HONG KONG, Aug. 12, 2008 (PRIME NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal first quarter ended June 30, 2008, reflecting contributions from a year-end order backlog and the stabilization of labor unrest that affected operations of the company in the previous fiscal year.
Net income for the fiscal 2009 first quarter was $287,000, or $0.08 per diluted share, compared with $248,000, or $0.06 per diluted share, last year. Net sales for the same period increased five percent to $9.3 million from $8.9 million a year earlier. The labor unrest in the prior fiscal year created the order backlog noted above that the company has been working to reduce.
Metal, mechanical and electronic OEM net sales represented $9.1 million, or 97 percent of the company's total net sales, for the first fiscal quarter of 2009. As anticipated, sales of clocks and watches continued to decline to $119,000 from $369,000 -- representing sales to current OEM customers.
Gross profit as a percentage of sales for the first fiscal quarter of fiscal 2009 was 21 percent, compared with 20 percent in the same period a year ago. Gross profit increased seven percent to $1.95 million from $1.82 million last year. Gross margin for the current fiscal quarter improved despite increases in the exchange rate of the RMB currency, which negatively impacted the company's operating costs in China; ongoing increases in labor and staff-related costs; and increases in certain raw materials transportation and energy costs.
"Results for the fiscal 2009 first quarter reflect the positive impact of the company's ability to pass-through a majority of its raw material and related cost increases to its customers. The company is extremely focused on controlling manufacturing costs, and we appreciate that our customers understand the necessity of certain price increases. The new fiscal year is off to an excellent beginning, and we look forward to continuing to rebuild a stable and profitable operation in the quarters ahead," said Roland Kohl, president and chief executive officer.
Selling, general and administrative expense as a percentage of sales for the first fiscal quarter of fiscal 2009 was 17.3 percent, compared with 17.2 percent in the same period a year ago. Selling, general and administrative expense for the fiscal quarter increased by $75,000, or five percent, from the same period a year ago -- primarily due to increased costs associated with strengthening the management team and the technical capabilities of the company. Kohl noted that the company is now benefiting from recent increases in the availability of qualified personnel due to softness in the local labor market, as well as from the upgrading of its staff and operations. As indicated in the company's March 31, 2008 fiscal year-end press release, management has been focused on streamlining and automating its manufacturing process. It is now beginning to benefit from the greater utilization of automated production lines and robots to reduce dependency on a large workforce -- which further enhances efficiency and strengthens the company's competitive position and corporate image.
Cash and cash equivalents were $3.04 million at June 30, 2008 compared with $3.89 million at March 31, 2008. The decrease in the company's cash and cash equivalents reflects higher account receivables due to increased net sales, increased inventories (primarily raw materials and associated materials for work-in-progress to fulfill the company's order backlog), and the repayment of short-term borrowing. At June 30, 2008, the company had working capital of $8.1 million compared with $7.6 million at March 31, 2008. Total shareholders' equity at June 30, 2008 was $10.7 million compared with $10.4 million last year. The company's current ratio was 1.89:1 at June 30, 2008.
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 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
June 30
2008 2007
-------- --------
Net sales $9,347 $8,932
Cost of sales 7,402 7,116
-------- --------
Gross profit 1,945 1,816
Selling, general and administrative expenses 1,613 1,538
-------- --------
Operating income 332 278
Non-operating items
Interest expenses (40) (59)
Exchange gain (loss), net (8) 8
Interest income 11 33
Other income 15 7
-------- --------
Total non-operating income (expenses) (22) (11)
Net income before income tax and minority interests 310 267
Income taxes 39 19
-------- --------
Income before minority interests 271 248
Minority Interests 16 0
-------- --------
Net Income $287 $248
======== ========
Earning per share - basic $0.08 $0.07
-------- --------
Weighted average number of shares - basic 3,734 3,785
======== ========
-------- --------
Earning per share - diluted $0.08 $0.06
-------- --------
Weighted average number of shares - diluted 3,734 3,816
======== ========
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except per share data)
June 30 March 31
2008 2008
------------------
Current assets:
---------------
Cash and cash equivalents $3,039 $3,889
Restricted cash 1,671 1,671
Accounts receivable, net of doubtful accounts 5,300 4,766
Inventories 6,261 5,775
Prepaid expenses and other current assets 885 689
------------------
Total current assets 17,156 16,790
------------------
Property, plant and equipment, (net) 3,351 3,646
Investment in affiliates 2 2
Intangible assets, (net) 47 52
------------------
Total assets 20,556 20,490
==================
Current liabilities:
--------------------
Accounts payable $3,673 $3,757
Short-term borrowing 1,984 2,214
Current portion of long-term debt 288 311
Accrued mould charges 235 260
Accrual payroll and employee benefits 1,124 988
Other liabilities and accrued expenses 1,753 1,704
------------------
Total current liabilities 9,057 9,234
------------------
Long-term debt - net of current portion 475 522
Deferred income taxes 189 189
------------------
Total liabilities 9,721 9,945
Minority Interest 135 151
Shareholders' equity:
---------------------
Common shares, $0.01 par value, authorized
20,000,000 shares 3,819,900 shares as of
March 31, 2008 and 3,720,520 shares as of
June 30, 2008, respectively, issued and
outstanding 37 38
Additional paid-in capital 11,049 11,562
Retained earnings (Accumulated Deficit) (331) (614)
Accumulated other comprehensive loss (2) (26)
Treasury shares, at cost - 166,334 shares as
of March 31, 2008; 37,800 shares as of
June 30, 2008 (53) (566)
------------------
Total shareholders' equity 10,700 10,394
------------------
------------------
Total liabilities and shareholders' equity 20,556 20,490
==================