HONG KONG, Jan. 27, 2014 (GLOBE NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal third quarter ended December 31, 2013 -– reflecting increased sales and profitability for both the quarter and nine-month period.
Net income for the fiscal 2014 third quarter was $149,000, or $0.04 per diluted share, compared with $18,000, or $0.01 per diluted share, in the third quarter a year earlier. Net sales for the same period increased 3.5 percent to $5.8 million from $5.6 million a year ago.
Net income for the nine-month period of fiscal 2014 increased sharply to $451,000, or $0.12 per diluted share, from $174,000, or $0.05 per diluted share, a year earlier. Net sales for the nine months climbed 7 percent to $17.5 million from $16.4 million in the comparable period a year earlier.
Gross profit margin for the three- and nine-month periods ended December 31, 2013 increased to 22.6 percent and 22.6 percent, respectively, compared with 22.2 percent and 21.9 percent, respectively, a year earlier. Gross profit margin increased due to ongoing streamlining efforts and slight price increases to customers.
Operating income for the three-month period ended December 31, 2013 was $132,000 compared with $8,000 in the prior year. Operating income for the nine months more than doubled to $563,000 from $255,000 a year earlier.
"Results for the quarter reflect the company's focus on quality manufacturing and customer service to increase business to existing customers and attract additional business opportunities. A key challenge is to balance a highly inflationary environment in China and Hong Kong, including higher wages for employees, with customer pricing expectations," said Roland Kohl, chairman, president and chief executive officer of Highway Holdings.
Kohl noted that the company is presently in discussions with most of its major customers for further price increases to match escalating operating costs in China and/or authorization to transfer labor intensive assembly work to its lower-cost, sub-contracting operation in Myanmar. "The relocation of certain labor intensive assembly services to Myanmar should be an attractive alternative to our customers, since it is a practical solution to maintaining quality and service without, in most cases, further price increases," Kohl said.
He noted that the Chinese government recently announced another minimum wage increase of approximately 13 percent effective February 1, 2014 for the Shenzhen region, reflecting the difficulty of attracting workers and further contributing to an inflationary environment in China.
Currency exchange rates positively affected the company's net income for the nine-month period ended December 31, 2013. The company reported a $28,000 currency exchange gain compared with a $26,000 exchange loss in 2012 -- mainly due to the increased strength of the RMB currency at December month ended.
Kohl noted the company's balance sheet remains strong. The company's total cash, cash equivalents and restricted cash position at December 31, 2013 was $4.5 million compared with $5.3 million at March 31, 2013, despite aggregate dividend payments of $302,000, or $0.08 per diluted share since March 2013, and approximately $1 million of cash that the company was required to deposit with the Chinese Customs Department. The Customs Department has commenced returning a portion of the deposits, and Highway Holdings anticipates that most of its deposits will be returned by mid-year.
The company's current ratio was 4:1 at December 31, 2013. The total cash, cash equivalents and restricted cash exceeded all current and long term liabilities combined by $954,000.
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 offices are located in Hong Kong and its manufacturing facilities are located in Shenzhen 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.
(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, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Net sales | $5,816 | $5,619 | $17,543 | $16,398 |
| Cost of sales | 4,503 | 4,369 | 13,586 | 12,804 |
| Gross profit | 1,313 | 1,250 | 3,957 | 3,594 |
| Selling, general and administrative expenses | 1,181 | 1,242 | 3,394 | 3,339 |
| Operating income | 132 | 8 | 563 | 255 |
| Non-operating items | ||||
| Interest expenses | 0 | 2 | 1 | 7 |
| Exchange gain (loss), net | 53 | 8 | 28 | (26) |
| Interest income | 4 | 2 | 13 | 7 |
| Other income | 48 | 4 | 47 | 50 |
| Total non-operating income | 105 | 12 | 87 | 24 |
| Net income before income tax and non-controlling Interest | 237 | 20 | 650 | 279 |
| Income taxes | 89 | 2 | 200 | 105 |
| Net Income before non-controlling interest | 148 | 18 | 450 | 174 |
| Less : Net income attributable to non-controlling interest | 1 | 0 | 1 | 0 |
| Net income attributable to Highway Holdings Limited shareholders | $149 | $18 | $451 | $174 |
| Net Income per share – basic and diluted | $0.04 | $0.01 | $0.12 | $0.05 |
| Weight average number of shares | ||||
| Basic | 3,778 | 3,778 | 3,778 | 3,778 |
| Diluted | 3,788 | 3,788 | 3,788 | 3,788 |
| HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES | ||
| Consolidated Balance Sheet | ||
| (In thousands, except per share data) | ||
| Dec 31 | March 31 | |
| 2013 | 2013 | |
| Current assets: | ||
| Cash and cash equivalents | $3,864 | $4,634 |
| Restricted cash | 643 | 643 |
| Accounts receivable, net of doubtful accounts | 3,774 | 3,958 |
| Inventories | 3,478 | 2,957 |
| Amount due from an equity method investee | -- | 110 |
| Prepaid expenses and other current assets | 2,191 | 1,114 |
| Total current assets | 13,950 | 13,416 |
| Property, plant and equipment, (net) | 1,356 | 1,769 |
| Loan receivables | 435 | 167 |
| Total assets | $15,741 | $15,352 |
| Current liabilities: | ||
| Accounts payable | $1,637 | $1,515 |
| Current portion of long-term debt | -- | 112 |
| Accrual payroll and employee benefits | 986 | 885 |
| Other liabilities and accrued expenses | 529 | 501 |
| Dividend payable | -- | 114 |
| Net Tax payable | 342 | 158 |
| Total current liabilities | 3,494 | 3,285 |
| Long term liabilities : | ||
| Deferred income taxes | 59 | 59 |
| Total liabilities | 3,553 | 3,344 |
| Shareholders' equity: | ||
| Common shares, $0.01 par value | 38 | 38 |
| Additional paid-in capital | 11,340 | 11,340 |
| Retained earnings | 777 | 628 |
| Accumulated other comprehensive income | 42 | 16 |
| Treasury shares, at cost – 5,049 shares as of | ||
| December, 31, 2013; and March 31, 2013 respectively | (14) | (14) |
| Total Highway Holdings Limited shareholders' equity | 12,183 | 12,008 |
| Non-controlling interest | 5 | -- |
| Total shareholders' equity | 12,188 | 12,008 |
| Total liabilities and shareholders' equity | $15,741 | $15,352 |