HONG KONG, Aug. 27, 2018 (GLOBE NEWSWIRE) -- Highway Holdings Limited (Nasdaq: HIHO) today reported results for its fiscal 2019 first quarter ended June 30, 2018.
Net income for the first quarter of the fiscal year ending March 31, 2019 was $82,000, or $0.02 per diluted share, compared with $217,000, or $0.06 per diluted share, last year. Net sales for the same period were $4.1 million compared with $5.3 million a year earlier.
“Results for the quarter reflect a sharp reduction in orders from two of our larger OEM customers, which we believe was due in part to a decrease in sales by those OEM customers, and also due in part to the ever-increasing manufacturing costs in China, which caused some business to move to other lower cost suppliers. While we remain cautiously optimistic about our long-term business outlook, we are not satisfied with our performance and are taking additional measures to address the situation – including utilization of our lower-cost, high-quality production capabilities in Myanmar for lower margin business and other possible adjustments to our product mix,” said Roland Kohl, chairman, president and chief executive officer.
“Increasing the utilization of the company’s new Myanmar manufacturing facilities while reducing our operations in China may also partially insulate the company from the effects of a trade dispute between the U.S. and China,” Kohl added.
Gross profit for the 2019 fiscal first quarter was $1.04 million compared with $1.38 million in the same period a year ago, with gross profit as a percentage of sales remaining unchanged at 26 percent.
Selling, general and administrative expense for the 2019 fiscal first quarter decreased by $136,000 but increased as a percentage of net sales to 25% in 2019 from 21% in 2018 due of the steep decrease in net sales. The company realized a currency exchange gain of $33,000 in the quarter compared with an exchange loss of $4,000 in the same period last year, primarily due to a weakening RMB.
The company previously disclosed that it was in discussions for a long-term lease of a new, larger manufacturing facility in Yangon, Myanmar. The company’s current lease in Myanmar expires at the end of 2018, and the new facilities would replace, and enhance, the existing leased facilities. The company has not yet consummated the proposed lease transaction. However, as part of the lease negotiations, the company deposited $950,000 in a Myanmar bank as a deposit, which will be released when the lease is executed. The $950,000 deposit is listed as “Restricted Cash” on the company’s balance sheet. If the long-term lease is executed, the company intends to relocate its existing operations to the new facility and to build a new factory and new office building on the site, which currently has two factories.
Kohl highlighted the company’s solid financial position, with cash and restricted cash of $10.4 million -- exceeding combined short- and long-term liabilities by $4.7 million. At June 30, 2018, the company had working capital of $11 million. Restricted cash in the amount of $950,000 is reserved for payment of a long-term lease in Myanmar, as noted above.
Total shareholders’ equity at June 30, 2018 was $11.84 million compared with $11.79 million as of March 31, 2018. The company’s current ratio at June 30, 2018 was 2.94:1.
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 Myanmar.
Except for the historical information contained herein, the matters discussed in this press release, including all statements about the proposed long-term lease in Yangon, Myanmar and the company’s longer-term business outlook, 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) | ||||||||
| Quarter Ended | ||||||||
| June 30 | ||||||||
| 2018 | 2017 | |||||||
| Net sales | $4,050 | $5,309 | ||||||
| Cost of sales | 3,007 | 3,928 | ||||||
| Gross profit | 1,043 | 1,381 | ||||||
| Selling, general and administrative expenses | 1,001 | 1,137 | ||||||
| Operating income | 42 | 244 | ||||||
| Non-operating income (expense): | ||||||||
| Exchange gain (loss), net | 33 | (4) | ||||||
| Interest income | 2 | 3 | ||||||
| Gain/(loss) on disposal of asset | 27 | 46 | ||||||
| Other income (expense) | 6 | 0 | ||||||
| Total non-operating income (expenses) | 68 | 45 | ||||||
| Net income before income tax and non-controlling interests | 110 | 289 | ||||||
| Income taxes | (32) | (65) | ||||||
| Net income before non-controlling interests | 78 | 224 | ||||||
| Less: net gain/(loss) attributable to non-controlling interests | (4) | 7 | ||||||
| Net income attributable to Highway Holdings Limited’s | $82 | $217 | ||||||
| Shareholders | ||||||||
| Net income per share – basic and diluted | $0.02 | $0.06 | ||||||
| Weighted average number of shares outstanding: | ||||||||
| Basic | 3,802 | 3,802 | ||||||
| Diluted | ||||||||
| 3,802 | 3,802 | |||||||
| HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES Consolidated Balance Sheet (In thousands, except per share data) | ||||||
| June 30 | March 31 | |||||
| 2018 | 2018 | |||||
| Current assets: | ||||||
| Cash and cash equivalents | $9,445 | $11,267 | ||||
| Restricted cash | 950 | - | ||||
| Accounts receivable, net of doubtful accounts | 2,477 | 2,223 | ||||
| Inventories | 2,785 | 2,933 | ||||
| Prepaid expenses and other current assets | 946 | 749 | ||||
| Total current assets | 16,603 | 17,172 | ||||
| Property, plant and equipment, net | 724 | 770 | ||||
| Goodwill | 77 | 77 | ||||
| Long-term deposits | 111 | 111 | ||||
| Total assets | 17,515 | 18,130 | ||||
| Current liabilities: | ||||||
| Accounts payable | $812 | $900 | ||||
| Accrued expenses and other liabilities | 3,781 | 3,982 | ||||
| Income tax payable | 785 | 803 | ||||
| Dividend payable | 268 | 623 | ||||
| Total current liabilities | 5,646 | 6,308 | ||||
| Deferred income taxes | 32 | 32 | ||||
| Total liabilities | 5,678 | 6,340 | ||||
| Shareholders' equity: | ||||||
| Common shares, $0.01 par value | 38 | 38 | ||||
| Additional paid-in capital | 11,370 | 11,370 | ||||
| Retained earnings | 429 | 347 | ||||
| Accumulated other comprehensive income/(loss) | (21) | - | ||||
| Treasury shares, at cost – 5,049 shares as of June 30, 2018; and on March 31, 2018 | (14) | (14) | ||||
| Non-controlling interest | 35 | 49 | ||||
| Total shareholders' equity | 11,837 | 11,790 | ||||
| Total liabilities and shareholders' equity | $17,515 | $18,130 | ||||
CONTACT:
Gary S. Maier
Maier & Company, Inc.
(310) 471-1288