Highway Holdings Reports Fiscal 2017 Third Quarter and Nine-Month Results
February 13 2017 - 8:00AM
Highway Holdings Limited (Nasdaq:HIHO) today reported results for
its fiscal third quarter and nine months ended December 31, 2016.
Net sales for the fiscal 2017 third quarter were
$5.4 million compared with $5.6 million a year ago --
reflecting a reduction in business from certain customers and
the previously announced temporary disruption of production related
to the relocation of certain machinery to the company’s emerging
Myanmar facility.
Net income for the fiscal 2017 third quarter was
$270,000, or $0.07 per diluted share, compared with $342,000, or
$0.09 per diluted share, in the same quarter a year earlier.
Net sales for the fiscal 2017 nine-month period
were $14.9 million compared with $17.7 million a year ago –
reflecting the factors noted above and the relocation of the
stamping operation to the newly built factory in China during the
second quarter. Net income for the fiscal 2017 nine-month
period was $308,000 or $0.08 per diluted share, compared with $1.0
million, or $0.27 per diluted share, a year earlier.
Gross profit margin for the three- and
nine-month periods ended December 31, 2016 increased to 28.0
percent and 26.4 percent, respectively, compared with 26.1 percent
and 25.4 percent, respectively, a year earlier. Gross profit
benefitted from the company’s Myanmar cost structure and product
mix.
Operating income for the three-month period
ended December 31, 2016 was $370,000 compared with $426,000 in the
prior year, despite the improved gross profit margin due to the
increase in selling, general and administrative expenses related to
factors noted above. Operating income for the nine months was
$421,000 compared with $1.2 million a year earlier, primarily due
to the factors noted above and the decrease in year-to-date
sales.
“Results for the quarter were mixed. The modest
decline in net sales and the additional expenses related to the
relocation of equipment in both China and Myanmar were partially
offset by the operational benefits derived from utilization of our
Myanmar operations. Once the previously announced component
manufacturing in Myanmar fully comes on stream, the benefits should
outstrip the costs we are currently incurring. Results for
the quarter were further impacted by a previously announced
strategic decision to phase out certain, low-margin business
despite our focus on higher-margin business and customer price
increases. We continue to focus on organic growth and on new
business opportunities to offset this strategic reduction of lower
margin sales, and remain hopeful about anticipated positive
contributions to our operations in the future,” said Roland Kohl,
chairman, president and chief executive officer.
“As noted last quarter, an ongoing challenge is
to balance the increasing costs in China and Hong Kong, which
includes heavy demands by employees for continuously increasing
wages, with the pricing expectations of our customers,” Kohl said.
He added that a key strategic objective to help offset this
situation is to increase utilization of automatic manufacturing in
China and increased utilization of Myanmar.
Currency exchange rates continued to negatively
affect the company’s net income for the nine-month period ended
December 31, 2016. The company reported a $79,000 currency exchange
loss compared with a $44,000 exchange loss in fiscal 2016 -- mainly
due to the weakening of the RMB at December 31, 2016 and Euro. The
company does not engage in currency exchange rate hedging, and the
fluctuations in the exchange rate of the RMB since January 1, 2017
are expected to affect the company’s future results.
Kohl noted the company’s balance sheet remains
very strong. The company’s total cash position at December
31, 2016 increased to $9.8 million, or approximately $2.60 per
share, compared with $8.9 million at December 31, 2015, despite
dividend payments and equipment and project investments. The
company’s current ratio was 3:1 at December 31, 2016. The company's
total cash exceeded all current and long-term liabilities combined
by $4.7 million.
