Highway Holdings Limited (Nasdaq:HIHO) today reported
results for its fiscal 2022 third quarter and nine months ended
December 31, 2021 – reflecting strong year-over-year improvement
for both periods, despite the ongoing impact of COVID-19 and supply
chain and delivery challenges.
Net sales for the fiscal 2022 third quarter increased by 18
percent to $3.0 million from $2.5 million a year ago. Net income
for the same period climbed almost three times to $240,000, or
$0.06 per diluted share, from $84,000, or $0.02 per diluted share,
in the same quarter a year earlier.
For the nine months, net sales increased by 28 percent to $9.4
million from $7.3 million a year ago. For the same period, net
income climbed sharply to $812,000, or $0.19 per diluted share,
from $90,000, or $0.02 per diluted share, a year earlier.
“Results for the quarter continued to be impacted by the ongoing
global effects of COVID-19. In addition, trade-related issues
involving China, the United States and Australia contributed to
industry-wide supply chain and raw material challenges. These
factors affected the business of our existing customers and caused
the delay in commencing the manufacture of a new customer’s
products. Production for a new electronic product, as previously
reported, was delayed by almost one year due to shortage of
electronic components, and we were finally able to commence the
first production run during the previous two quarters. Initial
orders have now been shipped and delivered. The situation was
further compounded by delivery backlogs at U.S. ports,” said Roland
Kohl, president and chief executive officer of Highway
Holdings.
“Despite the military coup in Myanmar, our factory in that
country has been operating smoothly during past two quarters. In
fact, there have been fewer issues at our Myanmar facility due to
the availability of materials and other Covid-related constraints
that have impacted our operations in China,” Kohl added.
Gross margin as a percentage of sales for the three months ended
December 31, 2021 decreased to 28.6 percent from 34.1 percent a
year earlier. Gross margin as a percentage of sales for the nine
months was 30.8 percent compared with 31.7 percent last year.
Selling, general and administrative expenses decreased for the
quarter by $178,000 and by $129,000 for the nine-month period on a
year-over-year basis.
Net income for the fiscal third quarter reflects a currency
exchange loss of $15,000 compared with a currency exchange loss of
$22,000 a year ago.
“Certain financial comparisons on a historical basis are
somewhat misleading due to the extraordinary impact of Covid-19
exposure, including governmental subsidies and business
interruptions, during the past two years. Nonetheless, our increase
in profitability was essentially due to increased sales,” Kohl
said.
The company reported a $20,000 currency exchange loss for the
fiscal 2022 nine months compared with a $60,000 currency exchange
loss a year earlier. The currency exchange losses in the current
year were mainly due to the strengthening of the RMB. The company
does not engage in currency exchange rate hedging, and the
fluctuations in the exchange rate of the RMB and Kyat are expected
to affect the company’s future results.
Kohl noted the company’s balance sheet remains strong, despite a
decrease in cash. The company’s total cash position at December 31,
2021 was approximately $6.8 million, or approximately $1.6 per
diluted share, compared with $7.8 million at March 31, 2021. Cash
utilization reflects an increase in pre-payments for long-term
orders, which were made to secure delivery of future production
material, as well as dividend payments the company made to its
shareholders during the past two years. The company’s increased
accounts receivable on its balance sheet reflects, in part, the
impact of late product shipments near the end of the quarter, as
well as extreme transportation delays and customer terms of upon
receipt of goods payment.
The company’s current ratio was 2.9:1 at December 31, 2021, and
the company's total cash exceeded all current and long-term
liabilities combined by $1.6 million.
About Highway Holdings
Highway Holdings is an international manufacturer of a wide
variety of high-quality parts and products for blue chip equipment
manufacturers based primarily in Germany. Highway Holdings’
administrative office is 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, the impact of the worldwide COVID-19
pandemic, 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
Nine Months Ended
December 31,
December 31,
2021
2020
2021
2020
Net sales
$
2,995
$
2,544
$
9,357
$
7,320
Cost of sales
2,137
1,676
6,476
5,000
Gross profit
858
868
2,881
2,320
Selling, general and administrative
expenses
671
849
2,148
2,277
Operating income
187
19
733
43
Non-operating items
Exchange gain /(loss), net
(15
)
(22
)
(20
)
(60
)
Interest income
3
7
9
15
Gain/(Loss) on disposal of Asset
0
0
14
9
Other income/(expenses)
0
0
1
8
Total non-operating income/ (expenses)
(12
)
(15
)
4
(28
)
Net profit before income tax and
non-controlling interests
175
4
737
15
Income taxes benefit/(expense)
72
80
100
80
Net profit before non-controlling
interests
247
84
837
95
Less: net gain/(loss) attributable to
non-controlling interests
7
0
25
5
Net income attributable to Highway
Holdings Limited’s shareholders
240
84
812
90
Net gain per share – Basic and Diluted
Basic
$
0.06
$
0.02
$
0.20
$
0.02
Diluted
$
0.06
$
0.02
$
0.19
$
0.02
Weighted average number of shares
outstanding
Basic
4,030
3,977
4,030
3,977
Diluted
4,205
4,173
4,205
4,073
HIGHWAY HOLDINGS LIMITED AND
SUBSIDIARIES
Consolidated Balance
Sheet
(Dollars in thousands, except per
share data)
Dec 31
Mar 31
2021
2021
Current assets:
Cash and cash equivalents
$
6,780
$
7,757
Accounts receivable, net of doubtful
accounts
2,385
973
Inventories
2,522
2,238
Prepaid expenses and other current
assets
312
513
Total current assets
11,999
11,481
Property, plant and equipment, (net)
769
833
Operating lease right-of-use assets
2,032
2,795
Long-term deposits
290
282
Long-term loan receivable
95
95
Investments in equity method investees
-
-
Total assets
$
15,185
$
15,486
Current
liabilities:
Accounts payable
$
1,262
$
653
Operating lease liabilities, current
982
821
Other liabilities and accrued expenses
1,931
2,347
Income tax payable
23
58
Dividend payable
0
85
Total current liabilities
4,198
3,964
Long term
liabilities :
Operating lease liabilities,
non-current
447
1,142
Deferred income taxes
522
607
Total liabilities
5,167
5,713
Shareholders’
equity:
Preferred shares, $0.01 par value
-
-
Common shares, $0.01 par value
40
40
Additional paid-in capital
11,795
11,709
Accumulated deficit
(1,713
)
(2,041
)
Accumulated other comprehensive
income/(loss)
(146
)
48
Non-controlling interest
42
17
Total shareholders’ equity
10,018
9,773
Total liabilities and shareholders’
equity
$
15,185
$
15,486
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version on businesswire.com: https://www.businesswire.com/news/home/20220131005326/en/
Gary S. Maier 310-471-1288
Highway (NASDAQ:HIHO)
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