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Highway Holdings Reports Fiscal 2021 Third Quarter and Nine-Month Results

HONG KONG--(BUSINESS WIRE)--Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal third quarter and nine months ended December 31, 2020, reflecting the impact of the COVID-19 pandemic on its customers and supply chain.

Net sales for the fiscal 2021 third quarter were $2.5 million compared with $3.6 million a year ago. For the same period, net income was $84,000, or $0.02 per diluted share, compared with $318,000, or $0.08 per diluted share, in the same quarter a year earlier.

For the nine months, net sales were $7.3 million compared with $9.6 million a year ago. For the same period, the company reported net income of $90,000, or $0.02 per diluted share, compared with a net income of $123,000, or $0.03 per diluted share, a year earlier.

“Results for the quarter were impacted by the ongoing global effects of COVID-19. In addition, trade-related issues involving China, the United States and Australia may have impacted the supply of components and raw materials for the whole industry and also the requirements for the company’s regular business. These factors also delayed the start of manufacturing activities for new business from existing and new customers. Certain other projects have also been delayed due to COVID-related travel restrictions that prevented the company’s engineers traveling from China to Myanmar to setup new production lines,” said Roland Kohl, chairman, president and chief executive officer of Highway Holdings.

“Notwithstanding the current political unrest in Myanmar, the company’s Yangon factory has been able, to date, to continue to operate, manufacture and ship products to our customers; and there have been no delays in receiving raw materials due to this situation,” Kohl said.

Kohl noted the company’s financial results benefitted from the reversal of prior-year tax provisions, as well as government subsidies from China and Hong Kong reduced rental and electricity charges in China.

Gross margin as a percentage of sales for the three months ended December 31, 2020 increased to 34.0 percent from 33.7 percent a year earlier, and gross margin as a percentage of sales for the nine months increased to 31.7 percent from 29.0 percent last year.

Selling, general and administrative expenses decreased for the quarter by $26,000 and by $524,000 for the nine-month period on a year-over-year basis – benefitting from streamlining of operations, government subsidies for employees and reduced electricity charges.

Net income for the fiscal third quarter reflects a currency exchange loss of $22,000 compared with a currency exchange gain of $17,000 a year ago. The company reported a $60,000 currency exchange loss for the fiscal 2021 nine months compared with a $112,000 currency exchange gain 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, 2020 was approximately $7.5 million, or approximately $2.00 per diluted share, compared with $8.8 million at March 31, 2020. Cash utilization reflects an increase in pre-payments and a reduction of accounts payable, both of which were made to secure delivery of production material. The present shortage of raw materials may remain for the foreseeable future, with the sharp increase in prices caused by the interruption of the supply chain affecting the company’s current production – including the production of the Playmaji gaming console manufacturing order, as previously announced, which was delayed due to these factors.

The company’s current ratio was 2.9:1 at December 31, 2020, and the company's total cash exceeded all current and long-term liabilities combined by $2 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.

(Financial Tables Follow)

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,

 

 

 

 

 

 

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

Net sales

$2,544

 

 

$3,590

 

 

$7,320

 

 

$9,630

 

Cost of sales

1,676

 

 

2,379

 

 

5,000

 

 

6,828

 

Gross profit

868

 

 

1,211

 

 

2,320

 

 

2,802

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

849

 

 

875

 

 

2,277

 

 

2,801

 

Operating income/(loss)

19

 

 

336

 

 

43

 

 

1

 

 

 

 

 

 

 

 

 

Non-operating items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange gain /(loss), net

(22

)

 

17

 

 

(60

)

 

112

 

Interest income

7

 

 

12

 

 

15

 

 

42

 

Gain/(Loss) on disposal of Asset

0

 

 

14

 

 

9

 

 

17

 

Other income/(expenses)

0

 

 

0

 

 

8

 

 

1

 

Total non-operating income/(expenses)

(15

)

 

43

 

 

(28

)

 

172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit before income tax and non-controlling interests

4

 

 

379

 

 

15

 

 

173

 

Income taxes benefit/(expense)

80

 

 

(60

)

 

80

 

 

(60

)

Net profit before non-controlling interests

84

 

 

319

 

 

95

 

 

113

 

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

0

 

 

1

 

 

5

 

 

(10

)

Net income/(loss) attributable to Highway Holdings Limited’s shareholders

84

$318

 

90

$123

 

 

 

 

 

 

 

 

Net Gain/(loss) per share – Basic and Diluted

Basic

$0.02

 

 

$0.08

 

 

$0.02

 

 

$0.03

 

Diluted

$0.02

 

 

$0.08

 

 

$0.02

 

 

$0.03

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

Basic

3,977

 

 

3,977

 

 

3,977

 

 

3,895

 

Diluted

4,173

 

 

3,977

 

 

4,073

 

 

3,895

 

 

 

 

 

 

 

 

 

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES

Consolidated Balance Sheet

(Dollars in thousands, except per share data)

 

 

Dec 31

 

Mar 31

 

2020

 

2020

 

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$7,487

 

 

$8,827

 

Accounts receivable, net of doubtful accounts

2,017

 

 

2,008

 

Inventories

1,501

 

 

2,000

 

Prepaid expenses and other current assets

583

 

 

388

 

Total current assets

11,588

 

 

13,223

 

 

 

 

 

Property, plant and equipment, (net)

966

 

 

878

 

Operating lease right-of-use assets

2,944

 

 

3,710

 

Long-term deposits

263

 

 

263

 

Long-term loan receivable

95

 

 

95

 

Investments in equity method investees

-

 

 

-

 

Total assets

$15,856

 

 

$18,169

 

 

 

 

 

Current liabilities:

 

 

 

Accounts payable

$620

 

 

$997

 

Operating lease liabilities, current

749

 

 

782

 

Other liabilities and accrued expenses

2,021

 

 

2,294

 

Income tax payable

553

 

 

564

 

Dividend payable

5

 

 

351

 

Total current liabilities

3,948

 

 

4,988

 

 

 

 

 

Long term liabilities:

 

 

 

Operating lease liabilities, non-current

1,351

 

 

2,034

 

Deferred income taxes

229

 

 

229

 

Total liabilities

5,528

 

 

7,251

 

 

 

 

 

Shareholders’ equity:

 

 

 

Preferred shares, $0.01 par value

-

 

 

-

 

Common shares, $0.01 par value

40

 

 

40

 

Additional paid-in capital

11,596

 

 

11,537

 

Accumulated deficit

(1,410

)

 

(865

)

Accumulated other comprehensive income/(loss)

87

 

 

196

 

Non-controlling interest

15

 

 

10

 

Total shareholders’ equity

10,328

 

 

10,918

 

 

 

 

 

Total liabilities and shareholders’ equity

$15,856

 

 

$18,169

 

 

Contacts

Gary S. Maier

310-471-1288

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