Highway Holdings Reports Fiscal 2018 Second Quarter Results
November 13 2017 - 8:00AM
Highway Holdings Limited (Nasdaq:HIHO) today reported results for
its fiscal 2018 second quarter and six months ended September 30,
2017.
Net sales for the fiscal 2018 second quarter increased 9.5
percent to $4.6 million from $4.2 million in the same quarter a
year earlier. Net income for the same period was $211,000, or $0.06
per share, compared with a net loss of $128,000, or $0.03 per
share, a year earlier.
For the six-month period, net sales increased 5.3 percent to
$9.9 million from $9.4 million a year earlier. Net income for the
same period was $426,000, or $0.11 per diluted share compared with
$37,000, or $0.01 per diluted share, a year ago.
As previously reported, net sales in both comparable prior-year
periods were impacted by lower production output largely due to a
temporary disruption caused by the relocation of certain
manufacturing operations at the company’s China facilities. The
relocation of the manufacturing operations has been completed.
“Sales activity gained slight momentum in the first half of
fiscal 2018, though customers remain hesitant to accept necessary
price increases due to inflationary pressures for
Chinese-manufactured products. In addition, customers are also
somewhat cautious to utilize our lower-cost Myanmar operation as an
alternative to our operations in China, given political issues in
this emerging country,” said Roland Kohl, chairman and chief
executive officer of Highway Holdings.
Kohl noted that the company is working diligently to execute its
strategy to expand its business for higher margin products, which
depends on the company’s ability to minimize inflationary pressures
by utilizing advanced technology to improve manufacturing
efficiency and offset ever-increasing operational costs in
China.
He emphasized that the company is continuing initiatives in
Myanmar. “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 especially attractive to potential new
customers who are seeking a lower-cost manufacturer, and to
existing customers who are strategically focused on transitioning
away from more expensive manufacturing in China,” said Kohl.
Gross profit for the second quarter of fiscal 2018
was $1.57 million compared with $1.12 million a year ago. Gross
profit as a percentage of sales for the same period was 33.8
percent compared with 26.6 percent a year earlier, reflecting the
strategic shift to higher margin business and the previously
discussed elimination of low-margin sales. Gross profit also
benefitted from further utilization of the company’s lower-cost
operations in Myanmar.
Gross profit for the six-month period of fiscal
2018 was $2.95 million compared with $2.41 million a year ago.
Gross profit as a percentage of sales for the same period increased
to 29.7 percent from 25.5 percent.
Selling, general and administrative expenses
increased slightly by $22,000 compared with the same period last
year, and increased by $105,000 from the six-month period last year
-- reflecting increased marketing and engineering expenses related
to the implementation of new business initiatives.
Net income for the second quarter reflects a
currency exchange loss of $7,000 compared with a $43,000 currency
exchange gain for the same period last year. For the fiscal 2018
six-month period, the company reports a currency exchange loss of
$12,000 compared with a currency exchange gain of $26,000 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 and cash equivalents in excess of $10.7 million,
or approximately $2.80 per diluted share, compared with
approximately $2.64 per diluted share at March 31, 2017, exceeding
all of its short- and long-term liabilities by approximately $3.8
million.
Current liabilities at September 30, 2017 totaled
$6.9 million and current assets were $17.0 million. Total
shareholders’ equity at September 30, 2017 was $11.2 million, or
$2.95 per diluted share, compared with $11.3 million, or $2.97 per
diluted share, at March 31, 2017.
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.
