CONTACT: Gary
S. Maier
Maier & Company,
Inc.
(310) 442-9852
HIGHWAY HOLDINGS REPORTS FISCAL 2010 SECOND
QUARTER RESULTS
--Net profit increases;
Sees Signs of Recovery from Worldwide Economic Downturn--
HONG KONG — November 10, 2009
— Highway Holdings Limited (Nasdaq:HIHO)
today reported results for its second fiscal
quarter ended September 30, 2009, reflecting a modest gain in
net income and gross margin improvement despite the impact of global economic
conditions on net sales.
Net
income for the 2010 fiscal second quarter increased to $139,000,
or $0.04 per diluted share, from $100,000, or $0.03 per
diluted share, a year earlier. Net sales for same period were $5.2
million compared with $9.5 million a year earlier.
Net income for the first half of fiscal 2010 was $3,000, compared with a
net income of $387,000, a year earlier. Net sales for the six-month period were
$9.8 million compared with $18.9 million a year ago --reflecting the full impact of global economic
conditions on the company’s major customers during the first two quarters of the new fiscal year.
“As expected, net sales were substantially lower during the first six
months of this fiscal year than last year as a result of fewer orders received
and a change in pricing policy that reduces our sales price when material costs
decrease. The decrease in orders
was due to the effects of the worldwide recession on our clients. Orders, however, started to improve beginning in August,” said
Kohl further noted that
despite reduced sales levels, the company was able to post a profit for both
the second fiscal quarter and the six-month period– a result of management’s
precautionary measures that were implemented at the beginning of the current
recession, including a 50 percent reduction in the workforce; successful new
pricing policies with customers to address raw material cost price
fluctuations; greater utilization of automation, and improved overall
efficiency. “As a result of these
measures and several other initiatives, I believe that we are well positioned
to realize significant improvement in our operating results as economic conditions
improve and net sales increase,” Kohl said
Gross profit as a percentage of sales for the quarter increased to 25.2 percent from 19.1
percent in
the same period a year ago as a result of the company’s new pricing policies
and the increase in automation.
Selling, general and administrative expenses decreased to $1.22 million during
the second quarter of the current fiscal year from $1.45 million in same
quarter a year ago. The decrease in selling, general and administrative
expenses was the result of ongoing
streamlining of its administrative operations and the decrease in sales. The company is in the process of consolidating three of its
manufacturing operations into one.
Kohl noted that the company’s factory located in He Yuan has already
been relocated to the company’s facilities in Long Hua, and that its Golden
Bright facility in Ping Hsu is in the process of also being integrated into the
main operation in Long Hua. Once
completed, the consolidation of these three facilities is expected to contribute
major further cost reductions.
The company realized a $67,000 currency exchange gain during the fiscal
2010 second quarter compared with a $197,000 currency exchange loss during the
same period last year, due to the strong value of the
Euro compared with the U.S. dollar.
For the six-months, the company realized a currency exchange gain of
$348,000 compared with a currency exchange loss of $205,000 a year earlier.
Since the company does not engage in currency exchange rate hedging, the
company will in the future continue to realize currency exchange gains and
losses as a result of the fluctuation of currency exchange rates.
Kohl highlighted the company’s strong balance sheet, with cash and cash
equivalents and restricted cash increasing by $68,000 to $6.9 million, or $1.8
cash per share, from March 31, 2009 to September 30, 2009. He also noted that
inventory, accounts receivable and other current assets at September 30, 2009
were reduced by $1.03 million from levels at March 31, 2009 – representing
cash, cash equivalents and restricted cash being approximately half of current
assets. Current liabilities at
September 30, 2009 totaled $4.86 million and current assets were 13.9 million. Total shareholders’ equity at September
30, 2009 was $ 11.2 million, or $2.96 per diluted share, compared with $11.4
million, or $3.07 per diluted share, at March 31,
2009.
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 three manufacturing facilities in the People's Republic
of
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.
