First Half Year of Fiscal Year 2017 Financial
Highlights
- Non-GAAP net income attributable to Hollysys was
$33.8 million, a decrease of 47.3%
compared to the comparable prior year period.
- Total revenues were $202.7
million, a decrease of 27.1% compared to the comparable
prior year period.
- Non-GAAP gross margin was at 29.2%, compared to 39.6%
for the comparable prior year period.
- Non-GAAP diluted EPS were at $0.56, a decrease of 47.2% compared to the
comparable prior year period.
- Net cash provided by operating activities was
$54.1 million for the current
period.
- DSO of 203 days, compared to 158 days for the
comparable prior year period.
- Inventory turnover days of 48 days, compared to 38 days
for the comparable prior year period.
Second Quarter of Fiscal Year 2017 Financial
Highlights
- Non-GAAP net income attributable to Hollysys was
$11.0 million, a decrease of 70.1%
compared to the comparable prior year period.
- Total revenues were $99.1
million, a decrease of 35.1% compared to the comparable
prior year period.
- Non-GAAP gross margin was at 28.7%, compared to 39.8%
for the comparable prior year period.
- Non-GAAP diluted EPS were at $0.18, a decrease of 70.5% compared to the
comparable prior year period.
- Net cash provided by operating activities was
$36.2 million for the current
quarter.
- DSO of 208 days, compared to 138 days for the
comparable prior year period.
- Inventory turnover days of 52 days, compared to 34 days
for the comparable prior year period.
BEIJING, Feb 14, 2017 /PRNewswire/ -- Hollysys Automation
Technologies Ltd. (NASDAQ: HOLI) ("Hollysys" or the "Company"), a
leading provider of automation and control technologies and
applications in China, today
announced its unaudited financial results for the fiscal year 2017
the second quarter ended on Dec 31,
2016 (see attached tables).
Industrial Automation (IA) has been developing to the short-term
target, which was trying to alleviate continuously declining.
Through actively traced our customers' new demands under adjusting
circumstance, we got several significant contracts. For example, in
power, we signed the contract to provide products for Yuneng
Hengshan 2X1000MW power units, Datang Pingluo 2X660MW power units
and Yangmei Xishangzhuang 2X660MW power units. In chemical, we
provided DCS and Batch for BASF chemical company. In petrochemical,
we won the contract to provide products to a halite project which
will produce 1 million tons soda ash per year. In nuclear power, we
continued to provide DCS for Hongyanhe #5 & #6 units and
Tianwan #5 & #6 units.
For Factory Automation (FA), after by changing strategies from
selling products to provide solutions to customers we did have some
progress such as Hair project to help the customer improve the
level of automation and Intelligence of their Tianjin-based factory which focuses on wash
machine, integrated internal resources to improve the production.
Others new sub-vertical trials such as Hai Di Lao Hot Pot project
helped the customer to improve their efficiency of hot pot based
making in the restaurant which is the first food area project under
FA customizations. We also provide supervisory control and data
analyzing software integration solutions to "China Model Factory"
jointly established by Tsinghua University and McKinsey &
Company. The project is to raise the level of factory's
productivity, digitalization and intelligence in China. Hollysys aim to make each project into
a demonstration project and create values to the customers.
In high-speed railway, due to the negative impact from delaying
ATP contract, the performance of high-speed railway for this
quarter was less than satisfactory. In addition, since it is the
first year for the 13th five-year-plan, the infrastructure of new
planned railway is just started. Therefore, in short term, the
performance of high speed rail segment was fluctuated. However,
from long run, according to the mid and long term plan of
high-speed railway and with the increase of the after sell and new
products launching, we think the sector will recover in future. For
subway, we stick to our strategy to expand new cities. For this
quarter, we signed the contract to provide SCADA for Wuhan Subway
Line 21.
In the mechanical and electrical installation services, although
Concord and Bond are facing some difficulties because of the local
political and economic uncertainties in South East Asia and Middle East area, they are still hard working
to develop businesses. For example, Concord won the contract to
provide SCADA for Macau LRT phase 1. As one of the strategies to
expand overseas market, we will ensure a healthy development of
Concord and Bond and take use of their advantages such as good
customer relations and sales channels to find more international
opportunities.
