Highway Holdings Limited (Nasdaq:HIHO) today reported results for
its fiscal 2017 second quarter and six months ended September 30,
2016.
Net sales for the fiscal 2017 second quarter were $4.2 million
compared with $6.1 million in the same quarter a year earlier --
reflecting lower production output largely due to a temporary
disruption caused by the relocation of certain manufacturing
operations at the company’s China facilities. Net sales also
declined to a lesser extent due to decreased customer orders.
For the fiscal 2017 second quarter, the company reported a net
loss of $128,000, or $0.03 per share, compared with net income of
$391,000, or $0.10 per diluted share, a year earlier -- reflecting
the impact on net sales of the relocation noted above and a
one-time relocation expense of approximately $100,000.
Net sales for the six-month period were $9.44 million compared
with $12.04 million a year ago, reflecting the disruption caused by
the relocation of facilities and the decrease in customer orders
noted above.
Net income for the six-month period was $37,000, or $0.01 per
diluted share, compared with $695,000, or $0.18 per diluted share
for the same period last year, reflecting the factors noted
above.
Since February 2015, the company has been operating its metal
stamping operations from temporary facilities while a new building
was commissioned by the landlord. The company moved its operations
out of the temporary facilities into the new building during the
second quarter of fiscal 2017.
“The company continues to transition away from low margins
business, with a focus on capturing new business to replace this
business. At the same time, we are working diligently to maintain
and grow business from our higher margin customers, which depends
very much on the company’s ability to minimize inflationary
increases of operational costs in China,” said Roland Kohl,
chairman and chief executive officer of Highway Holdings.
Kohl emphasized that the company is continuing its initiatives
in Myanmar by relocating some component manufacturing machinery and
equipment to its Myanmar operation, with the goal of expanding its
assembly and manufacturing capabilities in that emerging country.
“Shifting more of the manufacturing operations to Myanmar will both
lower the cost of operations and reduce transportation costs
between the company’s China and Myanmar facilities. These factors
are expected to be attractive to a broader customer base and to
lessen the dependency on the company’s operations in China. For the
short term, such adjustments may slightly influence the company’s
performance, but the initiatives are expected to secure and enhance
the company’s future in the medium and longer term,” Kohl said.
Gross profit as a percentage of sales for the second quarter of
fiscal 2017 was 26.6 percent compared with 25.7 percent a year
earlier, reflecting the shift to higher margin business. Gross
profit for the fiscal 2017 six-month period decreased to $2.4
million from $3.02 million a year ago due to the decrease in net
sales. Gross profit as a percentage of sales increased to 25.5
percent from 25.1 percent, despite the sales decrease.
Selling, general and administrative expenses increased by
$139,000 compared with the same period last year, reflecting the
impact of the one-time $100,000 relocation expenses note above, and
increased marketing expenses related to new business
initiatives.
Net loss for the second quarter reflects a currency exchange
gain of $43,000 compared with a $55,000 currency exchange gain for
the same period last year. For the fiscal 2017 six-month period,
the company realized a currency exchange gain of $26,000 compared
with a currency exchange gain of $22,000 a year earlier. Since the
company does not engage in currency exchange rate hedging, Highway
Holdings will in the future continue to realize currency exchange
gains and losses due to the fluctuation of currency exchange
rates.
Kohl noted the company’s balance sheet remains strong, with cash
of approximately $8.8 million, or $2.30 per diluted share compared
with $2.4 per diluted share a year earlier, exceeding all of its
short- and long-term liabilities by $3.6 million.
Current liabilities at September 30, 2016 totaled $5.1 million
and current assets were $15.05 million. Total shareholders’ equity
at September 30, 2016 was $11.19 million, or $2.94 per diluted
share, compared with $11.93 million, or $3.14 per diluted share, at
March 31, 2016.
About Highway Holdings Limited
Highway Holdings produces a wide variety of high-quality
products for blue chip original equipment manufacturers -- from
simple parts and components to sub-assemblies and finished
products. Highway Holdings’ administrative offices are located in
Hong Kong and its manufacturing facilities are located in Shenzhen
in the People’s Republic of China and in Yangon in Myanmar.
Except for the historical information contained herein, the
matters discussed in this press release are forward-looking
statements which involve risks and uncertainties, including but not
limited to economic, competitive, governmental, political and
technological factors affecting the company’s revenues, operations,
markets, products and prices, and other factors discussed in the
company’s various filings with the Securities and Exchange
Commission, including without limitation, the company’s annual
reports on Form 20-F.
