.7 million for the year ended March 31, 2024. The increase in net income was mainly attributable to increases in gross profit and non-operating income in fiscal 2025, as compared to the prior fiscal year. Deswell reported basic and diluted net income per share of $0.70 for fiscal 2025 (based on 15,935,000 and 15,953,000 weighted average shares outstanding, respectively), as compared to basic and diluted net income per share of $0.48 (based on 15,935,000 and 15,999,000 weighted average shares outstanding, respectively), for the prior fiscal year.

The Company's financial position remained strong, with $28.1 million in cash and cash equivalents and working capital totaling $78.8 million as of March 31, 2025. Furthermore, the Company has no long-term or short-term borrowings as of March 31, 2025.

Mr. Edward So, Chief Executive Officer, commented, “During full year fiscal 2025 we made progress capturing new customers in both the market verticals we have traditionally addressed as well as new verticals. That said, with a broad range of international customers we continued to see some sales pressure in the back half of fiscal 2025 given the global inflationary environment and its impact on discretionary purchases, and we also continue to monitor the evolving international tariff environment closely. Nonetheless, we were pleased to achieve improved margin performance as well as enhanced profitability in both the last six months of fiscal 2025 and for full year 2025. Our margin performance was favorably impacted by a decrease in labor and materials costs associated with the depreciation of the renminbi, changes to our product mix, and the effect of the cost control measures we have undertaken.

“Our balance sheet is strong, reflecting a solid cash position and no debt providing us with the resources to focus on increasing our customer base and recognition in the industry as a dependable and effective partner for outsourced manufacturing operations.”

Second Half Dividend

The Company also announced that its board of directors today declared a cash dividend of $0.10 per share for the second half of the fiscal year ended March 31, 2025. The dividend will be payable on July 17, 2025 to shareholders of record as of July 3, 2025.

Dividends to be declared in the future will depend upon the Company’s future growth and earnings, of which there can be no assurance, and the Company’s cash flow needs for future development.

About Deswell

Deswell manufactures injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers (“OEMs”) and contract manufacturers at its factories in the People’s Republic of China. The Company produces a wide variety of plastic parts and components used in the manufacture of consumer and industrial products; printed circuit board assemblies using surface mount (“SMT”) and finished products such as telephones, professional audio equipment, home audio products, and Internet-of-Things (IoT) products.

To learn more about Deswell Industries, Inc., please visit the Company’s website at www.deswell.com.

Forward-Looking Statements
Statements in this press release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. For example, our statements regarding our expected growth in sales from the electronic division in the coming year and our efforts to reduce overhead costs in our plastic division are forward-looking statements. Actual results could differ materially because of the following factors, among others, which may cause revenues and income to fall short of anticipated levels or our overhead expenses to increase: our dependence on a few major customers; vigorous competition forcing product price reductions or discounts; the timing and amount of significant orders from our relatively few significant customers; continuing increases in resin prices that cannot be passed on to customers; unexpected production delays; obsolete inventory or product returns; losses resulting from fraudulent activity of our customers or employees; labor shortages that increase labor and costs; changes in the mix of product products we manufacture and sell; adverse currency fluctuations in the renminbi and Hong Kong dollar when translated to US dollars; potential new accounting pronouncements; and the effects of travel restrictions and quarantines associated with major health problems, such as the Severe Acute Respiratory Syndrome, on general economic activity.

For further information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” section of Company’s Annual Report on Form 20-F, copies of which may be obtained from the Website maintained by the Securities and Exchange Commission at http://www.sec.gov.

All information in this release is made as of the date of this press release. Deswell undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Deswell’s expectations.

DESWELL INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET (U.S. dollars in thousands)
	March 31,				March 31,
		2025				2024
ASSETS	(Audited)				(Unaudited)
Current assets:
Cash and cash equivalents	$	28,133			$	15,750
Timed deposits with original maturing over three months		19,431				13,979
Time deposits with original maturing over twelve months - current		2,761				-
Marketable securities (note 2)		25,175				23,026
Held-to-Maturity investment		-				5,157
Accounts receivable, net		10,328				11,986
Inventories, net (note 3)		9,127				12,129
Prepaid expenses and other current assets		1,612				1,228
Total current assets		96,567				83,255
Property, plant and equipment, net		23,385				24,603
Deferred tax assets		335				419
Time deposits with original maturing over twelve months		-				2,799
Total assets	$	120,287			$	111,076
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	5,405			$	5,210
Accrued payroll and employee benefits		7,779				7,159
Customer deposits		2,472				1,712
Other accrued liabilities (note 7)		1,014				1,236
Income taxes payable		1,126				1,113
Total current liabilities		17,796				16,430
Deferred income tax liabilities (note 8)		371				476
Total liabilities		18,167				16,906
Shareholders' equity
Common shares nil par value - authorized 30,000,000 shares,
17,081,810 shares issued as of March 31, 2024 and 2025;
15,935,239 shares outstanding as of March 31, 2024 and 2025;		53,202				53,202
Treasury stock at cost; 1,146,571 shares as of March 31, 2024 and 2025		(2,821	)			(2,821	)
Additional paid-in capital		7,973				7,973
Accumulated other comprehensive income		5,316				5,316
Retained earnings		38,450				30,500
Total shareholders' equity		102,120				94,170
Total liabilities and shareholders' equity	$	120,287			$	111,076