First Half Year and the Second Quarter Ended
December 31, 2016 Unaudited
Financial Results Summary
To facilitate a clear understanding of Hollysys' operational
results, a summary of unaudited non-GAAP financial results is shown
as below:
(In USD
thousands, except for number of shares and per share
data)
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
Dec 31,
2016
|
Dec 31,
2015
|
%
Change
|
|
Dec 31,
2016
|
Dec 31,
2015
|
%
Change
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
99,137
|
152,773
|
(35.1)%
|
$
|
202,679
|
277,864
|
(27.1)%
|
Integrated contract revenue
|
$
|
89,535
|
134,159
|
(33.3)%
|
$
|
182,600
|
245,172
|
(25.5)%
|
Products sales
|
$
|
6,057
|
15,393
|
(60.7)%
|
$
|
14,370
|
26,835
|
(46.5)%
|
Service rendered
|
$
|
3,545
|
3,221
|
10.1%
|
$
|
5,709
|
5,857
|
(2.5)%
|
Cost of
revenues
|
$
|
70,704
|
91,964
|
(23.1)%
|
$
|
143,588
|
167,875
|
(14.5)%
|
Gross
profit
|
$
|
28,433
|
60,809
|
(53.2)%
|
$
|
59,091
|
109,989
|
(46.3)%
|
Total operating
expenses
|
$
|
17,236
|
19,151
|
(10.0)%
|
$
|
30,543
|
37,305
|
(18.1)%
|
Selling
|
$
|
6,307
|
7,096
|
(11.1)%
|
$
|
11,858
|
13,720
|
(13.6)%
|
General and administrative
|
$
|
10,819
|
10,836
|
(0.2)%
|
$
|
20,493
|
19,752
|
3.8%
|
Research and development
|
$
|
8,293
|
11,890
|
(30.3)%
|
$
|
15,990
|
19,600
|
(18.4)%
|
VAT refunds and government subsidies
|
$
|
(8,183)
|
(10,671)
|
(23.3)%
|
$
|
(17,798)
|
(15,767)
|
12.9%
|
Income from
operations
|
$
|
11,197
|
41,658
|
(73.1)%
|
$
|
28,548
|
72,684
|
(60.7)%
|
Other income,
net
|
$
|
866
|
1,391
|
(37.7)%
|
$
|
1,260
|
1,777
|
(29.1)%
|
Foreign exchange
loss
|
$
|
(715)
|
(850)
|
(15.9)%
|
$
|
(635)
|
(814)
|
(22.0)%
|
Share of net income
(losses) of equity
investees
|
$
|
970
|
(217)
|
(547.0)%
|
$
|
2,279
|
77
|
2859.7%
|
Gains on dilution and
divestment of the
Company's interests in HollyCon
|
$
|
-
|
-
|
-
|
$
|
6,005
|
-
|
-
|
Interest
income
|
$
|
512
|
1,102
|
(53.5)%
|
$
|
1,257
|
2,839
|
(55.7)%
|
Interest
expenses
|
$
|
(271)
|
(384)
|
(29.4)%
|
$
|
(400)
|
(753)
|
(46.9)%
|
Income tax
expenses
|
$
|
1,559
|
5,128
|
(69.6)%
|
$
|
4,570
|
9,783
|
(53.3)%
|
Net income
attributable to noncontrolling
interests
|
$
|
(9)
|
785
|
(101.1)%
|
$
|
(13)
|
1,940
|
(100.7)%
|
Non-GAAP net income
attributable to
Hollysys Automation Technologies
Ltd.
|
$
|
11,009
|
36,787
|
(70.1)%
|
$
|
33,757
|
64,087
|
(47.3)%
|
Non-GAAP basic
EPS
|
$
|
0.18
|
0.62
|
(71.0)%
|
$
|
0.56
|
1.08
|
(48.1)%
|
Non-GAAP diluted
EPS
|
$
|
0.18
|
0.61
|
(70.5)%
|
$
|
0.56
|
1.06
|
(47.2)%
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
$
|
918
|
1,243
|
(26.1)%
|
$
|
1,837
|
2,137
|
(14.0)%
|
Amortization of
acquired intangible assets
|
$
|
122
|
230
|
(47.0)%
|
$
|
263
|
487
|
(46.0)%
|
Acquisition-related
incentive share contingent
consideration
|
$
|
-
|
2,366
|
(100.0)%
|
$
|
-
|
(1,745)
|
(100.0)%
|
GAAP Net income
attributable to Hollysys
Automation Technologies Ltd.
