SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
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HIGHWAY
HOLDINGS LIMITED
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Date: February
5, 2018
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By
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/s/ ROLAND W. KOHL
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Roland W. Kohl
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Chief Executive Officer
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NEWS
RELEASE
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CONTACT:
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Gary S. Maier
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Maier & Company, Inc.
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(310) 471-1288
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HIGHWAY
HOLDINGS REPORTS FISCAL 2018 THIRD QUARTER
AND
NINE-MONTH RESULTS
HONG
KONG — February 5, 2018 —
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.
Highway
Holdings Ltd.
2-2-2
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 $4.7 million.
About
Highway Holdings
Highway
Holdings produces a wide variety of high-quality products for blue chip original equipment manufacturers -- from simple parts
and components to sub-assemblies and finished products. Highway Holdings’ administrative office is located in Hong Kong
and its manufacturing facilities are located in Shenzhen in the People’s Republic of China and Yangon, Myanmar.
Except
for the historical information contained herein, the matters discussed in this press release are forward-looking statements which
involve risks and uncertainties, including but not limited to economic, competitive, governmental, political and technological
factors affecting the company’s revenues, operations, markets, products and prices, and other factors discussed in the company’s
various filings with the Securities and Exchange Commission, including without limitation, the company’s annual reports
on Form 20-F.
(Financial
Tables Follow)
# # #
HIGHWAY
HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated
Statement of Income
(Dollars
in thousands, except per share data)
(Unaudited)
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Three Months Ended
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Nine Months Ended
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December 31,
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December 31,
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2017
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2016
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2017
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2016
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Net sales
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$
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5,033
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$
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5,438
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$
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14,989
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$
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14,883
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Cost of sales
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3,410
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3,918
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10,412
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10,952
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Gross profit
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1,623
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1,520
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4,577
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3,931
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Selling, general and administrative expenses
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1,064
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1,150
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3,528
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3,510
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Operating income
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559
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370
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1,049
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421
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Non-operating items
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Exchange gain /(loss), net
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2
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(79
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(9
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(53
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Interest income
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4
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2
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12
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4
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Gain/Loss on disposal of Asset
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2
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1
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48
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12
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Other income/(expenses)
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—
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—
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—
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—
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Total non-operating income/ (expenses)
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8
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(76
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51
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(37
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Share of profits/ (loss) of equity investees
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—
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—
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—
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—
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Net income before income tax and non-controlling interests
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567
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294
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1,100
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384
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Income taxes
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(177
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(30
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(268
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(80
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Net Income before non-controlling interests
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390
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264
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832
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304
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Less: net (loss)/gain attributable to non-controlling interests
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11
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(6
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24
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(4
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Net Income attributable to Highway Holdings Limited shareholders
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$
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379
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$
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270
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$
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808
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$
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308
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Net Income per share - basic and diluted
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$
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0.10
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$
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0.07
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$
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0.21
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$
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0.08
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Weighted average number of shares outstanding
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Basic
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3,801
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3,801
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3,801
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3,801
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Diluted
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3,801
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3,801
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3,801
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3,801
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HIGHWAY
HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated
Balance Sheet
(In
thousands, except per share data)
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December 31
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March 31
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2017
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2017
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Current assets:
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Cash and cash equivalents
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$
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10,973
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$
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10,028
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Accounts receivable, net of doubtful accounts
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3,061
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3,403
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Inventories
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1,843
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2,265
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Prepaid expenses and other current assets
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669
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714
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Total current assets
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16,546
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16,410
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Property, plant and equipment, (net)
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892
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954
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Goodwill
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77
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77
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Long-term deposits
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111
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111
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Total assets
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$
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17,626
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$
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17,552
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Current liabilities:
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Accounts payable
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$
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1,506
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$
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2,391
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Other liabilities and accrued expenses
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3,937
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3,053
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Income tax payable
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559
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328
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Dividend payable
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243
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438
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Total current liabilities
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6,245
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6,210
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Long term liabilities :
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Deferred income taxes
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32
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32
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Total liabilities
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6,277
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6,242
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Shareholders’ equity:
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Common shares, $0.01 par value
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38
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38
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Additional paid-in capital
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11,370
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11,370
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Retained earnings
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(14
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13
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Accumulated other comprehensive (loss)/income
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(97
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(136
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Treasury shares, at cost – 5,049 shares as of December 31, 2017; and March 31, 2017 respectively
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(14
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(14
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Total Highway Holdings Limited shareholders’ equity
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11,283
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11,271
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Non-controlling interest
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66
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39
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Total shareholders’ equity
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11,349
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11,310
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Total liabilities and shareholders’ equity
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$
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17,626
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$
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17,552
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