First Nine Months of Fiscal Year 2017 Financial
Highlights
- Non-GAAP net income attributable to Hollysys was
$47.5 million, a decrease of 45.6%
compared to the comparable prior year period.
- Total revenues were $294.0
million, a decrease of 25.9% compared to the comparable
prior year period.
- Non-GAAP gross margin was at 29.6%, compared to 37.2%
for the comparable prior year period.
- Non-GAAP diluted EPS were at $0.79, a decrease of 45.5% compared to the
comparable prior year period.
- Net cash provided by operating activities was
$41.1 million for the current
period.
- DSO of 212 days, compared to 169 days for the
comparable prior year period.
- Inventory turnover days of 54 days, compared to 38 days
for the comparable prior year period.
Third Quarter of Fiscal Year 2017 Financial
Highlights
- Non-GAAP net income attributable to Hollysys was
$13.7 million, a decrease of 40.7%
compared to the comparable prior year period.
- Total revenues were $91.3
million, a decrease of 23.1% compared to the comparable
prior year period.
- Non-GAAP gross margin was at 30.7%, compared to 31.7%
for the comparable prior year period.
- Non-GAAP diluted EPS were at $0.22, a decrease of 42.1% compared to the
comparable prior year period.
- Net cash used in operating activities was $12.5 million for the current quarter.
- DSO of 219 days, compared to 181 days for the
comparable prior year period.
- Inventory turnover days of 61 days, compared to 40
days for the comparable prior year period.
BEIJING, May 11, 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
third quarter ended on March 31, 2017
(see attached tables).
With market stabilization in parts of process industries, the
performance of Industrial Automation has been getting better,
especially recent order trend reflecting a positive momentum.
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 Sichuan
Jiangyou 2X1000MW power units, Shanxi Yangmei 2X660MW power units.
In chemical, we provided DCS and SIS for producing polycarbonate of
Luxi Chemical Company. In petrochemical, we won the contract to
provide DCS to Shengli oilfield Gudong production plant. In nuclear
power, we are continuing providing DCS for Hongyanhe #5 & #6
units and Tianwan #5 & #6 units.
For Factory Automation, after changing strategies from selling
products to providing 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
and Hai Di Lao Hot Pot project to help the customer improve their
efficiency of hot pot based making in the restaurant. Hollysys aims
to make each project into a demonstration project to create values
to the customers and explore more opportunities in
sub-industries.
In high-speed railway, we won 106 C2-ATPs & 10 C3-ATPs but
since the customer is changing the procurement timeline, it
increases uncertainty and volatility of the performance of
high-speed railway. In addition, since it is the beginning of the
13th five-year-plan, the finished infrastructure of new planned
railway is limited. Therefore, in short term, the performance of
high speed rail segment was unfavorable. 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 replacement, as well as new
products launching, we expect the sector will gradually recover in
future. For subway, we won the contract to provide power SCADA for
Dalian intercity line (from
Jinzhou to Pulandianwan).
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 working hard
to develop businesses. 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 Nine Months and the Third Quarter Ended
March 31, 2017 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
|
|
Nine months
ended
|
|
|
Mar 31,
2017
|
Mar 31,
2016
|
%
Change
|
|
Mar 31,
2017
|
Mar 31,
2016
|
%
Change
