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Highway Holdings Reports Fiscal 2019 First Quarter Results

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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

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