Highway Holdings Reports Fiscal 2019 Fourth Quarter and Year-End Results
July 02 2019 - 4:00PM
Highway Holdings Limited (
Nasdaq: HIHO) today
reported results for its fiscal fourth quarter and year ended March
31, 2019 – reflecting the impact of lower orders from certain
customers experiencing soft product demand and the loss of business
due to continued inflationary pressures in China.
Net loss for the fiscal fourth quarter was
$186,000, or $0.05 per diluted share, compared with net income of
$742,000, or $0.20 per diluted share, in the same quarter a year
ago. Net sales for the same period were $3.8 million compared with
$4.2 million a year ago.
Net loss for fiscal 2019 was $630,000, or $0.17
per share, compared with net income of $1,550,000, or $0.41 per
diluted share, a year earlier. Net sales for fiscal 2019 were $14.3
million compared with $19.2 million a year ago.
The sales decrease for fiscal 2019 reflects
sharply reduced orders from two of the company’s major customers –
including a year-over-year sales reduction of approximately 30
percent from one customer alone.
“We remain cautiously optimistic that business
will improve in the future -- supported by ongoing pro-active
strategic initiatives, particularly the increasing utilization of
our Myanmar complex and the expected cost-savings and competitive
advantage it provides for the long term. In the short term, we will
not realize all the benefits from the favorable labor cost savings
derived from our emerging Myanmar operation because these savings
are being passed through to our customers, which contributes to
lower pricing and lower sales turnover. Nonetheless, our ability to
offer lower cost manufacturing in Myanmar is a benefit to customers
seeking an increasingly attractive alternative to the inflationary
trends in China. Furthermore, an escalating trade war between the
United States and China enhances the appeal of our expanding
capacity and manufacturing capabilities in Myanmar,” said Roland
Kohl, chairman, president and chief executive officer of Highway
Holdings.
Gross profit margin for fiscal 2019 was 25
percent compared with 35 percent a year earlier, due to increasing
manufacturing costs related to the sharp reduction in sales and
lower overhead absorption.
Selling, general and administrative expenses
decreased to $1.1 million from $1.3 million, and $4.3 million from
$4.8 million for the fiscal fourth quarter and 12-month period,
respectively, on a year-over-year basis -- despite cost increases
related to the relocation of machinery and equipment from China to
the company’s operation in Myanmar.
Currency exchange rates slightly affected the
company’s net loss for fiscal 2019. The company realized a small
currency exchange loss in fiscal 2019 of $8,000 compared with a
currency exchange gain of $63,000 a year ago, mainly due to the
weakening of the RMB. The company does not undertake any currency
hedging transactions.
Kohl noted the company’s balance sheet remains
strong, despite the losses. Total current assets at March 31, 2019
were $13.4 million, with working capital of $8.3 million and a
current ratio of 2.6:1. Total cash was $8.8 million after a
long-term rental prepayment of $950,000 in Myanmar and a cash
outlay for constructing an additional factory and an office
building at the company’s Myanmar complex. Cash on hand totaled
$2.32 per diluted share, exceeding all current and long-term
liabilities combined by $3.7 million.
Kohl highlighted the company’s total equity of
$10 million at March 31, 2019 -- representing approximately $2.67
per diluted share.
About Highway HoldingsHighway
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 in Hong Kong, with
manufacturing and assembly facilities located in Shenzhen in the
People’s Republic of China and in Yangon, Myanmar.
Except for the historical information contained
herein, the matters discussed in this press release are
forward-looking statements, including but not limited to the
Company’s ability to maintain lower costs at the Myanmar facility,
the effects of lower costs in Myanmar on customer retention, the
Company’s ability to streamline its operations through robotics and
automation, the timing of future business, and the Company’s growth
prospects. These forward-looking statements involve numerous
risks and uncertainties, including 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. The
forward-looking statements are made only as of the date of this
press release and the Company undertakes no obligation to publicly
update such forward-looking statements to reflect subsequent events
or circumstance.