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
91,303
|
118,793
|
(23.1)%
|
$
|
293,981
|
396,657
|
(25.9)%
|
Integrated contract revenue
|
$
|
78,167
|
99,757
|
(21.6)%
|
$
|
260,766
|
344,929
|
(24.4)%
|
Products sales
|
$
|
9,746
|
16,157
|
(39.7)%
|
$
|
24,116
|
42,992
|
(43.9)%
|
Service rendered
|
$
|
3,390
|
2,879
|
17.7%
|
$
|
9,099
|
8,736
|
4.2%
|
Cost of
revenues
|
$
|
63,238
|
81,126
|
(22.0)%
|
$
|
206,826
|
249,000
|
(16.9)%
|
Gross
profit
|
$
|
28,065
|
37,667
|
(25.5)%
|
$
|
87,155
|
147,657
|
(41.0)%
|
Total operating
expenses
|
$
|
15,300
|
17,986
|
(14.9)%
|
$
|
45,843
|
55,292
|
(17.1)%
|
Selling
|
$
|
5,961
|
5,237
|
13.8%
|
$
|
17,819
|
18,957
|
(6.0)%
|
General and administrative
|
$
|
8,754
|
8,685
|
0.8%
|
$
|
29,247
|
28,438
|
2.8%
|
Research and development
|
$
|
6,093
|
8,369
|
(27.2)%
|
$
|
22,083
|
27,969
|
(21.0)%
|
VAT refunds and government subsidies
|
$
|
(5,508)
|
(4,305)
|
27.9%
|
$
|
(23,306)
|
(20,072)
|
16.1%
|
Income from
operations
|
$
|
12,765
|
19,681
|
(35.1)%
|
$
|
41,312
|
92,365
|
(55.3)%
|
Other income
(expenses), net
|
$
|
571
|
(394)
|
244.9%
|
$
|
1,831
|
1,383
|
32.4%
|
Foreign exchange
gains
|
$
|
1,191
|
1,543
|
(22.8)%
|
$
|
132
|
729
|
(81.9)%
|
Share of net income
of equity investees
|
$
|
2,390
|
6,409
|
(62.7)%
|
$
|
4,670
|
6,486
|
(28.0)%
|
Gains on dilution and
divestment of the
Company's interests in HollyCon
|
$
|
-
|
-
|
-
|
$
|
6,429
|
-
|
-
|
Dividend income from
cost investees
|
|
449
|
-
|
-
|
|
449
|
-
|
-
|
Interest
income
|
$
|
1,173
|
1,212
|
(3.2)%
|
$
|
2,431
|
4,051
|
(40.0)%
|
Interest
expenses
|
$
|
(395)
|
(161)
|
145.3%
|
$
|
(795)
|
(914)
|
(13.0)%
|
Income tax
expenses
|
$
|
4,433
|
3,358
|
32.0%
|
$
|
9,003
|
13,140
|
(31.5)%
|
Net income
attributable to noncontrolling
interests
|
$
|
(5)
|
1,787
|
(100.3)%
|
$
|
(17)
|
3,727
|
(100.5)%
|
Non-GAAP net income
attributable to
Hollysys Automation Technologies
Ltd.
|
$
|
13,716
|
23,145
|
(40.7)%
|
$
|
47,473
|
87,233
|
(45.6)%
|
Non-GAAP basic
EPS
|
$
|
0.23
|
0.39
|
(41.0)%
|
$
|
0.79
|
1.48
|
(46.6)%
|
Non-GAAP diluted
EPS
|
$
|
0.22
|
0.38
|
(42.1)%
|
$
|
0.79
|
1.45
|
(45.5)%
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
$
|
(1,907)
|
1,128
|
(269.1)%
|
$
|
(70)
|
3,265
|
(102.1)%
|
Amortization of
acquired intangible assets
|
$
|
-
|
166
|
(100.0)%
|
$
|
263
|
654
|
(59.8)%
|
Acquisition-related
incentive share
contingent consideration
|
$
|
-
|
-
|
-
|
$
|
-
|
(1,745)
|
(100.0)%
|
GAAP Net income
attributable to Hollysys
Automation Technologies Ltd.
|
$
|
15,623
|
21,851
|
(28.5)%
|
$
|
47,280
|
85,059
|
(44.4)%
|
GAAP basic
EPS
|
$
|
0.26
|
0.37
|
(29.7)%
|
$
|
0.79
|
1.44
|
(45.1)%
|
GAAP diluted
EPS
|
$
|
0.26
|
0.36
|
(27.8)%
|
$
|
0.78
|
1.41
|
(44.7)%
|
|
|
|
|
|
|
|
|
|
Basic weighted
average common shares
outstanding
|
|
60,408,369
|
59,082,795
|
2.2%
|
|
60,112,281
|
59,061,277
|
1.8%
|
Diluted weighted
average common shares
outstanding
|
|
61,225,248
|
60,555,132
|
1.1%
|
|
60,909,201
|
60,594,356
|
0.5%
|
Operational Results Analysis for the Third Quarter Ended
March 31, 2017
Comparing to the third quarter of the prior fiscal year, the
total revenues for the three months ended March 31, 2017 decreased from $118.8 million to $91.3
million, representing a decrease of 23.1%. Broken down by
the revenue types, services revenue increased by 17.7% to
$3.4 million, integrated contracts
revenue decreased by 21.6% to $78.2
million, and products sales revenue decreased by 39.7% to
$9.7 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 third quarter of the prior
fiscal year, the products sales revenue for the three months ended
March 31, 2017 should be increased by
17.8%.
