Highway Holdings Limited (Nasdaq:HIHO) today reported
results for its fiscal third quarter and nine months ended December
31, 2020, reflecting the impact of the COVID-19 pandemic on its
customers and supply chain.
Net sales for the fiscal 2021 third quarter were $2.5 million
compared with $3.6 million a year ago. For the same period, net
income was $84,000, or $0.02 per diluted share, compared with
$318,000, or $0.08 per diluted share, in the same quarter a year
earlier.
For the nine months, net sales were $7.3 million compared with
$9.6 million a year ago. For the same period, the company reported
net income of $90,000, or $0.02 per diluted share, compared with a
net income of $123,000, or $0.03 per diluted share, a year
earlier.
“Results for the quarter were impacted by the ongoing global
effects of COVID-19. In addition, trade-related issues involving
China, the United States and Australia may have impacted the supply
of components and raw materials for the whole industry and also the
requirements for the company’s regular business. These factors also
delayed the start of manufacturing activities for new business from
existing and new customers. Certain other projects have also been
delayed due to COVID-related travel restrictions that prevented the
company’s engineers traveling from China to Myanmar to setup new
production lines,” said Roland Kohl, chairman, president and chief
executive officer of Highway Holdings.
“Notwithstanding the current political unrest in Myanmar, the
company’s Yangon factory has been able, to date, to continue to
operate, manufacture and ship products to our customers; and there
have been no delays in receiving raw materials due to this
situation,” Kohl said.
Kohl noted the company’s financial results benefitted from the
reversal of prior-year tax provisions, as well as government
subsidies from China and Hong Kong reduced rental and electricity
charges in China.
Gross margin as a percentage of sales for the three months ended
December 31, 2020 increased to 34.0 percent from 33.7 percent a
year earlier, and gross margin as a percentage of sales for the
nine months increased to 31.7 percent from 29.0 percent last
year.
Selling, general and administrative expenses decreased for the
quarter by $26,000 and by $524,000 for the nine-month period on a
year-over-year basis – benefitting from streamlining of operations,
government subsidies for employees and reduced electricity
charges.
Net income for the fiscal third quarter reflects a currency
exchange loss of $22,000 compared with a currency exchange gain of
$17,000 a year ago. The company reported a $60,000 currency
exchange loss for the fiscal 2021 nine months compared with a
$112,000 currency exchange gain a year earlier. The currency
exchange losses in the current year were mainly due to the
strengthening of the RMB. The company does not engage in currency
exchange rate hedging, and the fluctuations in the exchange rate of
the RMB and Kyat are expected to affect the company’s future
results.
Kohl noted the company’s balance sheet remains strong, despite a
decrease in cash. The company’s total cash position at December 31,
2020 was approximately $7.5 million, or approximately $2.00 per
diluted share, compared with $8.8 million at March 31, 2020. Cash
utilization reflects an increase in pre-payments and a reduction of
accounts payable, both of which were made to secure delivery of
production material. The present shortage of raw materials may
remain for the foreseeable future, with the sharp increase in
prices caused by the interruption of the supply chain affecting the
company’s current production – including the production of the
Playmaji gaming console manufacturing order, as previously
announced, which was delayed due to these factors.
The company’s current ratio was 2.9:1 at December 31, 2020, and
the company's total cash exceeded all current and long-term
liabilities combined by $2 million.
About Highway Holdings
Highway Holdings is an international manufacturer of a wide
variety of high-quality parts and products for blue chip equipment
manufacturers based primarily in Germany. Highway Holdings’
administrative office is located in Hong Kong and its manufacturing
facilities are located in Yangon, Myanmar and Shenzhen, China.
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, the impact of the worldwide COVID-19
pandemic, 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,
2020
2019
2020
2019
Net sales
$2,544
$3,590
$7,320
$9,630
Cost of sales
1,676
2,379
5,000
6,828
Gross profit
868
1,211
2,320
2,802
Selling, general and administrative
expenses
849
875
2,277
2,801
Operating income/(loss)
19
336
43
1
Non-operating items
Exchange gain /(loss), net
(22
)
17
(60
)
112
Interest income
7
12
15
42
Gain/(Loss) on disposal of Asset
0
14
9
17
Other income/(expenses)
0
0
8
1
Total non-operating income/(expenses)
(15
)
43
(28
)
172
Net profit before income tax and
non-controlling interests
4
379
15
173
Income taxes benefit/(expense)
80
(60
)
80
(60
)
Net profit before non-controlling
interests
84
319
95
113
Less: net gain/(loss) attributable to
non-controlling interests
0
1
5
(10
)
Net income/(loss) attributable to Highway
Holdings Limited’s shareholders
84
$318
90
$123
Net Gain/(loss) per share – Basic and
Diluted
Basic
$0.02
$0.08
$0.02
$0.03
Diluted
$0.02
$0.08
$0.02
$0.03
Weighted average number of shares
outstanding
Basic
3,977
3,977
3,977
3,895
Diluted
4,173
3,977
4,073
3,895
HIGHWAY HOLDINGS LIMITED AND
SUBSIDIARIES
Consolidated Balance
Sheet
(Dollars in thousands, except per
share data)
Dec 31
Mar 31
2020
2020
Current assets:
Cash and cash equivalents
$7,487
$8,827
Accounts receivable, net of doubtful
accounts
2,017
2,008
Inventories
1,501
2,000
Prepaid expenses and other current
assets
583
388
Total current assets
11,588
13,223
Property, plant and equipment, (net)
966
878
Operating lease right-of-use assets
2,944
3,710
Long-term deposits
263
263
Long-term loan receivable
95
95
Investments in equity method investees
-
-
Total assets
$15,856
$18,169
Current
liabilities:
Accounts payable
$620
$997
Operating lease liabilities, current
749
782
Other liabilities and accrued expenses
2,021
2,294
Income tax payable
553
564
Dividend payable
5
351
Total current liabilities
3,948
4,988
Long term
liabilities:
Operating lease liabilities,
non-current
1,351
2,034
Deferred income taxes
229
229
Total liabilities
5,528
7,251
Shareholders’
equity:
Preferred shares, $0.01 par value
-
-
Common shares, $0.01 par value
40
40
Additional paid-in capital
11,596
11,537
Accumulated deficit
(1,410
)
(865
)
Accumulated other comprehensive
income/(loss)
87
196
Non-controlling interest
15
10
Total shareholders’ equity
10,328
10,918
Total liabilities and shareholders’
equity
$15,856
$18,169
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210210005335/en/
Gary S. Maier 310-471-1288
Highway (NASDAQ:HIHO)
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