|
$
|
9,969
|
32,948
|
(69.7)%
|
$
|
31,657
|
63,208
|
(49.9)%
|
GAAP basic
EPS
|
$
|
0.17
|
0.56
|
(69.6)%
|
$
|
0.53
|
1.07
|
(50.5)%
|
GAAP diluted
EPS
|
$
|
0.17
|
0.55
|
(69.1)%
|
$
|
0.52
|
1.05
|
(50.5)%
|
|
|
|
|
|
|
|
|
|
Basic weighted
average common shares
outstanding
|
|
60,070,218
|
59,071,520
|
1.7%
|
|
59,976,132
|
59,069,316
|
1.5%
|
Diluted weighted
average common shares
outstanding
|
|
60,895,404
|
60,619,909
|
0.5%
|
|
61,023,669
|
60,632,435
|
0.6%
|
Operational Results Analysis for the Second Quarter Ended
December 31, 2016
Comparing to the second quarter of the prior fiscal year, the
total revenues for the three months ended December 31, 2016 decreased from $152.8 million to $99.1
million, representing a decrease of 35.1%. Broken down by
the revenue types, services revenue increased by 10.1% to
$3.5 million, integrated contracts
revenue decreased by 33.3% to $89.5
million, and products sales revenue decreased by 60.7% to
$6.1 million. In July 2016, the company's interests in Hollycon
were diluted from 51.0% to 30.0% and the Company lost the control
of Hollycon. As a result, Hollycon's financials would not be
included in the Company's consolidated financials from July 2016 on. If Hollycon's revenue was excluded
from the comparable figure for the second quarter of the prior
fiscal year, the products sales revenue for the three months ended
December 31, 2016 should be decreased
by 42.2%.
The Company's total revenues can also be presented in
segments as shown in the following chart:
(In USD
thousands)
|
|
|
Three months ended
Dec 31,
|
|
Six months ended
Dec 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
$
|
% to Total
Revenue
|
|
$
|
% to Total
Revenue
|
|
$
|
% to Total
Revenue
|
|
$
|
% to Total
Revenue
|
Industrial
Automation
|
|
45,792
|
46.2%
|
|
54,276
|
35.6%
|
|
90,831
|
44.8%
|
|
103,742
|
37.4%
|
Rail Transportation
Automation
|
|
23,263
|
23.5%
|
|
63,878
|
41.8%
|
|
56,297
|
27.8%
|
|
118,209
|
42.5%
|
Mechanical and
Electrical Solution
|
|
30,082
|
30.3%
|
|
29,710
|
19.4%
|
|
55,462
|
27.4%
|
|
45,268
|
16.3%
|
Miscellaneous
|
|
-
|
-
|
|
4,909
|
3.2%
|
|
89
|
0.0%
|
|
10,645
|
3.8%
|
Total
|
|
99,137
|
100.0%
|
|
152,773
|
100.0%
|
|
202,679
|
100.0%
|
|
277,864
|
100.0%
|
Overall gross margin excluding non-cash
amortization of acquired intangibles (non-GAAP gross
margin) was 28.7% for the three months ended December 31, 2016, as compared to 39.8% for the
same period of the prior year. The non-GAAP gross
margin for integrated contracts, product sales, and services
rendered were 24.3%, 72.1% and 64.9% for the three months ended
December 31, 2016, as compared to
37.2%, 57.4% and 65.2% for the same period of the prior year
respectively. The gross margin fluctuation was mainly due to the
different revenue mix with different margin. The GAAP
overall gross margin which includes non-cash amortization of
acquired intangibles was 28.6% for the three months ended
December 31, 2016, as compared to
39.7% for the same period of the prior year. The GAAP
gross margin for integrated contracts, product sales, and
service rendered were 24.2%, 72.1% and 64.9% for the three
months ended December 31, 2016, as
compared to 37.0%, 57.4% and 65.2% for the same period of the prior
year respectively.
Selling expenses were $6.3
million for the three months ended December 31, 2016, representing a decrease of
$0.8 million or 11.1% compared to
$7.1 million for the same quarter of
the prior year. Presented as a percentage of total revenues,
selling expenses were 6.4% and 4.6% for the three months ended
December 31, 2016, and 2015,
respectively.
General and
administrative expenses, excluding non-cash
share-based compensation expenses (non-GAAP G&A expenses),
were $10.8 million and $10.8 million for the quarter ended December 31, 2016, and 2015, respectively.
Presented as a percentage of total revenues, non-GAAP G&A
expenses were 10.9% and 7.1% for quarters ended December 31, 2016 and 2015 respectively. The
GAAP G&A expenses which include the non-cash share-based
compensation expenses were $11.7
million and $12.1million for
the three months ended December 31,
2016 and 2015, respectively.
Research and development expenses were $8.3 million for the three months ended
December 31, 2016, representing a
decrease of $3.6 million or 30.3%
compared to $11.9 million for the
same quarter of the prior year. Presented as a percentage of total
revenues, R&D expenses were 8.4% and 7.8% for the quarter ended
December 31, 2016 and 2015,
respectively.
The VAT refunds and government subsidies were
$8.2 million for three months ended
December 31, 2016, as compared to
$10.7 million for the same period in
the prior year, representing a $2.5million or 23.3% decrease, which was
primarily due to decrease of the VAT refunds of $3.3 million.
