HONG KONG, Nov. 3, 2003 (PRIMEZONE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported strong financial results for its second fiscal quarter and six months ended September 30, 2003, supported by strength across all of its business segments.
Net income for the quarter increased two-fold to $201,000, or $0.06 per diluted share, from $100,000, or $0.03 per diluted share, a year earlier -- despite a 12.5 percent increase in the diluted weighted average shares outstanding over the second quarter in 2002. Net sales for the second fiscal quarter climbed 22.4 percent to $6.2 million from $5.1 million in the same period a year ago.
Net income for the first half of fiscal 2004 climbed 90.5 percent to $360,000, or $0.11 per diluted share, from $189,000, or $0.07 per diluted share, a year earlier. Net sales for the six months increased 26.5 percent to $12.2 million from $9.6 million in fiscal 2003.
"The company's solid performance for the second quarter, across all of our business segments, represents our sixth consecutive quarter of sales growth. In addition, we continued to realize the ongoing benefits of both the strategic marketing initiatives and the cost cutting measures that we implemented over the past few years," said Roland Kohl, chairman and chief executive officer.
Gross profit for the six-month period increased by $372,000, but decreased for the most recent quarter by $43,000 due to narrowing gross margins. Gross profit as a percentage of sales for the second quarter of fiscal 2004 was 18 percent compared with 23 percent a year ago -- reflecting increased pricing pressures in certain of the company's business segments, as well as changing product mix. As a percentage of overall sales, the company's metal parts business, with historically higher margins than the company's other two business segments, declined slightly.
Operating income increased 14.2 percent over a year ago, despite the impact of pricing pressures on the company's clock and camera business and its changing product mix due to a decrease in selling, general and administrative expenses. Selling, general and administrative expenses declined 7 percent over a year earlier, as a result of the company's previously implemented reorganization and cost cutting efforts.
Kohl noted that sales from the company's watch division were particularly strong, with net sales for this business segment jumping 78 percent to $603,000 from $339,000 a year ago -- increasing 48 percent on a sequential quarter basis and representing 10 percent of total sales. Kohl attributed the division's growth to the company's ongoing efforts to leverage its Kienzle Uhren brand, particularly in Germany where the brand has significant name recognition.
He added that clock sales benefited from the company's focused marketing efforts and the leveraging of the Kienzle brand name, as well as increased business from OEM customers -- particularly radio-controlled clocks. Clock sales for the quarter increased 34.1 percent to $668,000 from $498,000 last year, climbing 49.4 percent on a sequential quarter basis and representing approximately 11 percent of total sales.
Camera sales for the current quarter increased 26.1 percent to $1.5 million from $1.2 million in the quarter a year earlier.
Sales of metal stamped parts and components for the quarter increased 13 percent to $3.5 million from $3.1 million a year ago, representing approximately 56 percent of total sales compared with 60.6 percent a year ago.
Kohl noted the strength of the company's balance street, with working capital at September 30, 2003 of $8.05 million, up from $7.75 million at the close of the prior fiscal year, March 31, 2003. Shareholders' equity improved to $12.2 million from $11.9 million. The company's current ratio was 2.7:1 at September 30, 2003, with essentially no long-term debt.
Highway Holdings produces a wide variety of high-quality metal parts and components for blue chip original equipment manufacturers. It also manufactures clocks and clock movements for sale under the company's own Kienzle Uhren brand name, as well as for unaffiliated clock companies. Additionally, Highway Holdings manufactures finished products, including single-use and 35mm cameras and other products. The company is headquartered in Hong Kong and operates manufacturing facilities both in Shenzhen province of the People's Republic of China and in Bulgaria.
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 Registration Statement on Form F-1, as amended (Registration No. 333-05980), and the company's annual reports on Form 20-F.
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statement of Income
(Dollars in thousands, except per share data)
(Unaudited)
Quarter Ended Six Months Ended
September 30, September 30,
2003 2002 2003 2002
-------- -------- -------- --------
Net sales $ 6,234 $ 5,092 $ 12,187 $ 9,636
Cost of sales 5,106 3,921 9,920 7,741
-------- -------- -------- --------
Gross profit 1,128 1,171 2,267 1,895
Selling, general
and administrative
expenses 919 988 1,979 1,857
-------- -------- -------- --------
Operating income 209 183 288 38
Non-operating items
Interest (24) (19) (41) (32)
Exchange gain
(loss), net 8 (47) 107 194
Interest income 0 0 10 14
Other income 18 9 39 17
-------- -------- -------- --------
Total non-operating
income (expenses) 2 (57) 115 193
Net income
before income
taxes 211 126 403 231
Income taxes 9 26 42 42
-------- -------- -------- --------
Net income
before Minority
Interest $ 202 $ 100 $ 361 $ 189
Minority Interest (1) 0 (1) 0
-------- -------- -------- --------
Net income $ 201 $ 100 $ 360 $ 189
======== ======== ======== ========
Earnings per
share - basic $ 0.07 $ 0.03 $ 0.12 $ 0.07
======== ======== ======== ========
Weighted average
number of shares
- basic 2,993 2,903 3,034 2,903
======== ======== ======== ========
Earnings per
share -diluted $ 0.06 $ 0.03 $ 0.11 $ 0.07
======== ======== ======== ========
Weighted average
number of shares
- basic 3,265 2,903 3,266 2,903
======== ======== ======== ========
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except per share data)
Sept. 30, March 31
2003 2003
----------- ------------
(Unaudited)
Current assets
Cash and cash equivalents $ 3,600 $ 3,148
Restricted cash 965 1,157
Accounts receivable, net
of doubtful accounts 2,987 2,872
Inventories 4,648 4,572
Prepaid expenses and other
current assets 624 254
----------- -----------
Total current assets 12,824 12,003
Property, plant and equipment, net 3,320 3,657
Investment and advance in affiliate 430 109
Industrial property rights 708 725
----------- -----------
Total assets $ 17,282 $ 16,494
=========== ===========
Current liabilities:
Short-term borrowings $ 1,273 $ 1,156
Current portion of
long-term debt 126 125
Accounts payable 2,547 1,917
Accrual payroll and
employee benefits 270 349
Accrued mould charges 152 147
Accrued professional fees 50 89
Other liabilities and
accrued expenses 349 467
----------- -----------
Total current liabilities 4,767 4,250
----------- -----------
Long-term debt 42 105
Deferred income taxes 231 231
Minority interest 2 1
Shareholders' equity:
Common shares, $0.01 par value
Authorized, 20,000,000 shares;
issued, 3,071,623 shares
at September 30, 2003;
outstanding shares at
September 30, 2003: 3,033,823 31 30
Additional paid-in capital 9,032 8,793
Retained earnings 3,333 3,210
Accumulated other comprehensive
income (103) (73)
Treasury shares, at cost-
37,800 shares in 2003 (53) (53)
----------- -----------
Total shareholders' equity 12,240 11,907
Total liabilities and
shareholders' equity $ 17,282 $ 16,494
=========== ===========