HONG KONG, July 09, 2018 (GLOBE NEWSWIRE) --
Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal fourth quarter and year ended March 31, 2018 -- reflecting improved profitability for both periods despite a challenging operating environment in China.
Net income for the fiscal fourth quarter was $742,000, or $0.20 per diluted share, compared with $219,000, or $0.06 per diluted share, in the same quarter a year ago. Net sales for the same period were $4.1 million compared with $4.7 million a year ago.
Net income for fiscal 2018 was $1,550,000, or $0.41 per diluted share, compared with $527,000, or $0.14 per diluted share, a year earlier. Net sales for fiscal 2018 were $19.2 million compared with $19.6 million a year ago – reflecting lower sales to certain European customers.
“Results for fiscal 2018 reflect improvement in operational margins, which benefitted from acceptance of price increases from certain customers and the strategic elimination of low-margin business, as discussed in previous quarters. We continued to make progress in streamlining our OEM business, which includes greater utilization of robotics and automation equipment in China and increasing utilization of our Myanmar subsidiary. In addition, we continued to strengthen our technical capabilities with enhancements to our engineering department to support innovation and future growth,” said Roland Kohl, chairman, president and chief executive officer.
He noted that the company’s expansion in Myanmar is becoming more attractive to the company’s existing and prospective customers due to the economic impact of escalating operational costs in China. “Nonetheless, the timing of business we expect to realize from the transition of manufacturing operations to Myanmar is uncertain, and quarter-to-quarter performance will vary,” Kohl said.
“The manufacturing cost advantage of utilizing further automation and the benefits of Myanmar’s favorable labor costs are mostly passed through to our customers, which contributes to lower pricing and sales turnover. As a result, we anticipate some sales softness as we commence a new fiscal year, but remain cautiously optimistic about our longer-term prospects,” Kohl added.
Gross profit as a percentage of sales improved in fiscal 2018 to 35.2 percent from 28.4 percent a year earlier – primarily due to several material tooling orders, which typically have higher gross margins, and material accounting adjustments related to accruals for employee termination payments.
Selling, general and administrative expenses remained at almost identical levels for both the fiscal 2018 fourth quarter and the full year compared with a year ago.
Currency exchange rates slightly affected the company’s net income for fiscal 2018. The company realized a currency exchange gains in fiscal 2018 of $63,000 compared with a currency exchange loss of $19,000 a year ago, mainly due to strength of the RMB. The company does not undertake any currency hedging transactions.
Kohl noted that the company’s balance sheet remains strong, despite four dividend payments made in fiscal 2018 -- representing an aggregate of $0.29 per share. Total current assets at March 31, 2018 were $17.2 million, with working capital of $10.9 million and a current ratio of 2.7:1. Total cash was $11.3 million, or $2.96 per diluted share, exceeding all current and long-term liabilities combined by $4.9 million.
Kohl highlighted the company’s total shareholders’ equity of $11.8 million at March 31, 2018 -- representing approximately $3.10 per diluted share.
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 in Hong Kong, with manufacturing and assembly facilities located in Shenzhen in the People’s Republic of China and in Yangon, Myanmar.
Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements, including but not limited to the Company’s ability to maintain or improve margins, customer future acceptance of price increases, the Company’s ability to streamline its operations through robotics and automation, the timing of future business, and the Company’s growth prospects. These forward-looking statements involve numerous risks and uncertainties, including 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. The forward-looking statements are made only as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstance.
(Financial Tables Follow)
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statement of Income
(Dollars in thousands, except per share data)
| Three Months Ended | Year Ended | ||||||||||||||
| March 31, (Unaudited) | March 31, (Audited) | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net sales | $ | 4,177 | $ | 4,720 | $ | 19,166 | $ | 19,603 | |||||||
| Cost of sales | 2,012 | 3,081 | 12,424 | 14,033 | |||||||||||
| Gross profit | 2,165 | 1,639 | 6,742 | 5,570 | |||||||||||
| Selling, general and administrative expenses | 1,276 | 1,299 | 4,804 | 4,809 | |||||||||||
| Operating income | 889 | 340 | 1,938 | 761 | |||||||||||
| Non-operating items | |||||||||||||||
| Exchange gain/(loss), net | 72 | 34 | 63 | (19 | ) | ||||||||||
| Interest income | 4 | 4 | 16 | 8 | |||||||||||
| Gain/Loss on disposal of assets | 2 | - | 50 | 0 | |||||||||||
| Other income / (expenses) | 5 | (1 | ) | 5 | 11 | ||||||||||
| Total non-operating income / (expenses) | 83 | 37 | 134 | (0 | ) | ||||||||||
| Share of profits (loss) of equity investee | - | - | - | - | |||||||||||
| Net income before income tax and non-controlling Interest | 972 | 377 | 2,072 | 761 | |||||||||||
| Income taxes | (244 | ) | (156 | ) | (512 | ) | (236 | ) | |||||||
| Net Income before non-controlling interests | 728 | 221 | 1,560 | 525 | |||||||||||
| Less: Net gain / (loss) attributable to non-controlling Interests | (14 | ) | 2 | 10 | (2 | ) | |||||||||
| Net Income attributable to Highway Holdings Limited shareholders | $ | 742 | $ | 219 | $ | 1,550 | $ | 527 | |||||||
| Net Income per share: | |||||||||||||||
| Basic | $ | 0.20 | $0.06 | $ | 0.41 | $ | 0.14 | ||||||||
| Diluted | $ | 0.20 | $ | 0.06 | $ | 0.41 | $ | 0.14 | |||||||
| 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
(In thousands, except per share data)
| March 31, | March 31, | |||||
| 2018 | 2017 | |||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 11,267 | $ | 10,028 | ||
| Accounts receivable, net of doubtful accounts | 2,223 | 3,403 | ||||
| Inventories | 2,933 | 2,265 | ||||
| Prepaid expenses and other current assets | 749 | 714 | ||||
| Total current assets | 17,172 | 16,410 | ||||
| Property, plant and equipment, (net) | 770 | 954 | ||||
| Goodwill | 77 | 77 | ||||
| Long-term deposits | 111 | 111 | ||||
| Investments in equity method investees | - | - | ||||
| -Total assets | $ | 18,130 | $ | 17,552 | ||
| Current liabilities: | ||||||
| Accounts payable | $ | 900 | $ | 2,391 | ||
| Accrual expenses and other liabilities | 3,982 | 3,053 | ||||
| Income tax payable | 803 | 328 | ||||
| Dividend payable | 623 | 438 | ||||
| Total current liabilities | 6,308 | 6,210 | ||||
| Deferred income taxes | 32 | 32 | ||||
| Total liabilities | 6,340 | 6,242 | ||||
| Shareholders' equity: | ||||||
| Common shares, $0.01 par value | 38 | 38 | ||||
| Additional paid-in capital | 11,370 | 11,370 | ||||
| Retained earnings | 347 | 13 | ||||
| Treasury shares, at cost – 5,049 shares as of March 31, 2018 and 2017 | (14 | ) | (14 | ) | ||
| Accumulated other comprehensive income | - | (136 | ) | |||
| Total Highway Holdings Limited shareholders’ equity | 11,741 | 11,271 | ||||
| Non-controlling interest | 49 | 39 | ||||
| Total Equity | 11,790 | 11,310 | ||||
| Total liabilities and shareholders' equity | $ | 18,130 | $ | 17,552 | ||