HONG KONG, June 29, 2007 (PRIME NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fourth fiscal quarter and year ended March 31, 2007, highlighted by solid sales growth, three acquisitions and a dedicated focus on expanding the company's original equipment manufacturing operation.
Net sales for the 2007 fiscal fourth quarter increased 33 percent to $7.9 million from $6.0 million a year earlier. The company reported a net loss for its fiscal 2007 fourth quarter of $442,000, or $0.13 per share, compared with a net loss of $797,000, or $0.24 per share, during the same period last year, reflecting, in part, the impact of certain expenses related to recent acquisitions, such as legal, accounting, due diligence, appraisal costs and associated integration expenses.
Net sales for the fiscal 2007 twelve months increased 22 percent to $31.5 million compared with $25.8 million a year ago. Net income for the same period was $594,000, $0.16 per diluted share, compared with $42,000, or $0.01 per diluted share, a year earlier.
"Fiscal 2007 was a year of investments designed to support future sales growth and earnings potential. The company's 22 percent increase in top-line performance underscores the correctness of our strategic vision, taking into account the expected short-term impact to profitability. We are encouraged that the company was able to offset the loss of $2.1 million in sales due to the divestiture last fiscal year of our unprofitable clock, watch and camera operations; and we are gratified by the company's initial efforts to expand its OEM business in the United States -- an area of strategic importance from a growth potential standpoint," said Roland Kohl, chief executive officer.
Gross profit as a percentage of net sales increased to 19.8 percent in fiscal 2007 from 16.4 percent a year earlier. Gross profit increased to $6.2 million from $4.2 million in fiscal 2006, reflecting increased sales and improved gross margins. Kohl noted that gross margin and gross profit performance reflect the benefits of the company's OEM business focus, which historically has generated higher gross margins than the company's divested businesses mentioned above.
Cost of sales for fiscal 2007 was negatively impacted, in part, by continuing increases for certain raw materials, as well as ongoing labor and operational cost increases. Selling, general and administrative expenses for fiscal 2007 increased by $685,000, or 13.3 percent, compared with a year ago, primarily due to the addition of the three additional facilities added during fiscal 2006 and fiscal 2007, as well as increased corporate expenses. The increase in selling, general and administrative expenses was partially offset by a decrease in general and administrative expenses as a result of the closing of its German marketing offices in fiscal 2006. Selling, general and administrative expenses also increased due to the significant additional costs the company incurred through its ongoing integration of administrative, financial and accounting functions for its new facilities, particularly those of its new Golden Bright subsidiary that the company acquired in September 2006. Selling, general and administrative expenses are expected to increase further in fiscal 2007 due to additional financial controls and procedures that the company will have to implement for the first time in the fiscal 2008 under Section 404 of the Sarbanes-Oxley Act of 2002. Although the amount of selling, general and administrative costs increased in fiscal 2007, as a percentage of net sales those expenses decreased to 18.6 percent in fiscal 2007 from 20.0 percent of total net sales in fiscal 2006.
Kohl noted that the company's balance sheet remains strong. At March 31, 2007, the company had working capital of $8.9 million compared with $9.9 million at March 31, 2006. Total Shareholders' equity was $12.2 million compared with $12.3 million last year, after a total dividend payout of $1.3 million, or $0.36 per share, for fiscal 2007. The company's current ration was 1.95:1 at March 31, 2007.
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. It also manufactures finished products, such as light fixtures, LED lights, radio chimes and other electronic products. Highway Holdings is headquartered in Hong Kong and operates four manufacturing facilities in the People's Republic of 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, 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.
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statement of Income
(Dollars in thousands, except per share data)
(Unaudited)
Quarter ended Year End
(Unaudited) (Audited)
March 31 March 31
2007 2006 2007 2006
-------------------- ---------------------
Net sales $ 7,946 $ 5,977 $ 31,469 $ 25,843
Cost of sales (6,517) (5,347) (25,233) (21,600)
-------------------- ---------------------
Gross profit 1,429 630 6,236 4,243
Selling, general and
administrative
expenses (1,825) (1,147) (5,850) (5,165)
Impairment of
industrial property
rights 0 (15) 0 (60)
Impairment of
property, plant and
equipment 0 (197) 0 (197)
Gain on sale of
industrial property
right 0 0 0 1,781
-------------------- ---------------------
Operating Income/
(loss) (396) (729) 386 602
Non-operating items
Interest expense (73) (46) (242) (134)
Exchange gain
(loss), net (26) (57) 245 (614)
Interest income 32 19 161 66
Other income 37 25 92 195
-------------------- ---------------------
Total non-operating
income (expenses) (30) (59) 256 (487)
Net income/ (loss)
before income tax (426) (788) 642 115
Income taxes (16) (9) (48) (73)
-------------------- ---------------------
Net income/ (loss) ($442) ($797) $ 594 $ 42
==================== =====================
Earning per share -
basic ($0.13) ($0.24) $ 0.16 $ 0.01
-------------------- ---------------------
Weight average
number of shares -
basic 3,636 3,465 3,636 3,465
==================== =====================
Earning per share -
diluted ($0.13) ($0.24) $ 0.16 $ 0.01
-------------------- ---------------------
Weight average
number of shares -
diluted 3,636 3,465 3,690 3,544
==================== =====================
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except per share data)
March 31 March 31
2007 2006
------------------------
Current assets:
Cash and cash equivalents $5,299 $6,384
Restricted cash 1,221 965
Accounts receivable, net of
doubtful accounts 4,742 3,789
Inventories 6,104 4,118
Short term Investment 316 300
Prepaid expenses and other
current assets 680 546
------------------------
Total current assets 18,362 16,102
------------------------
Property, plant and
equipment, (net) 3,980 2,787
Investment and advance in
affiliate 2 2
Industrial property rights 70 0
------------------------
Total assets 22,414 18,891
========================
Current liabilities:
Accounts payable $3,990 $2,498
Short-term borrowing 3,097 2,015
Current portion of
long-term debt 478 481
Accrued mould charges 253 246
Accrual payroll and
employee benefits 446 292
Other liabilities and
accrued expenses 1,154 610
------------------------
Total current liabilities 9,418 6,142
------------------------
Long-term debt 655 322
Deferred income taxes 174 153
Shareholders' equity:
Common shares, $0.01 per
value, authorized
20,000,000 shares 38 35
Additional paid-in capital 11,304 10,245
Retained earning 1,439 2,133
Accumulated other
comprehensive income (48) (86)
Subscription receivable
- 128,534 shares (513) 0
Treasury shares, at cost
- 37,800 shares (53) (53)
------------------------
Total shareholders' equity 12,167 12,274
------------------------
------------------------
Total liabilities and
shareholders' equity 22,414 18,891
========================