The Company's total revenues can also be presented in
segments as shown in the following chart:
(In USD
thousands)
|
|
Three months ended
Mar 31,
|
|
Nine months ended
Mar 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
$
|
% to
Total
Revenue
|
|
$
|
% to
Total
Revenue
|
|
$
|
% to
Total
Revenue
|
|
$
|
% to
Total
Revenue
|
Industrial
Automation
|
38,054
|
41.7%
|
|
38,026
|
32.0%
|
|
128,884
|
43.8%
|
|
141,769
|
35.7%
|
Rail Transportation
Automation
|
34,788
|
38.1%
|
|
56,157
|
47.3%
|
|
91,085
|
31.0%
|
|
174,366
|
44.0%
|
Mechanical and
Electrical
Solution
|
18,461
|
20.2%
|
|
17,089
|
14.4%
|
|
74,012
|
25.2%
|
|
62,357
|
15.7%
|
Miscellaneous
|
-
|
-
|
|
7,521
|
6.3%
|
|
-
|
-
|
|
18,165
|
4.6%
|
Total
|
91,303
|
100.0%
|
|
118,793
|
100.0%
|
|
293,981
|
100.0%
|
|
396,657
|
100.0%
|
Overall gross margin excluding non-cash
amortization of acquired intangibles (non-GAAP gross
margin) was 30.7% for the three months ended March 31, 2017, as compared to 31.7% for the same
period of the prior year. The non-GAAP gross
margin for integrated contracts, product sales, and services
rendered were 24.4%, 65.2% and 78.8% for the three months ended
March 31, 2017, as compared to 27.1%,
55.5% and 59.1% 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 30.7% for the three months ended March 31, 2017, as compared to 31.6% for the same
period of the prior year. The GAAP gross margin
for integrated contracts, product sales, and service
rendered were 24.4%, 65.2% and 78.8% for the three months ended
March 31, 2017, as compared to 26.9%,
55.5% and 59.1% for the same period of the prior year
respectively.
Selling expenses were $6.0
million for the three months ended March 31, 2017, representing an increase of
$0.8 million or 13.8% compared to
$5.2 million for the same quarter of
the prior year. Presented as a percentage of total revenues,
selling expenses were 6.5% and 4.4% for the three months ended
March 31, 2017, and 2016,
respectively.
General and
administrative expenses, excluding non-cash
share-based compensation expenses (non-GAAP G&A expenses),
were $8.8 million and $8.7 million for the quarter ended March 31, 2017, and 2016, respectively. Presented
as a percentage of total revenues, non-GAAP G&A expenses were
9.6% and 7.3% for quarters ended March 31,
2017 and 2016 respectively. The GAAP G&A expenses
which include the non-cash share-based compensation expenses were
$6.8 million and $9.8 million for the three months ended
March 31, 2017 and 2016,
respectively.
Research and development expenses were $6.1 million for the three months ended
March 31, 2017, representing a
decrease of $2.3 million or 27.2%
compared to $8.4 million for the same
quarter of the prior year. Presented as a percentage of total
revenues, R&D expenses were 6.7% and 7.0% for the quarter ended
March 31, 2017 and 2016,
respectively.
The VAT refunds and government subsidies were
$5.5 million for three months ended
March 31, 2017, as compared to
$4.3 million for the same period in
the prior year, representing a $1.2
million or 27.9% increase.
The income tax expenses and the effective tax rate were
$4.4 million and 22.1% for the three
months ended March 31, 2017, as
compared to $3.4 million and 12.4%
for comparable prior year period. The fluctuation of the effective
tax rate was mainly due to the different pre-tax income mix with
different tax rates, as the Company's subsidiaries apply to
different tax rates. For the nine months ended March 31, 2017, the effective tax rate was
16.0%.
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 $13.7 million or
$0.22 per diluted share based on 61.2
million shares outstanding for the three months ended March 31, 2017. This represents a 40.7% decrease
over the $23.1 million or
$0.38 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
$15.6 million or $0.26 per diluted share representing a decrease
of 28.5% over the $21.9 million or
$0.36 per diluted share reported in
the comparable prior year period.
