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Highway Holdings Reports Fiscal 2021 Second Quarter Results

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Highway Holdings Limited (NASDAQ:HIHO) today reported results for its fiscal 2021 second quarter and six-months ended September 30, 2020.

Net sales for the fiscal 2021 second quarter were $2.7 million compared with $3.2 million a year earlier. Net income for the same period was $229,000, or $0.06 per diluted share, compared with a net loss of $94,000, or $0.02 per share, a year earlier.

Net sales for the first half of fiscal 2021 were $4.8 million compared with $6.0 million a year earlier. Net income for the same period was $6,000, or $0.00 per diluted share, compared with a net loss of $196,000, or $0.05 per share, a year ago.

"Results for the quarter and first half of fiscal 2021 reflect the worldwide impact of the coronavirus pandemic. Nonetheless, despite unfavorable year-over-year sales comparisons, sales on a quarterly sequential basis actually increased 30 percent. Net income performance, though modest, was encouraging, despite the continued impact of the pandemic on operations and on our customers," said Roland Kohl, chairman, president and chief executive officer.

Kohl noted that results for the quarter benefited from various subsidies provided by the governments in Hong Kong and Shenzhen due to the continued impact of COVID-19, as well as from voluntary reductions of substantially all staff salaries.

Kohl emphasized the company expects to be effected by the coronavirus for at least another quarter, and potentially for the rest of the fiscal year -- reflecting the offset of certain customer business increases by other customers more sharply experiencing the impact of COVID-19 and reducing order activity.

"Nonetheless, new business opportunities are continuing and are encouraging, though the timing can be difficult to gauge and closing new business opportunities take longer due to the numerous travel restrictions caused by COVID-19. We remain optimistic about the future and believe the trade friction between the United States and China may actually be to our benefit because of our ability to manufacture in Myanmar," Kohl said.

Gross profit for the second quarter of fiscal 2021 was $931,000 compared with $845,000 a year ago. Gross profit as a percentage of sales for the same period was 34.2 percent compared with 26.4 percent a year earlier. Gross profit for the six-month period of fiscal 2021 was $1.5 million compared with $1.6 million a year ago. Gross profit as a percentage of sales for the same period was 30.4 percent compared with 26.3 percent a year earlier. "Gross profit for both the quarter and six months of 2021 is not truly representative of the company's expected annualized financial performance due to the many operational constraints and extraordinary income from varies governmental agencies," Kohl said.

Net gain for the second quarter reflects a currency exchange loss of $18,000 compared with a $54,000 currency exchange gain for the same period last year -- mainly due to weakening of RMB. For the fiscal 2021 six-month period, the company reported a currency exchange loss of $38,000 compared with a currency exchange gain of $95,000 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 and cash equivalents in excess of $8.6 million, or approximately $2.2 per diluted share, exceeding all of its short- and long-term liabilities by approximately $2.4 million.

Current liabilities at September 30, 2020 totaled $4.4 million and current assets were $12.2 million. Total shareholders' equity at September 30, 2020 was $10.5 million, or $2.64 per diluted share, compared with $10.9 million, or $2.80 per diluted share, at March 31, 2020.

About Highway Holdings Limited

Highway Holdings is an international manufacturer of a wide variety quality parts and products for blue chip equipment manufacturers based primarily in Germany. Highway Holdings' administrative offices are located in Hong Kong and its manufacturing facilities are located in Yangon, Myanmar and Shenzhen, China.

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.

 

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,

 

 

 

 

 

2020

 

2019

 

 

2020

 

2019

 

 

 

 

 

Net sales

$2,719

 

$3,195

 

$4,776

 

$6,040

 

Cost of sales

 

1,788

 

 

2,350

 

 

3,324

 

4,449

 

Gross profit

 

931

 

 

845

 

 

1452

 

1,591

 

 

 

 

 

Selling, general and administrative expenses

 

698

 

 

1,014

 

 

1,428

 

1,926

 

Operating income/(loss)

 

233

 

 

(169

)

 

24

 

(335

)

 

 

 

 

Non-operating items

 

 

 

 

 

 

 

Exchange gain /(loss), net

 

(18

)

 

54

 

 

(38

)

95

 

Interest income

 

4

 

 

19

 

 

8

 

29

 

Gain/(Loss) on disposal of Asset

 

8

 

 

2

 

 

9

 

3

 

Other income/(expenses)

 

7

 

 

-

 

 

8

 

1

 

Total non-operating income/ (expenses)

 

1

 

 

75

 

 

(13

)

128

 

 

 

 

 

 

 

 

 

Net income (loss) before income tax and non-controlling interests

 

234

 

 

(94

)

 

11

 

(207

)

Income taxes

 

0

 

 

0

 

 

0

 

0

 

Net income (loss) before non-controlling interests

 

234

 

 

(94

)

 

11

 

(207

)

Less: net gain/(loss) attributable to non-controlling interests

 

5

 

 

0

 

 

5

 

(11

)

Net income/(loss) attributable to Highway

Holdings Limited's shareholders

 

 

 

229

 

 

 

 

 

(94

 

)

 

 

 

6

 

 

 

(196

)

 

 

 

 

Net Gain/ (loss) per share – Basic

$0.06

 

($0.02

)

$0.00

 

($0.05

)

Net Gain/ (loss) per share - Diluted

$0.06

 

($0.02

)

 

 

 

$0.00

 

 

($0.05

)

 

 

 

 

Weighted average number of shares outstanding

 

 

 

Basic

 

3,909

 

 

3,904

 

 

3,909

 

3,853

 

Diluted

3,981

 

 

 

3,904

 

 

 

 

3,981

 

 

 

 3,853

 

 

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES

Consolidated Balance Sheet

(Dollars in thousands, except per share data)

 

 

Sept 30

 

Mar 31

 

2020

 

2020

 

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$8,642

 

$8,827

Accounts receivable, net of doubtful accounts

1,800

 

2,008

Inventories

1,536

 

2,000

Prepaid expenses and other current assets

209

 

388

Total current assets

12,187

 

13,223

 

 

 

 

Property, plant and equipment, (net)

911

 

878

Operating lease right-of-use assets

3,288

 

3,710

Long-term deposits

263

 

263

Long-term loan receivable

95

 

95

Investments in equity method investees

-

 

-

Total assets

$16,744

 

$18,169

 

 

 

 

Current liabilities:

 

 

 

Accounts payable

$608

 

$997

Operating lease liabilities, current

853

 

782

Other liabilities and accrued expenses

1,917

 

2,294

Income tax payable

588

 

564

Dividend payable

399

 

351

Total current liabilities

4,365

 

4,988

 

 

 

 

Long term liabilities :

 

 

 

Operating lease liabilities, non-current

1,648

 

2,034

Deferred income taxes

229

 

229

Total liabilities

6,242

 

7,251

 

 

 

 

Shareholders' equity:

 

 

 

Preferred shares, $0.01 par value

-

 

-

Common shares, $0.01 par value

40

 

40

Additional paid-in capital

11,574

 

11,537

Accumulated deficit

(1,257)

 

(865)

Accumulated other comprehensive income/(loss)

129

 

196

Treasury shares, at cost – Nil shares as of Sep 30, 2020; and on March 31, 2020

-

 

-

Non-controlling interest

16

 

10

Total shareholders' equity

10,502

 

10,918

 

 

 

 

Total liabilities and shareholders' equity

$16,744

 

$18,169

 

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