(Financial Tables Follow)
# # #
HIGHWAY HOLDINGS LIMITED AND
SUBSIDIARIES |
|
Consolidated Statement of Income |
|
(Dollars in thousands, except per share data) |
|
(Unaudited) |
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
September 30, |
|
September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
|
4,220 |
|
|
|
$ |
6,139 |
|
|
$ |
9,445 |
|
|
$ |
12,038 |
|
|
|
Cost of sales |
|
|
3,096 |
|
|
|
|
4,562 |
|
|
|
7,035 |
|
|
|
9,019 |
|
|
|
Gross profit |
|
|
1,124 |
|
|
|
|
1,577 |
|
|
|
2,410 |
|
|
|
3,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
1,305 |
|
|
|
|
1,166 |
|
|
|
2,360 |
|
|
|
2,256 |
|
|
|
Operating (loss)/income |
|
|
(181 |
) |
|
|
|
411 |
|
|
|
50 |
|
|
|
763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange gain /(loss), net |
|
|
43 |
|
|
|
|
55 |
|
|
|
26 |
|
|
|
22 |
|
|
|
Interest income |
|
|
1 |
|
|
|
|
4 |
|
|
|
2 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
Other income/(expenses) |
|
|
11 |
|
|
|
|
- |
|
|
|
11 |
|
|
|
1 |
|
|
|
Total non-operating income/
(expenses) |
|
|
55 |
|
|
|
|
59 |
|
|
|
39 |
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income before income tax and
non-controlling interests |
|
|
(126 |
) |
|
|
|
470 |
|
|
|
89 |
|
|
|
793 |
|
|
|
Income taxes |
|
|
- |
|
|
|
|
(79 |
) |
|
|
(50 |
) |
|
|
(95 |
) |
|
|
Net ( loss)/income
before non-controlling interests |
|
|
(126 |
) |
|
|
|
391 |
|
|
|
39 |
|
|
|
698 |
|
|
|
Less: net gain
attributable to non-controlling interests |
|
|
2 |
|
|
|
|
- |
|
|
|
2 |
|
|
|
3 |
|
|
|
Net (loss) /income attributable to Highway
Holdings Limited shareholders |
($ |
|
128 |
) |
|
|
$ |
391 |
|
|
|
37 |
|
|
$ |
695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income per share - basic and
diluted |
|
($ |
0.03 |
) |
|
|
$ |
0.10 |
|
|
$ |
0.01 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
3,802 |
|
|
|
|
3,787 |
|
|
|
3,802 |
|
|
|
3,787 |
|
|
|
Diluted |
|
|
3,802 |
|
|
|
|
3,795 |
|
|
|
3,802 |
|
|
|
3,795 |
|
, |
|
|
|
|
|
|
|
|
|
|
|
HIGHWAY HOLDINGS LIMITED AND
SUBSIDIARIES |
Consolidated Balance Sheet |
(Dollars in thousands, except per share data) |
|
|
Sept
30 |
|
March 31 |
|
|
2016 |
|
|
|
2016 |
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
8,752 |
|
|
$ |
9,140 |
|
Accounts receivable, net of
doubtful accounts |
|
3,857 |
|
|
|
4,321 |
|
Inventories |
|
1,376 |
|
|
|
1,425 |
|
Prepaid expenses and other current
assets |
|
1,068 |
|
|
|
844 |
|
Total current assets |
|
15,053 |
|
|
|
15,730 |
|
|
|
|
|
Property, plant and
equipment, (net) |
|
1,072 |
|
|
|
1,121 |
|
Goodwill |
|
77 |
|
|
|
77 |
|
Long-term deposits |
|
111 |
|
|
|
111 |
|
Total assets |
$ |
16,313 |
|
|
$ |
17,039 |
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
1,489 |
|
|
$ |
1,307 |
|
Other liabilities and accured
expenses |
|
2,663 |
|
|
|
2,789 |
|
Income tax payable |
|
414 |
|
|
|
440 |
|
Dividend payable |
|
528 |
|
|
|
537 |
|
Total current liabilities |
|
5,094 |
|
|
|
5,073 |
|
Long term liabilities
: |
|
|
|
|
|
|
|
|
|
|
|
Deferred income
taxes |
|
32 |
|
|
|
32 |
|
Total liabilities |
|
5,126 |
|
|
|
5,105 |
|
|
|
|
|
Shareholders’
equity: |
|
|
|
Common shares, $0.01 par value |
|
38 |
|
|
|
38 |
|
Additional paid-in capital |
|
11,370 |
|
|
|
11,370 |
|
(Deficit ) / Retained
earnings |
|
(212 |
) |
|
|
512 |
|
Accumulated other comprehensive
(loss)/income |
|
(46 |
) |
|
|
(34 |
) |
Treasury shares, at cost – 5,049
shares as of September, 30, 2016; and March 31, 2016
respectively |
|
(14 |
) |
|
|
(14 |
) |
Total Highway Holdings
Limited shareholders’ equity |
|
11,136 |
|
|
|
11,872 |
|
|
|
|
|
|
|
|
|
Non-controlling
interest |
|
51 |
|
|
|
62 |
|
Total shareholders’ equity |
|
11,187 |
|
|
|
11,934 |
|
Total liabilities and shareholders’
equity |
$ |
16,313 |
|
|
$ |
17,039 |
|
CONTACT:
Gary S. Maier
Maier & Company, Inc.
(310) 471-1288
Highway (NASDAQ:HIHO)
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