Contracts and Backlog Highlights
Hollysys achieved $108.4 million
new contracts for the three months ended March 31, 2017. And the backlog as of
March 31, 2017 was $509.8 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 Mar
31, 2017
|
|
as of Mar 31,
2017
|
|
|
$
|
% to Total
Contract
|
|
$
|
% to Total
Backlog
|
Industrial
Automation
|
|
52,838
|
48.8%
|
|
127,614
|
25.0%
|
Rail
Transportation
|
|
50,264
|
46.4%
|
|
238,508
|
46.8%
|
Mechanical and
Electrical Solutions
|
|
5,254
|
4.8%
|
|
143,656
|
28.2%
|
Total
|
|
108,356
|
100.0%
|
|
509,778
|
100.0%
|
Cash Flow Highlights
For the three months ended March 31,
2017, the total net cash outflow was
$27.6 million. The net cash
used in operating activities was $12.5 million. The net cash used in investing
activities was $10.0 million,
mainly consisted of $22.8 million
time deposits placed with banks, which was partially offset by
$12.5 million maturity of time
deposits. The net cash used in financing activities was
$3.5 million, mainly consisted of
$4.9 million repayments of long-term
bank loans, which was partially offset by $1.1 million proceeds from short-term bank
loans.
Balance Sheet Highlights
The total amount of cash and cash equivalents and time
deposits with original maturities over three months were
$268.8 million, $285.4 million, and $256.4
million as of March 31, 2017,
December 31, 2016 and March 31, 2016, respectively. As of March 31, 2017, the company held $182.5 million in cash and cash equivalents and
$86.4 million in time deposits with
original maturities over three months.
For the three months ended March 31,
2017, DSO was 219 days, as compared to 181 days for the
comparable prior year period and 208 days for the last quarter; and
inventory turnover was 61 days, as compared to 40 days for the
comparable prior year period and 52 days for the last quarter.
Outlook for FY 2017
The management concluded, "Consideration on the volatility of
high-speed railway performance, we would like to keep the guidance
even though meeting potential challenges, 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 9:00
p.m. U.S. Eastern Time on May 11, 2017 / 9:00
a.m. Beijing Time on May 12, 2017, to discuss the
financial results for the fiscal year 2017 third quarter ended on
March 31, 2017 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 2982392.
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
Mar 31,
|
|
Nine months
ended
Mar 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Net
revenues
|
|
|
|
|
|
|
|
|
Integrated contract
revenue
|
$
|
78,167
|
$
|
99,757
|
$
|
260,766
|
$
|
344,929
|
Products
sales
|
|
9,746
|
|
16,157
|
|
24,116
|
|
42,992
|
Revenue from
services
|
|
3,390
|
|
2,879
|
|
9,099
|
|
8,736
|
Total net
revenues
|
|
91,303
|
|
118,793
|
|
293,981
|
|
396,657
|
|
|
|
|
|
|
|
|
|
Cost of integrated
contracts
|
|
59,126
|
|
72,921
|
|
196,936
|
|
227,270
|
Cost of products
sold
|
|
3,394
|
|
7,194
|
|
7,537
|
|
19,176
|
Costs of services
rendered
|
|
718
|
|
1,177
|
|
2,616
|
|
3,208
|
Gross
profit
|
|
28,065
|
|
37,501
|
|
86,892
|
|
147,003
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Selling
|
|
5,961
|
|
5,237
|
|
17,819
|
|
18,957
|
General and
administrative
|
|
6,847
|
|
9,813
|
|
29,177
|
|
31,703
|
Research and
development
|
|
6,093
|
|
8,369
|
|
22,083
|
|
27,969
|
VAT refunds and
government subsidies
|
|
(5,508)
|
|
(4,305)
|
|
(23,306)
|
|
(20,072)
|
Total operating
expenses
|
|
13,393
|
|
19,114
|
|
45,773
|
|
58,557
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
14,672
|
|
18,387
|
|
41,119
|
|
88,446
|
|
|
|
|
|
|
|
|
|
Other income
(expenses), net
|
|
571
|
|
(394)
|
|
1,831
|
|
3,128
|
Foreign exchange
gains
|
|
1,191
|
|
1,543
|
|
132
|
|
729
|
Share of net income
of equity investees
|
|
2,390
|
|
6,409
|
|
4,670
|
|
6,486
|
Gains on dilution and
divestment of the Company's interests
in HollyCon
|
|
-
|
|
-
|
|
6,429
|
|
-
|
Dividend income from
cost investees
|
|
449
|
|
-
|
|
449
|
|
-
|
Interest
income
|
|
1,173
|
|
1,212
|
|
2,431
|
|
4,051
|
Interest
expenses
|
|
(395)
|
|
(161)
|
|
(795)
|
|
(914)
|
Income before
income taxes
|
|
20,051
|
|
26,996
|
|
56,266
|
|
101,926
|
|
|
|
|
|
|
|
|
|
Income taxes
expenses
|
|
4,433
|
|
3,358
|
|
9,003
|
|
13,140
|
Net
income
|
|
15,618
|
|
23,638
|
|
47,263
|
|
88,786
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to noncontrolling interests
|
|
(5)
|
|
1,787
|
|
(17)
|
|
3,727
|
Net income
attributable to Hollysys Automation
Technologies Ltd.
