Deswell Industries, Inc. (Nasdaq: DSWL) today announced its unaudited financial results for the first six months of fiscal 2027, ended September 30, 2026.

Net sales for the six months ended September 30, 2026 were $33.0 million, a slightly decrease of 0.6% compared to net sales of $33.2 million for the six months ended September 30, 2025. Net sales increased by 17.7% to $5.9 million in the plastic segment and decreased by 3.9% to $27.2 million in the Company’s electronic segment.

Total gross margin was 19.8% of net sales during the six months ended September 30, 2026, as compared to 23.4% for the corresponding period of last year. Gross margin in the plastic segment decreased to 12.9% of net sales in the segment for the first half of fiscal 2027, compared to 18.3% of net sales in the segment for the corresponding period of last fiscal year. As a percentage of sales, gross margin in the plastic segment decreased due to the appreciation of the Renminbi, increased labor costs resulting from the raise in minimum wage and social insurance costs in the first six months of fiscal 2027. Gross profit margin in the electronic segment decreased to 21.3% compared to 24.3% of net sales in the segment for the first half of last fiscal year. This was mainly due to the appreciation of the Renminbi, increased labor costs resulting from the raise in minimum wage and social insurance costs for the first six months of fiscal 2027. Operating income in the first half of fiscal 2027 was $0.9 million, compared to operating income of $2.5 million for the same period of fiscal 2026.

The Company reported net income of $5.0 million for the six months ended September 30, 2026, compared to net income of $7.5 million for the six months ended September 30, 2025. This was primarily due to a decrease in total gross margin and non-operating income for the six months ended September 30, 2026, as compared to the same period of fiscal 2026. Deswell reported basic and diluted income per share of $0.31 for the first half of fiscal 2027 (based on 15,885,000 weighted average shares outstanding), as compared to basic and diluted income per share of $0.47 for the first half of fiscal 2026 (based on 15,935,000 weighted average shares outstanding).

The Company’s financial position remained strong, with $22.4 million in cash and cash equivalents and working capital totaling $87.0 million as of September 30, 2026. Furthermore, the Company has no long-term or short-term borrowings as of September 30, 2026.

Mr. Edward So, Chief Executive Officer, commented, “Revenue largely held steady in the first half of fiscal 2027 despite cautious end-market spending and subdued customer demand, reflecting the strength of our long-standing customer relationships. Supply chain volatility pushed back the timing of new product introductions, as extended component lead times and limited parts availability affected launch schedules. At the same time, Renminbi appreciation raised our operating and locally sourced material costs, with mandated minimum wage increases adding to labor costs.

“Our focus is on what we can control. We’re prioritizing operational efficiency, renegotiating supplier terms, and making selective investments in automation to protect margins while positioning ourselves for growth when customer demand improves. With a strong balance sheet, a solid cash position and no debt, we believe Deswell is well positioned to navigate the current economic environment to further drive shareholder value.”

First Half Dividend

The Company also announced that its Board of Directors today declared a cash dividend of $0.10 per share for the first six months of fiscal 2027. The dividend will be payable on December 23, 2026 to shareholders of record as of December 2, 2026.

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, telephone answering machines, sophisticated studio-quality audio equipment and computer peripherals.

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 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

CONSOLIDATED BALANCE SHEET

(U.S. dollars in thousands)
 

September 30,

March 31,

 

2026

 

 

2026

 

ASSETS

(Unaudited)

(Audited)
 

Current assets:

Cash and cash equivalents

$

22,429

 

$

23,062

 

Time deposits with original maturities over three months

 

14,488

 

 

19,552

 

Marketable securities (note 2)

 

36,488

 

 

27,874

 

Held-to-maturity investment

 

3,677

 

 

11,846

 

Accounts receivable, net

 

15,623

 

 

11,433

 

Inventories (note 3)

 

16,423

 

 

11,750

 

Prepaid expenses and other current assets

 

1,267

 

 

1,375

 

Total current assets

 

110,395

 

 

106,892

 

Property, plant and equipment, net

 

22,045

 

 

22,326

 

Deferred tax assets

 

759

 

 

746

 

Total assets

$

133,199

 

 

$

129,964

 
 

LIABILITIES AND SHAREHOLDERS’ EQUITY
 

Current liabilities

Accounts payable

$

9,412

 

$

6,842

 

Accrued payroll and employee benefits

 

9,204

 

 

8,833

 

Customer deposits

 

2,286

 

 

2,643

 

Other accrued liabilities

 

1,324

 

 

1,016

 

Income taxes payable

 

1,156

 

 

1,029

 

Total current liabilities

 

23,382

 

 

20,363

 

Deferred income tax liabilities

 

223

 

 

211

 

Total liabilities

 

23,605

 

 

20,574

 
 
 