The income tax expenses and the effective tax rate were
$1.6 million and 13.5% for the three
months ended December 31, 2016, as
compared to $5.1 million and 13.2%
for comparable prior year period.
The non-GAAP net income attributable to Hollysys, which
excludes non-cash share-based compensation expenses, amortization
of acquired intangibles, acquisition-related consideration fair
value adjustments and convertible bond related fair value
adjustments was $11.0 million or
$0.18 per diluted share based on 60.9
million shares outstanding for the three months ended December 31, 2016. This represents a 70.5%
decrease over the $25.8 million or
$0.43 per share based on 60.6 million
shares outstanding reported in the comparable prior year period.
On a GAAP basis, net income attributable to Hollysys was
$10.0 million or $0.17 per diluted share representing a decrease
of 69.7% over the $32.9 million or
$0.55 per diluted share reported in
the comparable prior year period.
Contracts and Backlog Highlights
Hollysys achieved $110.2 million
new contracts for the three months ended December 31, 2016. And the backlog as of
December 31, 2016 was $499.4 million. The detailed breakdown of the new
contracts and backlog by segments is shown below:
(In USD
thousands)
|
|
New contracts
achieved
|
|
Backlog
|
|
|
for the three
months
ended Dec
31, 2016
|
|
as of Dec 31,
2016
|
|
|
$
|
% to Total
Contract
|
|
$
|
% to Total
Backlog
|
Industrial
Automation
|
|
46,479
|
42.1%
|
|
119,764
|
24.0%
|
Rail
Transportation
|
|
47,338
|
43.0%
|
|
225,404
|
45.1%
|
Mechanical and
Electrical Solutions
|
|
16,387
|
14.9%
|
|
154,191
|
30.9%
|
Total
|
|
110,204
|
100.0%
|
|
499,359
|
100.0%
|
Cash Flow Highlights
For the three months ended December 31,
2016, the total net cash outflow was
$2.2 million. The net cash
provided by operating activities was $36.2 million. The net cash used in investing
activities was $30.0 million,
mainly consisted of $54.4 million
time deposits placed with banks, which was partially offset by
$24.6 million maturity of time
deposits. The net cash used in financing activities was
$3.9 million, mainly consisted of
$12.0 million payment of dividends,
which was partially offset by $5.5
million proceeds from long-term bank loans.
Balance Sheet Highlights
The total amount of cash and cash equivalents and time
deposits with original maturities over three months were
$285.4 million, $260.9 million, and $275.6
million as of December 31,
2016, September 30, 2016 and
December 31, 2015, respectively. As
of December 31, 2016, the company
held $210.1 million in cash and cash
equivalents and $75.3 million in time
deposits with original maturities over three months.
For the three months ended December 31,
2016, DSO was 208 days, as compared to 138 days for the
comparable prior year period and 207 days for the last quarter; and
inventory turnover was 52 days, as compared to 34 days for the
comparable prior year period and 48 days for the last quarter.
Outlook for FY 2017
The management concluded, "Consideration on the negative impact
from delaying ATP contract, we would like to adjust the guidance
for fiscal year 2017 with revenue in the range of $480 million to $520 million and non-GAAP net
income in the range of $90 million to $100
million."
Conference Call
The Company will host a conference call at 8:00
p.m. U.S. Eastern Time on February 14,
2017 / 9:00 a.m. Beijing Time on February 15,
2017, to discuss the financial results for the fiscal year 2017
second quarter ended on December 31,
2016 and business outlook.
To participate, please call the following numbers ten minutes
before the scheduled start of the call. The conference call
identification number is 5456927.
4001-200-539
|
(China)
|
0080 161
5189
|
(Taiwan)
|
+1-855-298-3404
|
(United
States)
|
+1 631 5142
526
|
(US - New
York)
|
0800 916
599
|
(France)
|
0800 1899
399
|
(Germany)
|
0800 837
001
|
(Switzerland)
|
1800 801
825
|
(Australia)
|
800-905-927
|
(Hong
Kong)
|
+852-5808-3202
|
(Hong
Kong)
|
0800-015-9725
|
(United
Kingdom)
|
+44(0)20 3078
7622
|
(United Kingdom -
London)
|
800-616-3222
|
(Singapore)
|
+65 6823
2299
|
(Singapore/International)
|
In addition, a recording of the conference call will be
accessible within 48 hours via Hollysys' website
at: http://ir.hollysys.com/ or
http://hollysys.investorroom.com.
