Highway Holdings Reports Fiscal 2018 Third Quarter and Nine-Month Results
February 05 2018 - 8:00AM
Highway Holdings Limited (Nasdaq:HIHO) today reported results for
its fiscal third quarter and nine months ended December 31, 2017.
Net sales for the fiscal 2018 third quarter were
$5.0 million compared with $5.4 million a year ago --
reflecting the continuous impact of a previously announced
strategic decision to phase out certain low-margin business.
Net sales for the fiscal 2018 nine-month period
were $15.0 million compared with $14.9 million a year ago.
Net income for the fiscal 2018 third quarter was
$379,000, or $0.10 per diluted share, compared with $270,000, or
$0.07 per diluted share, in the same quarter a year earlier --
reflecting substantial contributions derived from tooling orders
during the quarter.
Net income for the fiscal 2018 nine-month period
was $808,000, or $0.21 per diluted share, compared with $308,000,
or $0.08 per diluted share, a year earlier.
Gross profit margin for the three- and nine-month
periods ended December 31, 2017 increased to 32.2 percent and 30.5
percent, respectively, compared with 28 percent and 26.4 percent,
respectively, a year earlier. Gross profit benefitted from product
mix and from the substantial billings for tooling, as noted
above. A substantial portion of the costs associated with the
tooling orders was already absorbed in previous quarters, and the
recognition of the tooling revenues during the fiscal third quarter
increased gross profit.
Selling, general and administrative expenses
remained substantially unchanged for both the third quarter and
nine-month periods despite increasing wages and operating costs in
both Hong Kong and Shenzhen, China. Operating income for the
three-month period ended December 31, 2017 was $559,000 compared
with $370,000 in the prior year. Operating income for the
nine months increased sharply to $1.05 million compared with
$421,000 a year earlier, due to the higher gross margins noted
above.
“We continue to focus on organic growth and
appropriate new business opportunities to increase sales momentum,”
said Roland Kohl, chairman, president and chief executive
officer.
“As noted in last quarter’s financial release, an
ongoing challenge for the company is to balance the increasing
costs in China and Hong Kong, which result in continuously
increasing wages, with the pricing expectations of our customers,”
Kohl said. He added that the company’s two- pronged strategic
objective is to improve this situation by greater utilization of
automation in China and increased utilization of lower-cost labor
manufacturing in Myanmar.
Currency exchange rates had a minimal impact on the
company’s net income for the nine-month period ended December 31,
2017. The company reported a $9,000 currency exchange loss compared
with a $53,000 exchange loss in fiscal 2017 -- mainly due to the
strengthening of the RMB at December 31, 2017. 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,
2017 increased to about $11 million, or approximately $2.89 per
share, from $9.8 million at December 31, 2016, despite dividend
payments and on-going equipment and other capital investments. The
company’s current ratio was 2.65:1 at December 31, 2017, and 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
SUBSIDIARIES |
Consolidated Statement of Income |
(Dollars in thousands, except per share data) |
(Unaudited) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
December 31, |
|
December 31, |
|
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
5,033 |
|
|
$ |
5,438 |
|
|
$ |
14,989 |