Shareholders’ equity

Common shares nil par value; authorized 30,000,000 shares; 17,081,810

shares issued;

15,885,239 shares outstanding as of March 31, 2026 and September 30, 2026

 

53,202

 

 

53,202

 

Treasury stock at cost; 1,196,571 shares as of March 31, 2026 and September 30, 2026

 

(2,990

)

 

(2,990

)

Additional paid-in capital

 

7,973

 

 

7,973

 

Accumulated other comprehensive income

 

5,316

 

 

5,316

 

Retained earnings

 

46,093

 

 

45,889

 

Total shareholders’ equity

 

109,594

 

 

109,390

 

Total liabilities and shareholders’ equity

$

133,199

 

$

129,964

 

DESWELL INDUSTRIES

CONSOLIDATED STATEMENT OF OPERATIONS & COMPREHENSIVE INCOME

(UNAUDITED)

(U.S. dollars in thousands, except per share data)
 

Six months ended

September 30,

 

2026

 

 

2025

 
 

Net sales

$

33,021

 

$

33,230

 

Cost of sales

 

(26,479

)

 

(25,442

)

Gross profit

 

6,542

 

 

7,788

 

Selling, general and administrative expenses

 

(5,357

)

 

(5,432

)

Other (expense) income, net

 

(306

)

 

158

 

Operating income

 

879

 

 

2,514

 

Non-operating income, net

 

4,264

 

 

5,172

 

Income before income taxes

 

5,143

 

 

7,686

 

Income taxes

 

(173

)

 

(167

)

Net income attributable to Deswell Industries, Inc.

$

4,970

 

$

7,519

 
 
 

Other comprehensive income

$

–

 

$

–

 

Comprehensive income attributable to Deswell Industries, Inc.

$

4,970

 

$

7,519

 
 
 

Net income per share attributable to

Deswell Industries, Inc. (note 4)

Basic:

Net income per share

$

0.31

 

$

0.47

 

Weighted average common shares outstanding

shares (in thousands)

 

15,885

 

 

15,935

 
 

Diluted:

Net income per share

$

0.31

 

$

0.47

 

Weighted average number of shares

outstanding (in thousands)

 

15,885

 

 

15,935

 

DESWELL INDUSTRIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(U.S. dollars in thousands)
 

Six months ended

Six months ended

September 30,

September 30,

 

2026

 

 

2025

 

Cash flows from operating activities:

Net income

$

4,970

 

$

7,519

 

Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation and amortization

 

728

 

 

741

 

Provision for doubtful accounts

 

64

 

 

16

 

Allowance for obsolete inventories, net

 

(189

)

 

(284

)

Gain on disposal of property, plant and equipment

 

(4

)

 

(26

)

Unrealized holding gain on marketable securities

 

(2,782

)

 

(930

)

Realized loss (gain) on disposal of marketable securities

 

7

 

 

(2,881

)

Deferred tax credit

 

(1

)

 

(63

)

Changes in operating assets and liabilities:

Accounts receivable

 

(4,254

)

 

(4,003

)

Inventories

 

(4,484

)

 

(384

)

Prepaid expenses and other current assets

 

108

 

 

391

 

Accounts payable

 

2,570

 

 

1,523

 

Accrued payroll and employee benefits

 

371

 

 

635

 

Customer deposits

 

(357

)

 

(203

)

Other accrued liabilities

 

308

 

 

118

 

Income taxes payable

 

127

 

 

66

 

Net cash (used in) provided by operating activities

 

(2,818

)

 

2,235

 
 

Cash flows from investing activities

Purchase of property, plant and equipment

 

(455

)

 

(326

)

Proceeds from disposal of property, plant and equipment

 

12

 

 

42

 

Purchase of marketable securities

 

(6,119

)

 

(7,450

)

Proceeds from disposal of marketable securities

 

280

 

 

9,546

 

Decrease (increase) in fixed deposits with original maturities over three months

 

5,064

 

 

(1,785

)

Decrease of fixed deposits with original maturities over twelve months

 

–

 

 

2,761

 

Decrease (increase) in held-to-maturity investment

 

8,169

 

 

(8,180

)

Net cash provided by (used in) investing activities

 

6,951

 

 

(5,392

)
 

Cash flows from financing activities

Dividends paid

 

(4,766

)

 

(1,594

)

Net cash used in financing activities

 

(4,766

)

 

(1,594

)
 

Net decrease in cash and cash equivalents

 

(633

)

 

(4,751

)

Cash and cash equivalents, at beginning of period

 

23,062

 

 

 

28,133

 

Cash and cash equivalents, at end of period

 

22,429

 

 

23,382

 
 

Supplementary disclosures of cashflow information:

Cash paid during the period for:

Interest

 

–

 

 

–

 

Income taxes

 

56

 

 

 

170

 

 

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