|
$
|
15,623
|
$
|
21,851
|
$
|
47,280
|
$
|
85,059
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss), net of tax of nil
|
|
|
|
|
|
|
|
|
Translation
adjustments
|
|
7,525
|
|
7,838
|
|
(34,583)
|
|
(30,867)
|
Comprehensive
income
|
|
23,143
|
|
31,476
|
|
12,680
|
|
57,919
|
|
|
|
|
|
|
|
|
|
Less: comprehensive
(loss) income attributable to
noncontrolling interests
|
|
(34)
|
|
1,798
|
|
(8,551)
|
|
3,505
|
Comprehensive
income attributable to Hollysys
Automation Technologies Ltd.
|
$
|
23,177
|
$
|
29,678
|
$
|
21,231
|
$
|
54,414
|
|
|
|
|
|
|
|
|
|
Net income per
ordinary share:
|
|
|
|
|
|
|
|
|
Basic
|
|
0.26
|
|
0.37
|
|
0.79
|
|
1.44
|
Diluted
|
|
0.26
|
|
0.36
|
|
0.78
|
|
1.41
|
Shares used in
income per share computation:
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary shares
|
60,408,369
|
|
59,082,795
|
|
60,112,281
|
|
59,061,277
|
Weighted average
number of diluted ordinary shares
|
61,225,248
|
|
60,555,132
|
|
60,909,201
|
|
60,594,356
|
HOLLYSYS AUTOMATION
TECHNOLOGIES LTD.
|
CONSOLIDATED
BALANCE SHEETS
|
(In USD thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Mar
31,
|
|
Dec
31,
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
182,478
|
$
|
210,115
|
|
|
Time deposits with
original maturities over three months
|
|
86,352
|
|
75,282
|
|
|
Restricted
cash
|
|
44,940
|
|
42,802
|
|
|
Accounts receivable,
net of allowance for doubtful accounts of $45,509 and
$43,017 as of March 31,2017 and December
31, 2016, respectively
|
|
223,494
|
|
219,173
|
|
|
Costs and estimated
earnings in excess of billings, net of allowance for doubtful
accounts of $5,515 and $6,355 as of March
31, 2017 and December 31, 2016,
respectively
|
|
147,737
|
|
147,097
|
|
|
Other receivables,
net of allowance for doubtful accounts of $1,534 and $1,218 as
of March 31, 2017 and December 31, 2016,
respectively
|
|
15,026
|
|
11,999
|
|
|
Advances to
suppliers
|
|
9,463
|
|
10,027
|
|
|
Amounts due from
related parties
|
|
44,868
|
|
27,299
|
|
|
Inventories
|
|
45,802
|
|
40,001
|
|
|
Prepaid
expenses
|
|
562
|
|
754
|
|
|
Income tax
recoverable
|
|
6,531
|
|
4,497
|
|
|
Deferred tax
assets
|
|
7,586
|
|
10,103
|
|
Total current
assets
|
|
814,839
|
|
799,149
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Restricted
cash
|
|
2,318
|
|
481
|
|
|
Prepaid
expenses
|
|
13
|
|
8
|
|
|
Property, plant and
equipment, net
|
|
79,871
|
|
78,933
|
|
|
Prepaid land
leases
|
|
10,145
|
|
10,026
|
|
|
Acquired intangible
assets, net
|
|
407
|
|
524
|
|
|
Investments in equity
investees
|
|
23,924
|
|
33,951
|
|
|
Investments in cost
investees
|
|
3,961
|
|
3,927
|
|
|
Goodwill
|
|
57,758
|
|
55,821
|
|
|
Deferred tax
assets
|
|
1,758
|
|
1,526
|
|
Total non-current
assets
|
|
180,155
|
|
185,197
|
|
|
|
|
|
|
|
Total
assets
|
|
994,994
|
|
984,346
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term bank
loans
|
|
2,979
|
|
2,036
|
|
|
Current portion of
long-term loans
|
|
5,260
|
|
9,860
|
|
|
Accounts
payable
|
|
101,598
|
|
95,544
|
|
|
Deferred
revenue
|
|
105,145
|
|
103,062
|
|
|
Accrued payroll and
related expenses
|
|
9,455
|
|
15,243
|
|
|
Income tax
payable
|
|
6,362
|
|
6,852
|
|
|
Warranty
liabilities
|
|
6,137
|
|
6,174
|
|
|
