News Column

Highway Holdings Reports Fiscal 2015 First Quarter Results

July 28, 2014

HONG KONG, July 28, 2014 (GLOBE NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal 2015 first quarter ended June 30, 2014, reflecting increased profitability and a continued strong balance sheet.

Net income for the fiscal first quarter increased sharply to $256,000, or $0.07 per diluted share, from $150,000, or $0.04 per diluted share, last year. Net sales for the same period were $5.6 million compared to $5.9 million a year earlier – reflecting the reduction of some low margin business.

"Results for the quarter further validate the success of the company's strategic initiatives implemented during the past three years. Despite anticipated reduced sales, net income increased substantially -- benefiting from continuous operational improvements and increased pricing to major customers," said Roland Kohl, chairman, president and chief executive officer.

Kohl added that he expects the company's increased utilization of the lower-cost Myanmar facility as an alternative solution for its higher-cost assembly manufacturing in China will enhance organic growth and generate new business opportunities. Although net sales decreased in the fiscal 2015 first quarter due to the loss of low margin sales, gross margin and gross profit increased compared with a year ago. Gross profit for the 2015 fiscal first quarter was $1.33 million compared with $1.25 million in the same period a year ago, with gross profit as a percentage of sales increasing to 23.7 percent from 21.3 percent a year ago.

Selling, general and administrative expense for the 2015 fiscal first quarter remained substantially unchanged compared with the fiscal first quarter last year, primarily due to expense management -- despite wage inflation in China and costs associated with the company's operation in Myanmar.

Kohl highlighted the company's solid financial position, with cash, cash equivalents and restricted cash of $6.9 million -- exceeding the combined short- and long-term liabilities by $3.2 million.

At June 30, 2014 the company had working capital of $10.9 million.

Total shareholders' equity at June 30, 2014 was $12.4 million compared with $12.1 million as of March 31, 2014 and the company's current ratio was 4.0:1 at June 30, 2014.

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.

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)
 
 Quarter Ended
 June 30
  2014 2013
Net sales$5,601$5,872
Cost of sales 4,272 4,622
Gross profit 1,329 1,250
Selling, general and administrative expenses 1,036 1,025
Operating income 293 225
     
Non-operating income (expense) :    
Interest expense -- (1)
Exchange gain (loss), net 2 3
Interest income 4 4
Other income/expense (3) --
Total non-operating income (expenses) 3 6
     
Net income before income tax and non-controlling interests 296 231
Income taxes (41) (81)
Net income 255 150
     
Gain attributable to non-controlling interests 1 --
     
Net income attributable to Highway Holdings Limited$256$150
 Shareholders    
     
Net income per share – basic and diluted$0.07  $0.04
     
Weighted average number of shares outstanding:    
 

Basic
3,779 3,779
 

Diluted
 

3,789
 

3,781
 
 
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except per share data)
 
 June 30March 31
  2014 2014
Current assets:    
Cash and cash equivalents$6,227$5,416
Restricted cash 643 643
Accounts receivable, net of doubtful accounts 3,223 3,157
Inventories 3,060 3,700
Investment in associate 26 --
Prepaid expenses and other current assets 1,310 1,044
Total current assets 14,489 13,960
     
Property, plant and equipment, net 1,146 1,213
Loan receivable and long-term deposits 436 603
Total assets 16,071 15,776
     
Current liabilities:    
Accounts payable 1,544 1,577
Other liabilities and accrued expenses 1,812 1,730
Income tax payable 274 279
Total current liabilities 3,630 3,586
     
Deferred income taxes 44 44
Total liabilities 3,674 3,630
     
Shareholders' equity:    
Common shares, $0.01 par value 38 38
Additional paid-in capital 11,340 11,340
Retained earnings 1,027 770
Accumulated other comprehensive income 1 7
Treasury shares, at cost – 5,049 shares as of March 31, 2014; and on June 30, 2014 (14) (14)
Non controlling interest 5 5
Total shareholders' equity 12,397 12,146
     
Total liabilities and shareholders' equity 16,071 15,776

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

Source: Highway Holdings Limited


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