HONG KONG, Feb. 02, 2016 (GLOBE NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal third quarter and nine months ended December 31, 2015.
Net income for the fiscal 2016 third quarter was $342,000, or $0.09 per diluted share, compared with $361,000, or $0.10 per diluted share, in the same quarter a year earlier. Net sales for the same period were $5.7 million compared with $6.0 million a year ago -- reflecting year-end order adjustments by certain customers and a previously announced planned phase out of certain low-margin business.
Net income for the nine-month period of fiscal 2016 increased to $1,036,000, or $0.27 per diluted share, from $989,000, or $0.26 per diluted share, a year earlier. Net sales for the nine months were $17.7 million compared with $17.5 million a year ago.
Gross profit margin for the three- and nine-month periods ended December 31, 2015 increased to 26.0 percent and 25.4 percent, respectively, compared with 24.7 percent and 24.2 percent, respectively, a year earlier. Gross profit benefitted from the company’s Myanmar cost structure, price increases to customers, the planned phase out of low-margin business, and product mix.
Operating income for the three-month period ended December 31, 2015 was $426,000 compared with $458,000 in the prior year. Operating income for the nine months increased to $1,188,000 from $1,077,000 a year earlier.
“Results for the quarter reflect better pricing and, as noted above, the benefits of utilizing our Myanmar operation. Sales were impacted by a previously announced strategic decision to phase out of certain low-margin business. We continue to focus on organic growth and new business opportunities to offset this strategic sales loss and remain encouraged by our margin contributions,” said Roland Kohl, chairman, president and chief executive officer.
“Despite certain cost and pricing advantages derived from our operation in Myanmar, a major portion of the company’s business is still manufactured and produced in China. An ongoing challenge, therefore, is to balance the highly inflationary environment of China and Hong Kong, including higher wages, with the pricing expectations of our customers,” Kohl said. He noted that the emerging utilization of Myanmar, which offers high quality and lower-cost advantages for assembly work, remains an important strategic goal for management and a competitive benefit to the company’s customers.
Currency exchange rates negatively affected the company’s net income for the nine-month period ended December 31, 2015. The company reported a $44,000 currency exchange loss compared with a $40,000 exchange loss in fiscal 2015 -- mainly due to the weakening of the RMB at December 31, 2015.
The company does not engage in currency exchange rate hedging, and the fluctuations in the exchange rate of the RMB since January 1, 2016 are expected to affect the company’s future results.
Kohl noted the company’s balance sheet remains very strong. The company’s total cash position at December 31, 2015 was $8.9 million, or approximately $2.30 per share, compared with $8.7 million at December 31, 2014, despite several dividend payments and equipment investments since April 2015. The company’s current ratio was 3.2:1 at December 31, 2015. The total cash exceeded all current and long- term liabilities combined by $4.0 million.
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 and Yangon, Myanmar.
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, | |||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Net sales | $ | 5,650 | $ | 6,006 | $ | 17,687 | $ | 17,486 | ||||||||||||
| Cost of sales | 4,176 | 4,524 | 13,195 | 13,262 | ||||||||||||||||
| Gross profit | 1,474 | 1,482 | 4,492 | 4,224 | ||||||||||||||||
| Selling, general and administrative expenses | 1,048 | 1,024 | 3,304 | 3,147 | ||||||||||||||||
| Operating income | 426 | 458 | 1,188 | 1,077 | ||||||||||||||||
| Non-operating items | ||||||||||||||||||||
| Interest expenses | - | - | - | - | ||||||||||||||||
| Exchange gain /(loss), net | (44 | ) | (40 | ) | (20 | ) | (52 | ) | ||||||||||||
| Interest income | 2 | 3 | 8 | 11 | ||||||||||||||||
| Gain/Loss on disposal of Asset | - | - | - | 110 | ||||||||||||||||
| Other income/( expenses) | - | 2 | 2 | 2 | ||||||||||||||||
| Total non-operating income/ (expenses) | (42 | ) | (35 | ) | (10 | ) | 71 | |||||||||||||
| Share of profits/ (loss) of equity investees | - | 1 | - | 7 | ||||||||||||||||
| Net income before income tax and non-controlling interests | 384 | 424 | 1,178 | 1,155 | ||||||||||||||||
| Income taxes | 35 | 63 | 131 | 167 | ||||||||||||||||
| Net Income before non-controlling interests | 349 | 361 | 1,047 | 988 | ||||||||||||||||
| Less : net gain/(loss) attributable to non-controlling interests | 7 | - | 11 | (1 | ) | |||||||||||||||
| Net Income attributable to Highway Holdings Limited shareholders | $ | 342 | $ | 361 | $ | 1,036 | $ | 989 | ||||||||||||
| Net Income per share - basic and diluted | $ | 0.09 | $ | 0.10 | $ | 0.27 | $ | 0.26 | ||||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||||||
| Basic | 3,787 | 3,788 | 3,787 | 3,788 | ||||||||||||||||
| Diluted | 3,795 | 3,804 | 3,795 | 3,804 | ||||||||||||||||
| HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES | |||||||
| Consolidated Balance Sheet | |||||||
| (In thousands, except per share data) | |||||||
| December 31 | March 31 | ||||||
| 2015 | 2015 | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 8,918 | $ | 9,727 | |||
| Accounts receivable, net of doubtful accounts | 3,858 | 2,943 | |||||
| Inventories | 1,795 | 2,081 | |||||
| Prepaid expenses and other current assets | 1,001 | 987 | |||||
| Total current assets | 15,572 | 15,738 | |||||
| Property, plant and equipment, (net) | 1,264 | 1,094 | |||||
| Goodwill | 77 | 77 | |||||
| Long-term deposits | 78 | 78 | |||||
| Total assets | $ | 16,991 | $ | 16,987 | |||
| Current liabilities: | |||||||
| Accounts payable | $ | 1,542 | $ | 1,579 | |||
| Other liabilities and accrued expenses | 2,806 | 2,429 | |||||
| Income tax payable | 443 | 334 | |||||
| Dividend payable | 98 | 380 | |||||
| Total current liabilities | 4,889 | 4,722 | |||||
| Long term liabilities : | |||||||
| Deferred income taxes | 32 | 32 | |||||
| Total liabilities | 4,921 | 4,754 | |||||
| Shareholders’ equity: | |||||||
| Common shares, $0.01 par value | 38 | 38 | |||||
| Additional paid-in capital | 11,370 | 11,370 | |||||
| Retained earnings | 679 | 782 | |||||
| Accumulated other comprehensive income | (70 | ) | 8 | ||||
| Treasury shares, at cost – 5,049 shares as of December 31, 2015; and March 31, 2015 respectively | (14 | ) | (14 | ) | |||
| Total Highway Holdings Limited shareholders’ equity | 12,003 | 12,184 | |||||
| Non-controlling interest | 67 | 49 | |||||
| Total shareholders’ equity | 12,070 | 12,233 | |||||
| Total liabilities and shareholders’ equity | $ | 16,991 | $ | 16,987 | |||