Other tax
payables
|
|
4,833
|
|
6,837
|
|
|
Accrued
liabilities
|
|
30,768
|
|
35,632
|
|
|
Amounts due to
related parties
|
|
2,244
|
|
2,357
|
|
|
Deferred tax
liabilities
|
|
5,842
|
|
7,929
|
|
Total current
liabilities
|
|
280,623
|
|
291,526
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Long-term
loans
|
|
20,682
|
|
20,639
|
|
|
Deferred tax
liabilities
|
|
816
|
|
822
|
|
|
Warranty
liabilities
|
|
3,227
|
|
3,473
|
|
Total non-current
liabilities
|
|
24,725
|
|
24,934
|
|
|
|
|
|
|
|
Total
liabilities
|
|
305,348
|
|
316,460
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Ordinary shares, par
value $0.001 per share, 100,000,000 shares authorized;
60,319,599 and 60,259,599 shares issued
and outstanding as of March 31,
2017 and December 31, 2016,
respectively
|
|
60
|
|
60
|
|
|
Additional paid-in
capital
|
|
221,656
|
|
223,041
|
|
|
Statutory
reserves
|
|
41,500
|
|
41,299
|
|
|
Retained
earnings
|
|
460,969
|
|
445,546
|
|
|
Accumulated other
comprehensive income
|
|
(34,517)
|
|
(42,071)
|
|
Total Hollysys
Automation Technologies Ltd. stockholder's equity
|
|
689,668
|
|
667,875
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
(22)
|
|
11
|
|
Total
equity
|
|
689,646
|
|
667,886
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
$
|
994,994
|
$
|
984,346
|
HOLLYSYS AUTOMATION
TECHNOLOGIES LTD.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In USD
thousands)
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
Mar 31,
2017
|
|
Mar 31,
2017
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
15,618
|
$
|
47,263
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
1,552
|
|
4,418
|
|
Amortization of
prepaid land leases
|
|
47
|
|
141
|
|
Amortization of
intangible assets
|
|
136
|
|
421
|
|
Allowance for
doubtful accounts
|
|
1,704
|
|
4,964
|
|
Loss on disposal of
property, plant and equipment
|
|
-
|
|
26
|
|
Share of net income
from equity investees
|
|
(2,390)
|
|
(4,670)
|
|
Dividends received
from equity investees
|
|
88
|
|
88
|
|
Gains on dilution and
divestment of the Company's interests in HollyCon
|
|
-
|
|
(6,429)
|
|
Share based
compensation expenses
|
|
(1,906)
|
|
(70)
|
|
Deferred income tax
expenses (benefit)
|
|
260
|
|
(2,935)
|
|
Accretion of
convertible bond discount
|
|
57
|
|
391
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(4,358)
|
|
(3,126)
|
|
Costs and estimated
earnings in excess of billings
|
|
2,389
|
|
36,656
|
|
Inventories
|
|
(5,507)
|
|
(11,577)
|
|
Advances to
suppliers
|
|
656
|
|
1,610
|
|
Other
receivables
|
|
(3,173)
|
|
(2,601)
|
|
Deposits and other
assets
|
|
(3,307)
|
|
(20,613)
|
|
Due from related
parties
|
|
(4,926)
|
|
(5,460)
|
|
Accounts
payable
|
|
4,931
|
|
2,376
|
|
Deferred
revenue
|
|
758
|
|
27,552
|
|
Accruals and other
payable
|
|
(10,412)
|
|
(15,308)
|
|
Due to related
parties
|
|
(139)
|
|
780
|
|
Income tax
payable
|
|
(2,586)
|
|
(199)
|
|
Other tax
payables
|
|
(2,036)
|
|
(12,589)
|
|
Net cash (used in)
provided by operating activities
|
|
(12,544)
|
|
41,109
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Time deposits placed
with banks
|
|
(22,757)
|
|
(97,557)
|
|
Purchases of
property, plant and equipment
|
|
-
|
|
(434)
|
|
Proceeds from