(Financial Tables Follow)
#
# #
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, |
||||
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
|
|
|
|
|
|
|
|
|
Net sales |
$ 5,219 |
|
$ 9,507 |
|
$9,834 |
|
$18,854 |
|
Cost of sales |
3,904 |
|
7,690 |
|
7,776 |
|
15,092 |
|
Gross profit |
1,315 |
|
1,817 |
|
2,058 |
|
3,762 |
|
Selling, general and
administrative expenses |
1,224 |
|
1,445 |
|
2,397 |
|
3,058 |
|
Operating income / (loss) |
91 |
|
372 |
|
(339) |
|
704 |
|
|
|
|
|
|
|
|
|
|
Non-operating items |
|
|
|
|
|
|
|
|
Interest expenses |
(12) |
|
(48) |
|
(30) |
|
(88) |
|
Exchange gain (loss), net |
67 |
|
(197) |
|
348 |
|
(205) |
|
Interest income |
19 |
|
9 |
|
23 |
|
20 |
|
Other income |
2 |
|
4 |
|
12 |
|
19 |
|
Total non-operating income (expenses) |
76 |
|
(232) |
|
353 |
|
(254) |
|
|
|
|
|
|
|
|
|
|
Net income before
income tax and non-controlling interest |
167 |
|
140 |
|
14 |
|
450 |
|
Income taxes |
0 |
|
38 |
|
0 |
|
77 |
|
Net Income before non-controlling
interests |
167 |
|
102 |
|
14 |
|
373 |
|
Less: Net income
attributable to non-controlling interest |
(28) |
|
(2) |
|
(11) |
|
14 |
|
Net Income attributable to Highway Holdings Limited |
$ 139 |
|
$ 100 |
|
$ 3 |
|
$ 387 |
|
|
|
|
|
|
|
|
|
|
Net Income – basic and diluted |
|
|
|
|
|
|
|
|
Net Income
attributable to Highway Holdings Limited |
$0.04 |
|
$0.03 |
|
$0.00 |
|
$0.10 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares |
|
|
|
|
|
|
|
|
Basic |
3,758 |
|
3,734 |
|
3,758 |
|
3,734 |
|
Diluted |
3,787 |
|
3,734 |
|
3,787 |
|
3,734 |
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet
(In
thousands, except per share data)
|
|
Sep 30 |
March 31 |
|
|
2009 |
2009 |
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$5,877 |
$5,809
|
|
Restricted cash |
1,028 |
1,028 |
|
Accounts receivable,
net of doubtful accounts |
2,568 |
3,426
|
|
Inventories |
3,824 |
4,010
|
|
Prepaid expenses and
other current assets |
617 |
672 |
|
Total current assets |
13,914 |
14,945
|
|
|
|
|
|
Property, plant and equipment, (net) |
2,464 |
2,840
|
|
Investment in affiliates |
2 |
2
|
|
Intangible assets, (net) |
16 |
24
|
|
Total assets |
16,396 |
$17,811
|
|
|
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$2,362 |
$2,166 |
|
Short-term borrowing |
553 |
1,850
|
|
Current portion of
long-term debt |
265 |
259
|
|
Accrual payroll and
employee benefits |
424 |
373 |
|
Other liabilities
and accrued expenses |
1,252 |
1,257 |
|
Total current liabilities |
4,856 |
5,905
|
|
Long-term debt – net of current portion |
161 |
294
|
|
Deferred income taxes |
163 |
163 |
|
Total liabilities |
5,180 |
6,362 |
|
|
|
|
|
Shareholders' equity: |
|
|
|
Common shares, $0.01
par value |
37 |
37 |
|
Additional paid-in capital |
11,224 |
11,224 |
|
Retained earnings (Accumulated
Deficit) |
42 |
154
|
|
Accumulated other comprehensive loss |
(14) |
(6) |
|
Treasury
shares, at cost – 37,800 shares as of March 31, 2009; and September 30, 2009
respectively |
(53) |
(53) |
|
Total Highway Holdings
Limited shareholders' equity |
11,236 |
11,356
|
|
Non-controlling interest |
(20) |
93 |
|
Total shareholders' equity |
11,216 |
11,449 |
|
Total liabilities and shareholders' equity |
16,396 |
$17,811 |