HONG KONG, July 26, 2004 (PRIMEZONE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its first fiscal quarter ended June 30, 2004, representing the ninth consecutive quarter of profitability.
Net income for the fiscal first quarter more than doubled to $346,000, or $0.10 per diluted share, from $159,000, or $0.05 per diluted share, last year. Net sales for the same period increased 3.3 percent to $6.1 million from $6.0 million a year earlier.
"Results for the first fiscal quarter of 2005 reflect continued strength of our metal manufacturing division, as well as increased sales derived from our watch and clock businesses," said Roland Kohl, chairman and chief executive officer of Highway Holdings.
He emphasized that results for the first fiscal quarter do not fully reflect management's expectations for fiscal 2005, since the ramp up of several important new contracts and pending business will only begin to be realized in the second half of the company's fiscal year.
Gross profit as a percentage of sales for the first fiscal quarter of fiscal 2005 increased to 24 percent from 19 percent in the same period a year ago. The company attributed the improvement primarily to the increase in revenues from its metal manufacturing division, which normally has higher margins, and management's continued focus on attracting more customized business for this division from well-respected OEM customers.
Sales derived from the company's metal manufacturing division during the current fiscal quarter increased 8.6 percent to $3.8 million from $3.5 million in the comparable quarter last year. As a percentage of the company's overall sales, the metal division increased to 61.5 percent compared with 58.6 percent a year earlier.
Sales for the camera unit decreased in the first fiscal quarter, as anticipated, to $1.1 million from $1.6 million a year ago -- representing 18.6 percent of total sales compared with 27.0 percent a year ago. Since most of the company's camera products are film-based, camera sales are expected to further decline as digital photography continues to gain further market share. Clock sales climbed 94 percent to $866,000 from $447,000 a year ago -- representing 14.1 percent of total sales compared with 7.5 percent last year. The company attributed the sharp increase in sales to engineering and tooling orders from one of its OEM customers for future clock products.
Selling, general and administrative expenses for the quarter ended June 30, 2004 was $1,134,000 compared with $1,060,000 last year, increasing as a percentage of sales to 18.4 percent from 17.8 percent a year ago. The increase in selling, general and administrative expenses mainly reflects increased transportation and energy costs, as well as salary increases. Kohl noted that over the past several years management had voluntarily accepted salary reductions of approximately 30 percent during a difficult business environment. The recent salary increases recognize the improved operations and profitability of the company.
Operating income for the first fiscal quarter climbed more than four-fold to $342,000 from $79,000 a year earlier due to the increase in net sales and the improvement of the gross profit ratio.
Kohl highlighted the company's strong balance sheet. At June 30, 2004, the company had working capital of $9.3 million compared with $8.8 million at March 31, 2004. Total shareholders' equity improved to $13.4 million from $12.8 million last year. The company's current ratio was 2.78:1 at June 30, 2004, with essentially no long-term debt.
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. It also manufactures clocks, clock movements and watches for sale under the company's own Kienzle Uhren brand name, as well as for unaffiliated companies. Additionally, Highway Holdings manufactures or produces other finished products, including single-use and 35mm cameras and certain electronic products. Highway Holdings is headquartered in Hong Kong and operates manufacturing facilities in Shenzhen province of 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,
2004 2003
-------- --------
Net sales $ 6,148 $ 5,953
Cost of sales 4,672 4,814
-------- --------
Gross profit 1,476 1,139
Selling, general and
administrative expenses 1,134 1,060
-------- --------
Operating income 342 79
Non-operating items
Interest expenses (24) (17)
Exchange gain (loss), net 44 99
Interest income 1 10
Other income 36 21
-------- --------
Total non-operating income 57 113
Shares of loss of affiliate (1) 0
Net income before income tax 398 192
Income taxes 52 33
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Net income before
minority interest 346 159
Minority interest 0 0
-------- --------
Net income after
minority interest 346 159
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Earning per share - basic $0.11 $0.05
-------- --------
Weighted average number
of shares - basic 3,171 2,939
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Earning per share - diluted $0.10 $ 0.05
-------- --------
Weighted average number
of shares - diluted 3,374 2,974
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HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except per share data)
June 30, March 31
2004 2004
-------- ---------
(Unaudited)
Current assets
Cash and cash equivalents $ 4,326 $ 4,158
Restricted cash 965 965
Short term investment 291 309
Accounts receivable, net
of doubtful accounts 3,546 3,763
Inventories 4,890 4,394
Prepaid expenses and
other current assets 530 639
-------- ---------
Total current assets 14,548 14,228
Property, plant and
equipment, net 3,839 3,780
Investment and advance
in affiliate 6 7
Industrial property rights 625 673
-------- ---------
Total assets $ 19,018 $ 18,688
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Current liabilities:
Short-term borrowings $ 1,773 $ 1,933
Current portion of
long-term debt 171 173
Accounts payable 2,062 2,296
Accrual payroll and
employee benefits 308 321
Accrued professional fees 39 110
Other liabilities and
accrued expenses 750 543
Income tax payable 136 78
-------- ---------
Total current liabilities 5,239 5,454
-------- ---------
Long-term debt 214 212
Deferred income taxes 179 179
Minority interest 2 2
Shareholders' equity:
Common shares, $0.01 par value
Authorized, 20,000,000
shares; issued and
outstanding: 3,196,123
shares at June 30, 2004 32 31
Additional paid-in capital 9,273 9,035
Retained earnings 4,301 3,954
Accumulated other
comprehensive income (169) (126)
Treasury shares, at cost-37,800
shares at June 30, 2004 (53) (53)
-------- ---------
Total shareholders' equity 13,384 12,841
-------- ---------
Total liabilities and
shareholders' equity $ 19,018 $ 18,688
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