|
|
$ |
14,883 |
|
Cost of sales |
|
3,410 |
|
|
|
3,918 |
|
|
|
10,412 |
|
|
|
10,952 |
|
Gross profit |
|
1,623 |
|
|
|
1,520 |
|
|
|
4,577 |
|
|
|
3,931 |
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
1,064 |
|
|
|
1,150 |
|
|
|
3,528 |
|
|
|
3,510 |
|
Operating income |
|
559 |
|
|
|
370 |
|
|
|
1,049 |
|
|
|
421 |
|
|
|
|
|
|
|
|
|
Non-operating
items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
gain /(loss), net |
|
2 |
|
|
|
(79 |
) |
|
|
(9 |
) |
|
|
(53 |
) |
Interest
income |
|
4 |
|
|
|
2 |
|
|
|
12 |
|
|
|
4 |
|
Gain/Loss
on disposal of Asset |
|
2 |
|
|
|
1 |
|
|
|
48 |
|
|
|
12 |
|
Other
income/(expenses) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
non-operating income/ (expenses) |
|
8 |
|
|
|
(76 |
) |
|
|
51 |
|
|
|
(37 |
) |
|
|
|
|
|
|
|
|
Share of profits/
(loss) of equity investees |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net income before
income tax and non-controlling interests |
|
567 |
|
|
|
294 |
|
|
|
1,100 |
|
|
|
384 |
|
Income taxes |
|
(177 |
) |
|
|
(30 |
) |
|
|
(268 |
) |
|
|
(80 |
) |
Net Income before
non-controlling interests |
|
390 |
|
|
|
264 |
|
|
|
832 |
|
|
|
304 |
|
Less: net (loss)/gain
attributable to non-controlling interests |
|
11 |
|
|
|
(6 |
) |
|
|
24 |
|
|
|
(4 |
) |
Net Income attributable
to Highway Holdings Limited shareholders |
$ |
379 |
|
|
$ |
270 |
|
|
$ |
808 |
|
|
$ |
308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per share -
basic and diluted |
$ |
0.10 |
|
|
$ |
0.07 |
|
|
$ |
0.21 |
|
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding |
|
|
|
|
|
|
|
Basic |
|
3,801 |
|
|
|
3,801 |
|
|
|
3,801 |
|
|
|
3,801 |
|
Diluted |
|
3,801 |
|
|
|
3,801 |
|
|
|
3,801 |
|
|
|
3,801 |
|
|
|
|
|
|
|
|
|
|
HIGHWAY HOLDINGS LIMITED AND
SUBSIDIARIES |
Consolidated Balance Sheet |
(In thousands, except per share data) |
|
|
|
December 31 |
|
March 31 |
|
2017 |
|
2017 |
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
10,973 |
|
|
$ |
10,028 |
|
Accounts receivable,
net of doubtful accounts |
|
3,061 |
|
|
|
3,403 |
|
Inventories |
|
1,843 |
|
|
|
2,265 |
|
Prepaid expenses and
other current assets |
|
669 |
|
|
|
714 |
|
Total
current assets |
|
16,546 |
|
|
|
16,410 |
|
|
|
|
|
Property, plant and
equipment, (net) |
|
892 |
|
|
|
954 |
|
Goodwill |
|
77 |
|
|
|
77 |
|
Long-term deposits |
|
111 |
|
|
|
111 |
|
Total
assets |
$ |
17,626 |
|
|
$ |
17,552 |
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
1,506 |
|
|
$ |
2,391 |
|
Other
liabilities and accrued expenses |
|
3,937 |
|
|
|
3,053 |
|
Income
tax payable |
|
559 |
|
|
|
328 |
|
Dividend
payable |
|
243 |
|
|
|
438 |
|
Total
current liabilities |
|
6,245 |
|
|
|
6,210 |
|
|
|
|
|
Long term
liabilities: |
|
|
|
Deferred income
taxes |
|
32 |
|
|
|
32 |
|
Total
liabilities |
|
6,277 |
|
|
|
6,242 |
|
|
|
|
|
Shareholders’
equity: |
|
|
|
Common
shares, $0.01 par value |
|
38 |
|
|
|
38 |
|
Additional paid-in capital |
|
11,370 |
|
|
|
11,370 |
|
Retained
earnings |
|
(14 |
) |
|
|
13 |
|
Accumulated other comprehensive (loss)/income |
|
(97 |
) |
|
|
(136 |
) |
Treasury
shares, at cost – 5,049 shares as of December 31, 2017; and March
31, 2017 respectively |
|
(14 |
) |
|
|
(14 |
) |
Total Highway Holdings
Limited shareholders’ equity |
|
11,283 |
|
|
|
11,271 |
|
Non-controlling
interest |
|
66 |
|
|
|
39 |
|
Total
shareholders’ equity |
|
11,349 |
|
|
|
11,310 |
|
Total
liabilities and shareholders’ equity |
$ |
17,626 |
|
|
$ |
17,552 |
|
|
|
|
|
CONTACT:Gary S. MaierMaier & Company, Inc.(310) 471-1288
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