About Hollysys Automation Technologies, Ltd. (NASDAQ:
HOLI)
Hollysys Automation Technologies is a leading provider of
automation and control technologies and applications
in China that enables its diversified industry and
utility customers to improve operating safety, reliability, and
efficiency. Founded in 1993, Hollysys has approximately 3,600
employees with nationwide presence in over 60 cities in China,
with subsidiaries and offices in Singapore,
Malaysia, Dubai, India, and serves over 6,000 customers
more than 20,000 projects in the industrial, railway, subway &
nuclear industries in China, South-East Asia, and
the Middle East. Its proprietary technologies are applied in
its industrial automation solution suite including DCS (Distributed
Control System), PLC (Programmable Logic Controller), RMIS
(Real-time Management Information System), HAMS (HolliAS Asset
Management System), OTS (Operator Training System), HolliAS BATCH
(Batch Application Package), HolliAS APC Suite (Advanced Process
Control Package), SIS (Safety Instrumentation System), high-speed
railway signaling system of TCC (Train Control Center), ATP
(Automatic Train Protection), Subway Supervisory and Control
platform, SCADA (Supervisory Control and Data Acquisition), nuclear
power plant automation and control system and other products.
SAFE HARBOUR:
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical fact included
herein are "forward-looking statements," including statements
regarding: the ability of the Company to achieve its commercial
objectives; the business strategy, plans and objectives of the
Company and its subsidiaries; and any other statements of
non-historical information. These forward-looking statements are
often identified by the use of forward-looking terminology such as
"believes," "expects" or similar expressions, involve known and
unknown risks and uncertainties. Such forward-looking statements,
based upon the current beliefs and expectations of Hollysys'
management, are subject to risks and uncertainties, which could
cause actual results to differ from the forward looking statements.
Although the Company believes that the expectations reflected in
these forward-looking statements are reasonable, they do involve
assumptions, risks and uncertainties, and these expectations may
prove to be incorrect. Investors should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this press release. The Company's actual results could differ
materially from those anticipated in these forward-looking
statements as a result of a variety of factors, including those
discussed in the Company's reports that are filed with the
Securities and Exchange Commission and available on its website
(http://www.sec.gov). All forward-looking statements attributable
to the Company or persons acting on its behalf are expressly
qualified in their entirety by these factors. Other than as
required under the securities laws, the Company does not assume a
duty to update these forward-looking statements.
For further information, please contact:
Hollysys Automation Technologies Ltd.
www.hollysys.com
+8610-58981386
investors@hollysys.com
HOLLYSYS
AUTOMATION TECHNOLOGIES LTD.
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
(In USD thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
Dec 31,
|
|
Six months
ended
Dec 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Net
revenues
|
|
|
|
|
|
|
|
|
Integrated contract
revenue
|
$
|
89,535
|
$
|
134,159
|
$
|
182,600
|
$
|
245,172
|
Products
sales
|
|
6,057
|
|
15,393
|
|
14,370
|
|
26,835
|
Revenue from
services
|
|
3,545
|
|
3,221
|
|
5,709
|
|
5,857
|
Total net
revenues
|
|
99,137
|
|
152,773
|
|
202,679
|
|
277,864
|
|
|
|
|
|
|
|
|
|
Cost of integrated
contracts
|
|
67,896
|
|
84,520
|
|
137,810
|
|
154,349
|
Cost of products
sold
|
|
1,687
|
|
6,554
|
|
4,143
|
|
11,982
|
Costs of services
rendered
|
|
1,243
|
|
1,120
|
|
1,898
|
|
2,031
|
Gross
profit
|
|
28,311
|
|
60,579
|
|
58,828
|
|
109,502
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Selling
|
|
6,307
|
|
7,096
|
|
11,858
|
|
13,720
|
General and
administrative
|
|
11,737
|
|
12,079
|
|
22,330
|
|
21,889
|
Research and
development
|
|
8,293
|
|
11,890
|
|
15,990
|
|
19,600
|
VAT refunds and
government subsidies
|
|
(8,183)
|
|
(10,671)
|
|
(17,798)
|
|
(15,767)
|
Total operating
expenses
|
|
18,154
|
|
20,394
|
|
32,380
|
|
39,442
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
10,157
|
|
40,185
|
|
26,448
|
|
70,060
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
|
866
|
|
(975)
|
|
1,260
|
|
3,522
|
Foreign exchange
loss
|
|
(715)
|
|
(850)
|
|
(635)
|
|
(814)
|
Share of net income
(losses) of equity investees
|
|
970
|
|
(217)
|
|
2,279
|
|
77
|
Gains on dilution and
divestment of the Company's interests
in HollyCon
|
-
|
|
-
|
|
6,005
|
|
-
|
Interest
income
|
|
512
|
|
1,102
|
|
1,257
|
|
2,839
|
Interest
expenses
|
|
(271)
|
|
(384)
|
|
(400)
|
|
(753)
|
Income before
income taxes
|
|
11,519
|
|
38,861
|
|
36,214
|
|
74,931
|
|
|
|
|
|
|
|
|
|
Income taxes
expenses
|
|
1,559
|
|
5,128
|
|
4,570
|
|
9,783
|
Net
income
|
|
9,960
|
|
33,733
|
|
31,644
|
|
65,148
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to noncontrolling interests
|
(9)
|
|
785
|
|
(13)
|
|
1,940
|
Net income
attributable to Hollysys Automation
Technologies Ltd.