About Highway
Holdings
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
office is located in Hong Kong and its manufacturing facilities are
located in Shenzhen in the People’s Republic of China and Yangon,
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
SUBSIDIARIESConsolidated Statement of
Income(Dollars in thousands, except per share
data)(Unaudited) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
December 31, |
|
December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
5,438 |
|
|
$ |
5,650 |
|
|
$ |
14,883 |
|
|
$ |
17,687 |
|
Cost of sales |
|
3,918 |
|
|
|
4,176 |
|
|
|
10,952 |
|
|
|
13,195 |
|
Gross profit |
|
1,520 |
|
|
|
1,474 |
|
|
|
3,931 |
|
|
|
4,492 |
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
1,150 |
|
|
|
1,048 |
|
|
|
3,510 |
|
|
|
3,304 |
|
Operating income |
|
370 |
|
|
|
426 |
|
|
|
421 |
|
|
|
1,188 |
|
|
|
|
|
|
|
|
|
Non-operating
items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
gain /(loss), net |
|
(79 |
) |
|
|
(44 |
) |
|
|
(53 |
) |
|
|
(20 |
) |
Interest
income |
|
2 |
|
|
|
2 |
|
|
|
4 |
|
|
|
8 |
|
Gain/Loss
on disposal of Asset |
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other
income/(expenses) |
|
- |
|
|
|
- |
|
|
|
12 |
|
|
|
2 |
|
Total
non-operating income/ (expenses) |
|
(76 |
) |
|
|
(42 |
) |
|
|
(37 |
) |
|
|
(10 |
) |
|
|
|
|
|
|
|
|
Share of profits/
(loss) of equity investees |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net income before
income tax and non-controlling interests |
|
294 |
|
|
|
384 |
|
|
|
384 |
|
|
|
1,178 |
|
Income taxes |
|
(30 |
) |
|
|
(35 |
) |
|
|
(80 |
) |
|
|
(131 |
) |
Net Income before
non-controlling interests |
|
264 |
|
|
|
349 |
|
|
|
304 |
|
|
|
1,047 |
|
Less : net (loss)/gain
attributable to non-controlling interests |
|
(6 |
) |
|
|
7 |
|
|
|
(4 |
) |
|
|
11 |
|
Net Income attributable
to Highway Holdings Limited shareholders |
$ |
270 |
|
|
$ |
342 |
|
|
$ |
308 |
|
|
$ |
1,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per share -
basic and diluted |
$ |
0.07 |
|
|
$ |
0.09 |
|
|
$ |
0.08 |
|
|
$ |
0.27 |
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding |
|
|
|
|
|
|
|
Basic |
|
3,801 |
|
|
|
3,787 |
|
|
|
3,801 |
|
|
|
3,787 |
|
Diluted |
|
3,801 |
|
|
|
3,795 |
|
|
|
3,801 |
|
|
|
3,795 |
|
|
|
|
|
|
|
|
|
|
HIGHWAY HOLDINGS LIMITED AND
SUBSIDIARIESConsolidated Balance Sheet(In
thousands, except per share data) |
|
|
December 31 |
|
March 31 |
|
|
2016 |
|
|
|
2016 |
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
9,800 |
|
|
$ |
9,140 |
|
Accounts receivable,
net of doubtful accounts |
|
3,410 |
|
|
|
4,321 |
|
Inventories |
|
1,326 |
|
|
|
1,425 |
|
Prepaid expenses and
other current assets |
|
812 |
|
|
|
844 |
|
Total
current assets |
|
15,348 |
|
|
|
15,730 |
|
|
|
|
|
Property, plant and
equipment, (net) |
|
947 |
|
|
|
1,121 |
|
Goodwill |
|
77 |
|
|
|
77 |
|
Long-term deposits |
|
111 |
|
|
|
111 |
|
Total assets |
$ |
16,483 |
|
|
$ |
17,039 |
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
1,354 |
|
|
$ |
1,307 |
|
Other
liabilities and accrued expenses |
|
3,147 |
|
|
|
2,789 |
|
Income
tax payable |
|
439 |
|
|
|
440 |
|
Dividend
payable |
|
172 |
|
|
|
537 |
|
Total
current liabilities |
|
5,112 |
|
|
|
5,073 |
|
Long term
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Deferred income
taxes |
|
32 |
|
|
|
32 |
|
Total liabilities |
|
5,144 |
|
|
|
5,105 |
|
|
|
|
|
Shareholders’
equity: |
|
|
|
Common
shares, $0.01 par value |
|
38 |
|
|
|
38 |
|
Additional paid-in capital |
|
11,370 |
|
|
|
11,370 |
|
Retained
earnings |
|
59 |
|
|
|
512 |
|
Accumulated other comprehensive (loss)/income |
|
(159 |
) |
|
|
(34 |
) |
Treasury
shares, at cost – 5,049 shares as of December 31, 2016; and March
31, 2016 respectively |
|
(14 |
) |
|
|
(14 |
) |
Total Highway Holdings
Limited shareholders’ equity |
|
11,294 |
|
|
|
11,872 |
|
Non-controlling
interest |
|
45 |
|
|
|
62 |
|
Total
shareholders’ equity |
|
11,339 |
|
|
|
11,934 |
|
Total liabilities and shareholders’ equity |
$ |
16,483 |
|
|
$ |
17,039 |
|
|
|
|
|
CONTACT:
Gary S. Maier
Maier & Company, Inc.
(310) 471-1288
Highway (NASDAQ:HIHO)
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