disposal of property, plant and equipment
|
|
-
|
|
34
|
|
Maturity of time
deposits
|
|
12,542
|
|
40,475
|
|
Proceeds from sale of
shares of a subsidiary
|
|
3,200
|
|
3,200
|
|
Cash reduced upon
deconsolidation of subsidiary
|
|
(3,051)
|
|
(19,732)
|
|
Net cash used in
investing activities
|
|
(10,066)
|
|
(74,014)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
short-term bank loans
|
|
1,059
|
|
4,167
|
|
Repayments of
short-term bank loans
|
|
(171)
|
|
(4,088)
|
|
Proceeds from
long-term bank loans
|
|
-
|
|
5,665
|
|
Repayments of
long-term bank loans
|
|
(4,888)
|
|
(7,037)
|
|
Proceeds from
exercise of options
|
|
521
|
|
6,323
|
|
Payment of
Dividends
|
|
-
|
|
(11,973)
|
|
Net cash used in
financing activities
|
|
(3,479)
|
|
(6,943)
|
|
|
|
|
|
|
|
Effect of foreign
exchange rate changes
|
|
(1,548)
|
|
(6,769)
|
|
Net decrease in
cash and cash equivalents
|
$
|
(27,637)
|
$
|
(46,617)
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
$
|
210,115
|
$
|
229,095
|
|
Cash and cash
equivalents, end of period
|
|
182,478
|
|
182,478
|
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
|
|
Nine months
ended
|
|
|
|
Mar
31,
|
|
Mar
31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Cost of integrated
contracts
|
$
|
59,126
|
$
|
72,921
|
$
|
196,936
|
$
|
227,270
|
Less: Amortization of
acquired intangible assets
|
|
-
|
|
166
|
|
263
|
|
654
|
Non-GAAP cost of
integrated contracts
|
$
|
59,126
|
$
|
72,755
|
$
|
196,673
|
$
|
226,616
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
$
|
6,847
|
$
|
9,813
|
$
|
29,177
|
$
|
31,703
|
Less: Share-based
compensation expenses
|
|
(1,907)
|
|
1,128
|
|
(70)
|
|
3,265
|
Non-GAAP general
and administrative expenses
|
$
|
8,754
|
$
|
8,685
|
$
|
29,247
|
$
|
28,438
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
$
|
571
|
$
|
(394)
|
$
|
1,831
|
$
|
3,128
|
Add:
acquisition-related incentive share contingent
consideration fair value adjustment
|
|
-
|
|
-
|
|
-
|
|
(1,745)
|
Non-GAAP other
income, net
|
$
|
571
|
$
|
(394)
|
$
|
1,831
|
$
|
1,383
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Hollysys Automation Technologies
Ltd.
|
$
|
15,623
|
$
|
21,851
|
$
|
47,280
|
$
|
85,059
|
Add:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
|
(1,907)
|
|
1,128
|
|
(70)
|
|
3,265
|
|
Amortization of
acquired intangible assets
|
|
-
|
|
166
|
|
263
|
|
654
|
|
Acquisition-related
consideration adjustment
|
|
-
|
|
-
|
|
-
|
|
(1,745)
|
Non-GAAP net
income attributable to Hollysys
Automation Technologies Ltd.
|
$
|
13,716
|
$
|
23,145
|
$
|
47,473
|
$
|
87,233
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of basic ordinary shares
|
|
60,408,369
|
|
59,082,795
|
|
60,112,281
|
|
59,061,277
|
|
Weighted average
number of diluted ordinary shares
|
|
61,225,248
|
|
60,555,132
|
|
60,909,201
|
|
60,594,356
|
Non-GAAP basic
earnings per share
|
|
$
|
0.23
|
$
|
0.39
|
$
|
0.79
|
$
|
1.48
|
Non-GAAP diluted
earnings per share
|
|
$
|
0.22
|
$
|
0.38
|
$
|
0.79
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
|
|
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-nine-months-and-the-third-quarter-ended-march-31-2017-300455860.html
SOURCE Hollysys Automation Technologies, Ltd