|
$
|
9,969
|
$
|
32,948
|
$
|
31,657
|
$
|
63,208
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss), net of tax of nil
|
|
|
|
|
|
|
|
Translation
adjustments
|
|
(29,683)
|
|
(9,250)
|
|
(42,108)
|
|
(38,705)
|
Comprehensive
income
|
|
(19,723)
|
|
24,483
|
|
(10,464)
|
|
26,443
|
|
|
|
|
|
|
|
|
|
Less: comprehensive
(loss) income attributable to
noncontrolling interests
|
(11)
|
|
818
|
|
(8,518)
|
|
1,706
|
Comprehensive
income attributable to Hollysys
Automation Technologies Ltd.
|
$
|
(19,712)
|
$
|
23,665
|
$
|
(1,946)
|
$
|
24,737
|
|
|
|
|
|
|
|
|
|
Net income per
ordinary share:
|
|
|
|
|
|
|
|
|
Basic
|
|
0.17
|
|
0.56
|
|
0.53
|
|
1.07
|
Diluted
|
|
0.17
|
|
0.55
|
|
0.52
|
|
1.05
|
Shares used in
income per share computation:
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary shares
|
60,070,218
|
|
59,071,520
|
|
59,976,132
|
|
59,069,316
|
Weighted average
number of diluted ordinary shares
|
60,895,404
|
|
60,619,909
|
|
61,023,669
|
|
60,632,435
|
HOLLYSYS AUTOMATION
TECHNOLOGIES LTD.
|
CONSOLIDATED
BALANCE SHEETS
|
(In USD thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Dec
31,
|
|
Sep
30,
|
|
|
|
|
2016
|
|
2016
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
210,115
|
$
|
212,284
|
|
|
Time deposits with
original maturities over three months
|
|
75,282
|
|
48,570
|
|
|
Restricted
cash
|
|
42,802
|
|
43,653
|
|
|
Accounts receivable,
net of allowance for doubtful accounts of $43,017and $42,362
as of December 31,2016 and September 30,
2016, respectively
|
|
219,173
|
|
239,990
|
|
|
Costs and estimated
earnings in excess of billings, net of allowance for doubtful
accounts of $6,355 and $6,980 as of
December 31, 2016 and September 30,
2016, respectively
|
|
147,097
|
|
163,714
|
|
|
Other receivables,
net of allowance for doubtful accounts of $1,218 and $1,266 as
of
December 31, 2016 and September 30, 2016,
respectively
|
|
11,999
|
|
16,646
|
|
|
Advances to
suppliers
|
|
10,027
|
|
11,674
|
|
|
Amounts due from
related parties
|
|
27,299
|
|
28,411
|
|
|
Inventories
|
|
40,001
|
|
40,610
|
|
|
Prepaid
expenses
|
|
754
|
|
513
|
|
|
Income tax
recoverable
|
|
4,497
|
|
6,415
|
|
|
Deferred tax
assets
|
|
10,103
|
|
7,191
|
|
Total current
assets
|
|
799,149
|
|
819,671
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Restricted
cash
|
|
481
|
|
1,271
|
|
|
Prepaid
expenses
|
|
8
|
|
3
|
|
|
Property, plant and
equipment, net
|
|
78,933
|
|
81,076
|
|
|
Prepaid land
leases
|
|
10,026
|
|
10,608
|
|
|
Acquired intangible
assets, net
|
|
524
|
|
706
|
|
|
Investments in equity
investees
|
|
33,951
|
|
34,375
|
|
|
Investments in cost
investees
|
|
3,927
|
|
4,092
|
|
|
Goodwill
|
|
55,821
|
|
59,120
|
|
|
Deferred tax
assets
|
|
1,526
|
|
2,185
|
|
Total non-current
assets
|
|
185,197
|
|
193,436
|
|
|
|
|
|
|
|
Total
assets
|
|
984,346
|
|
1,013,107
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term bank
loans
|
|
2,036
|
|
1,135
|
|
|
Current portion of
long-term loans
|
|
9,860
|
|
6,566
|
|
|
Dividends
payable
|
|
-
|
|
11,973
|
|
|
Accounts
payable
|
|
95,544
|
|
104,679
|
|
|
Deferred
revenue
|
|
103,062
|
|
89,314
|
|
|
Accrued payroll and
related expenses
|
|
15,243
|
|
13,017
|
|
|
Income tax
payable
|
|
6,852
|
|
6,802
|
|
|
Warranty
liabilities
|
|
6,174
|
|
6,308
|
|
|
Other tax
payables
|
|
6,837
|
|
14,262
|
|
|
Accrued
liabilities
|
|
35,632
|
|
41,981
|
|
|
Amounts due to
related parties
|
|
2,357
|
|
1,516
|
|
|
Deferred tax
liabilities
|
|
7,929
|
|
7,219
|
|
Total current
liabilities
|
|
291,526
|
|
304,772
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Long-term
loans
|
|
20,639
|
|
20,642
|
|
|
Deferred tax
liabilities
|
|
822
|
|
908
|
|
|
Warranty
liabilities
|
|
3,473
|
|
3,509
|
|
Total non-current
liabilities
|
|
24,934
|
|
25,059
|
|
|
|
|
|
|
|
Total
