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

MACAO: 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 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
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