(Financial Tables Follow)
HIGHWAY HOLDINGS LIMITED AND
SUBSIDIARIESConsolidated Statement of
Income(Dollars in thousands, except per share data)
|
Three Months
Ended |
|
Year
Ended |
|
March
31,(Unaudited) |
|
March
31,(Audited) |
|
|
|
|
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
3,782 |
|
|
$ |
4,177 |
|
|
$ |
14,277 |
|
|
$ |
19,166 |
|
Cost of sales |
|
2,956 |
|
|
|
2,012 |
|
|
|
10,697 |
|
|
|
12,424 |
|
Gross profit |
|
826 |
|
|
|
2,165 |
|
|
|
3,580 |
|
|
|
6,742 |
|
Selling, general and administrative expenses |
|
1,057 |
|
|
|
1,276 |
|
|
|
4,335 |
|
|
|
4,804 |
|
Operating (loss)/income |
|
(231 |
) |
|
|
889 |
|
|
|
(755 |
) |
|
|
1,938 |
|
|
|
|
|
|
|
|
|
Non-operating items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange gain/(loss), net |
|
13 |
|
|
|
72 |
|
|
|
(8 |
) |
|
|
63 |
|
Interest income |
|
16 |
|
|
|
4 |
|
|
|
33 |
|
|
|
16 |
|
Gain/(Loss) on disposal of assets |
|
- |
|
|
|
2 |
|
|
|
28 |
|
|
|
50 |
|
Other income / (expenses) |
|
- |
|
|
|
5 |
|
|
|
8 |
|
|
|
5 |
|
Total non-operating income / (expenses) |
|
29 |
|
|
|
83 |
|
|
|
61 |
|
|
|
134 |
|
|
|
|
|
|
|
|
|
Share of profits (loss) of equity investee |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net (loss)/income before income tax and non-controlling
Interest |
|
(202 |
) |
|
|
972 |
|
|
|
(694 |
) |
|
|
2,072 |
|
Income taxes |
|
26 |
|
|
|
(244 |
) |
|
|
26 |
|
|
|
(512 |
) |
Net (loss)/income before
non-controlling interests |
|
(176 |
) |
|
|
728 |
|
|
|
(668 |
) |
|
|
1,560 |
|
|
|
|
|
|
|
|
|
Less: Net gain / (loss)
attributable to non-controlling Interests |
|
10 |
|
|
|
(14 |
) |
|
|
(38 |
) |
|
|
10 |
|
Net (loss)/income attributable to Highway Holdings Limited
shareholders |
($ |
186 |
) |
|
$ |
742 |
|
|
($ |
630 |
) |
|
$ |
1,550 |
|
|
|
|
|
|
|
|
|
Net income/(loss) per share: |
|
|
|
|
|
|
|
Basic |
($ |
0.05 |
) |
|
$0.20 |
|
($ |
0.17 |
) |
|
$ |
0.41 |
|
Diluted |
($ |
0.05 |
) |
|
$ |
0.20 |
|
|
($ |
0.17 |
) |
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
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(In thousands, except per share data)
|
March 31, |
March 31, |
|
|
2019 |
|
|
2018 |
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
8,827 |
|
$ |
11,267 |
|
Accounts receivable, net of doubtful accounts |
|
2,264 |
|
|
2,223 |
|
Inventories |
|
1,539 |
|
|
2,933 |
|
Prepaid expenses and other current assets |
|
722 |
|
|
749 |
|
Total current assets |
|
13,352 |
|
|
17,172 |
|
|
|
|
Property, plant and equipment,
(net) |
|
886 |
|
|
770 |
|
Goodwill |
|
- |
|
|
77 |
|
Long-term deposits |
|
66 |
|
|
111 |
|
Long-term loan receivable |
|
75 |
|
|
- |
|
Long-term rental
prepayment |
|
871 |
|
|
- |
|
Investments in equity method
investees |
|
- |
|
|
- |
|
Total assets |
$ |
15,250 |
|
$ |
18,130 |
|
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ |
1,161 |
|
$ |
900 |
|
Accrual expenses and other liabilities |
|
2,989 |
|
|
3,982 |
|
Income tax payable |
|
602 |
|
|
803 |
|
Dividend payable |
|
329 |
|
|
623 |
|
Total current liabilities |
|
5,081 |
|
|
6,308 |
|
Long term liabilities: |
|
|
Deferred income taxes |
|
32 |
|
|
32 |
|
Total liabilities |
|
5,113 |
|
|
6,340 |
|
|
|
|
Shareholders' equity: |
|
|
Common shares, $0.01 par value |
|
38 |
|
|
38 |
|
Additional paid-in capital |
|
11,370 |
|
|
11,370 |
|
Retained earnings |
|
(1,233 |
) |
|
347 |
|
Accumulated other comprehensive (loss)/income |
|
(35 |
) |
|
- |
|
Treasury shares, at cost – 5,049 shares as of March 31, 2019 and
2018, respectively |
|
(14 |
) |
|
(14 |
) |
Non-controlling interest |
|
11 |
|
|
49 |
|
Total equity |
|
10,137 |
|
|
11,790 |
|
Total liabilities and shareholders' equity |
$ |
15,250 |
|
$ |
18,130 |
|
|
|
|
|
|
|
|
CONTACT:Gary S. MaierMaier & Company,
Inc.(310) 471-1288
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