HONG KONG, Nov. 13, 2017 (GLOBE NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal 2018 second quarter and six months ended September 30, 2017.
Net sales for the fiscal 2018 second quarter increased 9.5 percent to $4.6 million from $4.2 million in the same quarter a year earlier. Net income for the same period was $211,000, or $0.06 per share, compared with a net loss of $128,000, or $0.03 per share, a year earlier.
For the six-month period, net sales increased 5.3 percent to $9.9 million from $9.4 million a year earlier. Net income for the same period was $426,000, or $0.11 per diluted share compared with $37,000, or $0.01 per diluted share, a year ago.
As previously reported, net sales in both comparable prior-year periods were impacted by lower production output largely due to a temporary disruption caused by the relocation of certain manufacturing operations at the company’s China facilities. The relocation of the manufacturing operations has been completed.
“Sales activity gained slight momentum in the first half of fiscal 2018, though customers remain hesitant to accept necessary price increases due to inflationary pressures for Chinese-manufactured products. In addition, customers are also somewhat cautious to utilize our lower-cost Myanmar operation as an alternative to our operations in China, given political issues in this emerging country,” said Roland Kohl, chairman and chief executive officer of Highway Holdings.
Kohl noted that the company is working diligently to execute its strategy to expand its business for higher margin products, which depends on the company’s ability to minimize inflationary pressures by utilizing advanced technology to improve manufacturing efficiency and offset ever-increasing operational costs in China.
He emphasized that the company is continuing initiatives in Myanmar. “Shifting more of the manufacturing operations to Myanmar will both lower the cost of operations and reduce transportation costs between the company’s China and Myanmar facilities. These factors are expected to be especially attractive to potential new customers who are seeking a lower-cost manufacturer, and to existing customers who are strategically focused on transitioning away from more expensive manufacturing in China,” said Kohl.
Gross profit for the second quarter of fiscal 2018 was $1.57 million compared with $1.12 million a year ago. Gross profit as a percentage of sales for the same period was 33.8 percent compared with 26.6 percent a year earlier, reflecting the strategic shift to higher margin business and the previously discussed elimination of low-margin sales. Gross profit also benefitted from further utilization of the company’s lower-cost operations in Myanmar.
Gross profit for the six-month period of fiscal 2018 was $2.95 million compared with $2.41 million a year ago. Gross profit as a percentage of sales for the same period increased to 29.7 percent from 25.5 percent.
Selling, general and administrative expenses increased slightly by $22,000 compared with the same period last year, and increased by $105,000 from the six-month period last year -- reflecting increased marketing and engineering expenses related to the implementation of new business initiatives.
Net income for the second quarter reflects a currency exchange loss of $7,000 compared with a $43,000 currency exchange gain for the same period last year. For the fiscal 2018 six-month period, the company reports a currency exchange loss of $12,000 compared with a currency exchange gain of $26,000 a year earlier. Since the company does not engage in currency exchange rate hedging, Highway Holdings will in the future continue to realize currency exchange gains and losses due to the fluctuation of currency exchange rates.
Kohl noted the company’s balance sheet remains strong, with cash and cash equivalents in excess of $10.7 million, or approximately $2.80 per diluted share, compared with approximately $2.64 per diluted share at March 31, 2017, exceeding all of its short- and long-term liabilities by approximately $3.8 million.
Current liabilities at September 30, 2017 totaled $6.9 million and current assets were $17.0 million. Total shareholders’ equity at September 30, 2017 was $11.2 million, or $2.95 per diluted share, compared with $11.3 million, or $2.97 per diluted share, at March 31, 2017.
About Highway Holdings Limited
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 in Yangon in 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.
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES Consolidated Statement of Income (Dollars in thousands, except per share data) (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Net sales | $4,647 | $4,220 | $9,956 | $9,445 | ||||||||||||||||
| Cost of sales | 3,073 | 3,096 | 7,002 | 7,035 | ||||||||||||||||
| Gross profit | 1,574 | 1,124 | 2,954 | 2,410 | ||||||||||||||||
| Selling, general and administrative expenses | 1,327 | 1,305 | 2,465 | 2,360 | ||||||||||||||||
| Operating (loss)/income | 247 | (181 | ) | 489 | 50 | |||||||||||||||
| Non-operating items | ||||||||||||||||||||
| Exchange gain /(loss), net | (7 | ) | 43 | (12 | ) | 26 | ||||||||||||||
| Interest income | 4 | 1 | 7 | 2 | ||||||||||||||||
| Gain/(Loss) on disposal of Asset | - | - | 46 | - | ||||||||||||||||
| Other income/(expenses) | - | 11 | - | 11 | ||||||||||||||||
| Total non-operating income/ (expenses) | (3 | ) | 55 | 41 | 39 | |||||||||||||||
| Net income before income tax and non-controlling interests taxes | 244 | (126 | ) | 530 | 89 | |||||||||||||||
| Income taxes | (27 | ) | - | (91 | ) | (50 | ) | |||||||||||||
| Net income/(loss) before non-controlling interests | 217 | (126 | ) | 439 | 39 | |||||||||||||||
| Less: net gain/(loss) attributable to non-controlling interests | 6 | 2 | 13 | 2 | ||||||||||||||||
| Net income/(loss) attributable to Highway Holdings Limited shareholders | 211 | (128 | ) | 426 | 37 | |||||||||||||||
| Net income/(loss) per share - basic and diluted | $0.06 | ($0.03 | ) | $0.11 | $0.01 | |||||||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||||||
| Basic | 3,802 | 3,802 | 3,802 | 3,802 | ||||||||||||||||
| Diluted | 3,802 | 3,802 | 3,802 | 3,802 | ||||||||||||||||
| HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES Consolidated Balance Sheet (Dollars in thousands, except per share data) | |||||||
| Sept 30 | March 31 | ||||||
| 2017 | 2017 | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $10,717 | $10,028 | |||||
| Accounts receivable, net of doubtful accounts | 3,197 | 3,403 | |||||
| Inventories | 2,430 | 2,265 | |||||
| Prepaid expenses and other current assets | 684 | 714 | |||||
| Total current assets | 17,028 | 16,410 | |||||
| Property, plant and equipment, (net) | 945 | 954 | |||||
| Goodwill | 77 | 77 | |||||
| Long-term deposits | 111 | 111 | |||||
| Total assets | $18,161 | $17,552 | |||||
| Current liabilities: | |||||||
| Accounts payable | $2,431 | $2,391 | |||||
| Other liabilities and accrued expenses | 3,886 | 3,053 | |||||
| Income tax payable | 385 | 328 | |||||
| Dividend payable | 215 | 438 | |||||
| Total current liabilities | 6,917 | 6,210 | |||||
| Long term liabilities: | |||||||
| Deferred income taxes | 32 | 32 | |||||
| Total liabilities | 6,949 | 6,242 | |||||
| Shareholders’ equity: | |||||||
| Common shares, $0.01 par value | 38 | 38 | |||||
| Additional paid-in capital | 11,370 | 11,370 | |||||
| Retained earnings / (Deficit) | (167 | ) | 13 | ||||
| Accumulated other comprehensive income/(loss) | (70 | ) | (136 | ) | |||
| Treasury shares, at cost – 5,049 shares as of September, 30, 2017; and March 31, 2017 respectively | (14 | ) | (14 | ) | |||
| Non-controlling interest | 55 | 39 | |||||
| Total shareholders’ equity | 11,212 | 11,310 | |||||
| Total liabilities and shareholders’ equity | $18,161 | $17,552 | |||||