Highway Holdings Reports Fiscal 2017 Second Quarter And Six-Month Results

HONG KONG, Nov. 08, 2016 (GLOBE NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal 2017 second quarter and six months ended September 30, 2016.

Net sales for the fiscal 2017 second quarter were $4.2 million compared with $6.1 million in the same quarter a year earlier -- reflecting lower production output largely due to a temporary disruption caused by the relocation of certain manufacturing operations at the company's China facilities. Net sales also declined to a lesser extent due to decreased customer orders.

For the fiscal 2017 second quarter, the company reported a net loss of $128,000, or $0.03 per share, compared with net income of $391,000, or $0.10 per diluted share, a year earlier -- reflecting the impact on net sales of the relocation noted above and a one-time relocation expense of approximately $100,000.

Net sales for the six-month period were $9.44 million compared with $12.04 million a year ago, reflecting the disruption caused by the relocation of facilities and the decrease in customer orders noted above.

Net income for the six-month period was $37,000, or $0.01 per diluted share, compared with $695,000, or $0.18 per diluted share for the same period last year, reflecting the factors noted above.

Since February 2015, the company has been operating its metal stamping operations from temporary facilities while a new building was commissioned by the landlord. The company moved its operations out of the temporary facilities into the new building during the second quarter of fiscal 2017.

"The company continues to transition away from low margins business, with a focus on capturing new business to replace this business. At the same time, we are working diligently to maintain and grow business from our higher margin customers, which depends very much on the company's ability to minimize inflationary increases of operational costs in China," said Roland Kohl, chairman and chief executive officer of Highway Holdings.

Kohl emphasized that the company is continuing its initiatives in Myanmar by relocating some component manufacturing machinery and equipment to its Myanmar operation, with the goal of expanding its assembly and manufacturing capabilities in that emerging country. "Shifting more of the manufacturing operations to Myanmar will both lower the cost of operations and reduce transportation costs between the company's China and Myanmar facilities. These factors are expected to be attractive to a broader customer base and to lessen the dependency on the company's operations in China. For the short term, such adjustments may slightly influence the company's performance, but the initiatives are expected to secure and enhance the company's future in the medium and longer term," Kohl said.

Gross profit as a percentage of sales for the second quarter of fiscal 2017 was 26.6 percent compared with 25.7 percent a year earlier, reflecting the shift to higher margin business. Gross profit for the fiscal 2017 six-month period decreased to $2.4 million from $3.02 million a year ago due to the decrease in net sales. Gross profit as a percentage of sales increased to 25.5 percent from 25.1 percent, despite the sales decrease.

Selling, general and administrative expenses increased by $139,000 compared with the same period last year, reflecting the impact of the one-time $100,000 relocation expenses note above, and increased marketing expenses related to new business initiatives.

Net loss for the second quarter reflects a currency exchange gain of $43,000 compared with a $55,000 currency exchange gain for the same period last year. For the fiscal 2017 six-month period, the company realized a currency exchange gain of $26,000 compared with a currency exchange gain of $22,000 a year earlier. Since the company does not engage in currency exchange rate hedging, Highway Holdings will in the future continue to realize currency exchange gains and losses due to the fluctuation of currency exchange rates.

Kohl noted the company's balance sheet remains strong, with cash of approximately $8.8 million, or $2.30 per diluted share compared with $2.4 per diluted share a year earlier, exceeding all of its short- and long-term liabilities by $3.6 million.

Current liabilities at September 30, 2016 totaled $5.1 million and current assets were $15.05 million. Total shareholders' equity at September 30, 2016 was $11.19 million, or $2.94 per diluted share, compared with $11.93 million, or $3.14 per diluted share, at March 31, 2016.

About Highway Holdings Limited 

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 in Yangon in Myanmar.

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)

#   #  #
Consolidated Statement of Income  
(Dollars in thousands, except per share data)  
  Three Months Ended   Six Months Ended  
  September 30,   September 30,  
       2016          2015       2016       2015      
Net sales $   4,220       $ 6,139     $ 9,445     $ 12,038      
Cost of sales     3,096         4,562       7,035       9,019      
Gross profit     1,124         1,577       2,410       3,019      
Selling, general and administrative expenses     1,305         1,166       2,360       2,256      
Operating (loss)/income     (181       411         50       763      
Non-operating items                  
Exchange gain /(loss), net     43         55       26       22      
Interest income     1         4       2       7    
Other income/(expenses)     11         -       11       1      
Total non-operating income/ (expenses)     55         59       39       30      
Net (loss)/income before income tax and non-controlling interests     (126       470       89       793      
Income taxes     -         (79 )     (50 )     (95 )    
Net ( loss)/income before non-controlling interests      (126       391       39       698      
Less: net gain attributable to non-controlling interests     2         -       2       3      
Net (loss) /income attributable to Highway Holdings Limited shareholders ($    128     $ 391         37     $  695      
Net (loss)/income per share - basic and diluted   ($ 0.03 )     $ 0.10     $ 0.01     $ 0.18      
Weighted average number of shares outstanding                    
Basic     3,802         3,787       3,802       3,787      
Diluted     3,802          3,795       3,802       3,795   ,  

Consolidated Balance Sheet
(Dollars in thousands, except per share data)
  Sep t 30   March 31
    201 6       201 6  
Current assets:      
Cash and cash equivalents $ 8,752     $ 9,140  
Accounts receivable, net of doubtful accounts   3,857       4,321  
Inventories   1,376       1,425  
Prepaid expenses and other current assets   1,068       844  
Total current assets   15,053       15,730  
Property, plant and equipment, (net)   1,072       1,121  
Goodwill   77       77  
Long-term deposits   111       111  
Total assets $ 16,313     $ 17,039  
Current liabilities:      
Accounts payable $ 1,489     $ 1,307  
Other liabilities and accured expenses   2,663       2,789  
Income tax payable   414       440  
Dividend payable   528       537  
Total current liabilities   5,094       5,073  
Long term liabilities :      
Deferred income taxes   32       32  
Total liabilities   5,126       5,105  
Shareholders' equity:      
Common shares, $0.01 par value   38       38  
Additional paid-in capital   11,370       11,370  
 (Deficit ) / Retained earnings   (212 )     512  
Accumulated other comprehensive (loss)/income   (46 )     (34 )
Treasury shares, at cost - 5,049 shares as of September, 30, 2016; and March 31, 2016 respectively   (14 )     (14 )
Total Highway Holdings Limited shareholders' equity   11,136       11,872  
Non-controlling interest   51       62  
Total shareholders' equity   11,187       11,934  
Total liabilities and shareholders' equity $ 16,313     $ 17,039  

CONTACT:Gary S. Maier Maier & Company, Inc.(310) 471-1288