HIGHWAY HOLDINGS LIMITED AND
SUBSIDIARIESConsolidated Statement of
Income(Dollars in thousands, except per share
data)(Unaudited) |
|
Three Months Ended |
|
Six Months Ended |
|
|
September 30, |
|
September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$4,647 |
|
|
$4,220 |
|
|
$9,956 |
|
|
$9,445 |
|
|
Cost of sales |
|
3,073 |
|
|
|
3,096 |
|
|
|
7,002 |
|
|
|
7,035 |
|
|
Gross profit |
|
1,574 |
|
|
|
1,124 |
|
|
|
2,954 |
|
|
|
2,410 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
1,327 |
|
|
|
1,305 |
|
|
|
2,465 |
|
|
|
2,360 |
|
|
Operating
(loss)/income |
|
247 |
|
|
|
(181 |
) |
|
|
489 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
Non-operating
items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
gain /(loss), net |
|
(7 |
) |
|
|
43 |
|
|
|
(12 |
) |
|
|
26 |
|
|
Interest
income |
|
4 |
|
|
|
1 |
|
|
|
7 |
|
|
|
2 |
|
|
Gain/(Loss) on disposal of Asset |
|
- |
|
|
|
- |
|
|
|
46 |
|
|
|
- |
|
|
Other
income/(expenses) |
|
- |
|
|
|
11 |
|
|
|
- |
|
|
|
11 |
|
|
Total
non-operating income/ (expenses) |
|
(3 |
) |
|
|
55 |
|
|
|
41 |
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before
income tax and non-controlling interests taxes |
|
244 |
|
|
|
(126 |
) |
|
|
530 |
|
|
|
89 |
|
|
Income taxes |
|
(27 |
) |
|
|
- |
|
|
|
(91 |
) |
|
|
(50 |
) |
|
Net income/(loss)
before non-controlling interests |
|
217 |
|
|
|
(126 |
) |
|
|
439 |
|
|
|
39 |
|
|
Less: net gain/(loss)
attributable to non-controlling interests |
|
6 |
|
|
|
2 |
|
|
|
13 |
|
|
|
2 |
|
|
Net income/(loss)
attributable to Highway Holdings Limited shareholders |
|
211 |
|
|
|
(128 |
) |
|
|
426 |
|
|
|
37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) per
share - basic and diluted |
$0.06 |
|
|
|
($0.03 |
) |
|
$0.11 |
|
|
$0.01 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
3,802 |
|
|
|
3,802 |
|
|
|
3,802 |
|
|
|
3,802 |
|
|
Diluted |
|
3,802 |
|
|
|
3,802 |
|
|
|
3,802 |
|
|
|
3,802 |
|
|
|
|
|
|
|
|
|
|
|
HIGHWAY HOLDINGS LIMITED AND
SUBSIDIARIESConsolidated Balance
Sheet(Dollars in thousands, except per share data) |
|
Sept 30 |
|
March 31 |
|
|
2017 |
|
|
|
2017 |
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$10,717 |
|
|
$10,028 |
|
Accounts
receivable, net of doubtful accounts |
|
3,197 |
|
|
|
3,403 |
|
Inventories |
|
2,430 |
|
|
|
2,265 |
|
Prepaid
expenses and other current assets |
|
684 |
|
|
|
714 |
|
Total
current assets |
|
17,028 |
|
|
|
16,410 |
|
|
|
|
|
Property, plant and
equipment, (net) |
|
945 |
|
|
|
954 |
|
Goodwill |
|
77 |
|
|
|
77 |
|
Long-term deposits |
|
111 |
|
|
|
111 |
|
Total
assets |
$18,161 |
|
|
$17,552 |
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$2,431 |
|
|
$2,391 |
|
Other
liabilities and accrued expenses |
|
3,886 |
|
|
|
3,053 |
|
Income
tax payable |
|
385 |
|
|
|
328 |
|
Dividend
payable |
|
215 |
|
|
|
438 |
|
Total
current liabilities |
|
6,917 |
|
|
|
6,210 |
|
|
|
|
|
Long term
liabilities: |
|
|
|
Deferred income
taxes |
|
32 |
|
|
|
32 |
|
Total
liabilities |
|
6,949 |
|
|
|
6,242 |
|
|
|
|
|
Shareholders’
equity: |
|
|
|
Common
shares, $0.01 par value |
|
38 |
|
|
|
38 |
|
Additional paid-in capital |
|
11,370 |
|
|
|
11,370 |
|
Retained
earnings / (Deficit) |
|
(167 |
) |
|
|
13 |
|
Accumulated other comprehensive income/(loss) |
|
(70 |
) |
|
|
(136 |
) |
Treasury
shares, at cost – 5,049 shares as of September, 30, 2017; and March
31, 2017 respectively |
|
(14 |
) |
|
|
(14 |
) |
Non-controlling interest |
|
55 |
|
|
|
39 |
|
Total
shareholders’ equity |
|
11,212 |
|
|
|
11,310 |
|
|
|
|
|
Total liabilities and
shareholders’ equity |
$18,161 |
|
|
$17,552 |
|
|
|
|
|
CONTACT:
Gary S. Maier (310) 471-1288
Highway (NASDAQ:HIHO)
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