liabilities
|
|
316,460
|
|
329,831
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Ordinary shares, par
value $0.001 per share, 100,000,000 shares authorized;
60,259,599 and 59,863,599 shares issued
and outstanding as of December 31,
2016 and September 30, 2016,
respectively
|
|
60
|
|
60
|
|
|
Additional paid-in
capital
|
|
223,041
|
|
218,682
|
|
|
Statutory
reserves
|
|
41,299
|
|
36,561
|
|
|
Retained
earnings
|
|
445,546
|
|
440,341
|
|
|
Accumulated other
comprehensive income
|
|
(42,071)
|
|
(12,390)
|
|
Total Hollysys
Automation Technologies Ltd. stockholder's equity
|
|
667,875
|
|
683,254
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
11
|
|
22
|
|
Total
equity
|
|
667,886
|
|
683,276
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
$
|
984,346
|
$
|
1,013,107
|
HOLLYSYS AUTOMATION
TECHNOLOGIES LTD.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In USD
thousands)
|
|
|
|
Three months
ended
|
|
Six months
ended
|
Dec 31,
2016
|
|
Dec 31,
2016
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
9,960
|
$
|
31,644
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
1,514
|
|
2,866
|
|
Amortization of
prepaid land leases
|
|
46
|
|
94
|
|
Amortization of
intangible assets
|
|
146
|
|
286
|
|
Allowance for
doubtful accounts
|
|
2,023
|
|
3,260
|
|
Loss on disposal of
property, plant and equipment
|
|
5
|
|
26
|
|
Share of net income
from equity investees
|
|
(970)
|
|
(2,279)
|
|
Gains on dilution and
divestment of the Company's interests in HollyCon
|
|
-
|
|
(6,005)
|
|
Share based
compensation expenses
|
|
918
|
|
1,836
|
|
Deferred income tax
benefit
|
|
(1,827)
|
|
(3,195)
|
|
Accretion of
convertible bond discount
|
|
277
|
|
334
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
8,692
|
|
1,232
|
|
Costs and estimated
earnings in excess of billings
|
|
9,770
|
|
34,267
|
|
Inventories
|
|
(996)
|
|
(6,070)
|
|
Advances to
suppliers
|
|
1,211
|
|
954
|
|
Other
receivables
|
|
4,067
|
|
571
|
|
Deposits and other
assets
|
|
(250)
|
|
(17,306)
|
|
Due from related
parties
|
|
(23)
|
|
(534)
|
|
Accounts
payable
|
|
(4,504)
|
|
(2,554)
|
|
Deferred
revenue
|
|
17,909
|
|
26,795
|
|
Accruals and other
payable
|
|
(7,624)
|
|
(4,897)
|
|
Due to related
parties
|
|
930
|
|
919
|
|
Income tax
payable
|
|
1,941
|
|
2,387
|
|
Other tax
payables
|
|
(7,020)
|
|
(10,558)
|
|
Net cash provided
by operating activities
|
|
36,195
|
|
54,073
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Time deposits placed
with banks
|
|
(54,405)
|
|
(74,799)
|
|
Purchases of
property, plant and equipment
|
|
(167)
|
|
(434)
|
|
Maturity of time
deposits
|
|
24,610
|
|
27,933
|
|
Proceeds from
disposal of property, plant and equipment
|
|
-
|
|
34
|
|
Cash reduced upon
deconsolidation of subsidiary
|
|
-
|
|
(16,681)
|
|
Net cash used in
investing activities
|
|
(29,962)
|
|
(63,947)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
short-term bank loans
|
|
1,956
|
|
3,108
|
|
Repayments of
short-term bank loans
|
|
(889)
|
|
(3,917)
|
|
Proceeds from
long-term bank loans
|
|
5,518
|
|
5,665
|
|
Repayments of
long-term bank loans
|
|
(1,919)
|
|
(2,149)
|
|
Proceeds from
exercise of options
|
|
3,442
|
|
5,802
|
|
Payment of
Dividends
|
|
(11,973)
|
|
(11,973)
|
|
Net cash provided
by financing activities
|
|
(3,865)
|
|
(3,464)
|
|
|
|
|
|
|
|
Effect of foreign
exchange rate changes
|
|
(4,537)
|
|
(5,642)
|
|
Net increase in
cash and cash equivalents
|
$
|
(2,169)
|
$
|
(18,980)
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
$
|
212,284
|
$
|
229,095
|
|
Cash and cash
equivalents, end of period
|
|
210,115
|
|
210,115
|
Non-GAAP Measures
In evaluating our results, the non-GAAP measures of "Non-GAAP
general and administrative expenses", "Non-GAAP net income
attributable to Hollysys Automation Technologies Ltd.