DESWELL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF OPERATIONS & COMPREHENSIVE INCOME (UNAUDITED) (U.S. dollars in thousands, except per share data)
		Six Months ended								Year ended
		March 31,								March 31,
			2025				2024				2025				2024
Net sales		$	32,434			$	31,638			$	67,610			$	69,368
Cost of sales			25,655				25,097				53,967				55,465
Gross profit			6,779				6,541				13,643				13,903
Selling, general and administrative expenses			5,876				5,241				11,280				10,501
Other income, net			591				183				951				383
Operating income			1,494				1,483				3,314				3,785
Non-operating income, net			3,340				2,610				7,986				4,034
Income before income taxes			4,834				4,093				11,300				7,819
Income taxes expense (benefit)			(119	)			(59	)			162				110
Net income attributable to Deswell Industries, Inc.		$	4,953			$	4,152			$	11,138			$	7,709
Other comprehensive income		$	-			$	-			$	-			$	-
Total comprehensive income attributable to Deswell Industries, Inc.		$	4,953			$	4,152			$	11,138			$	7,709
Net income per share attributable to
Deswell Industries, Inc. (note 4)
Basic:
Net income per share		$	0.31			$	0.26			$	0.70			$	0.48
Weighted average common shares outstanding
(shares in thousands)			15,935				15,935				15,935				15,935
Diluted:
Net income per share		$	0.31			$	0.26			$	0.70			$	0.48
Weighted average common shares outstanding
(shares in thousands)			15,935				15,992				15,953				15,999

DESWELL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (U.S. dollars in thousands)
( U.S. dollars in thousands )	Year ended
	Mar 31,
		2025				2024
Cash flows from operating activities:
Net income	$	11,138			$	7,709
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,519				1,523
(Reversal of) provision for credit losses, net		(67	)			76
Allowance for obsolete inventories, net		179				(24	)
(Gain) loss on disposal of property, plant and equipment		(38	)			74
Unrealized holding gain on marketable securities		(3,163	)			(952	)
Gain on sale of marketable securities		(1,470	)			-
Scrip dividend received		(73	)			-
Deferred income tax benefit		(21	)			(165	)
Changes in operating assets and liabilities:
Accounts receivable		1,725				3,642
Inventories		2,823				5,220
Prepaid expenses and other current assets		(384	)			(79	)
Accounts payable		195				(1,739	)
Accrued payroll and employee benefits		620				(784	)
Customer deposits		760				(504	)
Other accrued liabilities		(222	)			(753	)
Income taxes payable		13				(36	)
Net cash provided by operating activities		13,534				13,208
Cash flows from investing activities
Purchase of property, plant and equipment		(331	)			(381	)
Proceeds from sale of property, plant and equipment, net of transaction costs		69				232
Purchase of marketable securities		(3,090	)			(1,352	)
Proceeds from sales of marketable securities		5,647				-
Increase of fixed deposits with original maturing over three months		(5,452	)			(10,926	)
(Increase) decrease of fixed deposits with original maturing over twelve months		(2,761	)			1,154
Decrease in time deposits maturing over twelve months		2,799				-
Decrease (increase) in held-to-maturity investment		5,157				(5,157	)
Net cash provided by (used in) investing activities		2,038				(16,430	)
Cash flows from financing activities
Dividends paid		(3,188	)			(3,188	)
Net cash used in financing activities		(3,188	)			(3,188	)
Net increase (decrease) in cash and cash equivalents		12,383				(6,410	)
Cash and cash equivalents, beginning of year		15,750				22,160
Cash and cash equivalents, end of year		28,133				15,750
Supplementary disclosures of cash flow information:
Cash paid during the year for:
Interest		-				-
Income taxes		156				227

 

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Source: Deswell Industries, Inc.