stockholders", "Non-GAAP basic earnings per share", and "Non-GAAP
diluted earnings per share" serve as additional indicators of
our operating performance and not as a replacement for other
measures in accordance with U.S. GAAP. We believe these non-GAAP
measures are useful to investors, as they exclude the non-cash
share-based compensation expenses, which is calculated based on the
number of shares or options granted and the fair value as of the
grant date, amortization of acquired intangible assets, fair value
adjustments of acquisition-related consideration, and fair value
adjustments of a bifurcated derivative. They will not result in any
cash inflows or outflows. We believe that using non-GAAP measures
help our shareholders to have a better understanding of our
operating results and growth prospects. In addition, given the
business nature of the Company, it has been a common practice for
investors to use such non-GAAP measures to evaluate the
Company.
The following table provides a reconciliation of U.S. GAAP
measures to the non-GAAP measures for the periods indicated:
(In USD
thousands, except for number of shares and per share
data)
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
Dec
31,
|
|
Dec
31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Cost of integrated
contracts
|
$
|
67,896
|
$
|
84,520
|
$
|
137,810
|
$
|
154,349
|
Less: Amortization of
acquired intangible assets
|
|
122
|
|
230
|
|
263
|
|
487
|
Non-GAAP cost of
integrated contracts
|
$
|
67,774
|
$
|
84,290
|
$
|
137,547
|
$
|
153,862
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
$
|
11,737
|
$
|
12,079
|
$
|
22,330
|
$
|
21,889
|
Less: Share-based
compensation expenses
|
|
918
|
|
1,243
|
|
1,837
|
|
2,137
|
Non-GAAP general
and administrative expenses
|
$
|
10,819
|
$
|
10,836
|
$
|
20,493
|
$
|
19,752
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
$
|
866
|
$
|
(975)
|
$
|
1,260
|
$
|
3,522
|
Add:
acquisition-related incentive share contingent
consideration fair value adjustment
|
|
-
|
|
2,366
|
|
-
|
|
(1,745)
|
Non-GAAP other
income, net
|
$
|
866
|
$
|
1,391
|
$
|
1,260
|
$
|
1,777
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Hollysys
Automation Technologies Ltd.
|
$
|
9,969
|
$
|
32,948
|
$
|
31,657
|
$
|
63,208
|
Add:
|
|
|
|
|
|
|
|
|
Share-based compensation expenses
|
|
|
918
|
|
1,243
|
|
1,837
|
|
2,137
|
Amortization of acquired intangible assets
|
|
|
122
|
|
230
|
|
263
|
|
487
|
Acquisition-related consideration adjustment
|
|
|
-
|
|
2,366
|
|
-
|
|
(1,745)
|
Non-GAAP net
income attributable to Hollysys
Automation Technologies Ltd.
|
$
|
11,009
|
$
|
36,787
|
$
|
33,757
|
$
|
64,087
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of basic ordinary shares
|
|
|
60,070,218
|
|
59,071,520
|
|
59,976,132
|
|
59,069,316
|
Weighted
average number of diluted ordinary shares
|
|
|
60,895,404
|
|
60,619,909
|
|
61,023,669
|
|
60,632,435
|
Non-GAAP basic
earnings per share
|
$
|
0.18
|
$
|
0.62
|
$
|
0.56
|
$
|
1.08
|
Non-GAAP diluted
earnings per share
|
$
|
0.18
|
$
|
0.61
|
$
|
0.56
|
$
|
1.06
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hollysys-automation-technologies-reports-unaudited-financial-results-for-the-first-half-year-and-the-second-quarter-ended-december-31-201-300406910.html
SOURCE Hollysys Automation Technologies, Ltd