HONG KONG, Oct. 21, 2023 /PRNewswire/ — Highway Holdings Limited (Nasdaq: HIHO) today reported financial results for the first quarter of fiscal year 2024.
Net sales for the quarter ended June 30, 2023 were $1.35 million compared with $2.94 million in the first quarter of fiscal year 2023. Net loss for the first quarter of fiscal year 2024 was $338,000, or $0.08 per diluted share, compared with net income of $390,000, or $0.09 per diluted share, in the first quarter of fiscal year 2023.
Roland Kohl, chairman, president and chief executive officer of Highway Holdings, commented, "We are still dealing with the fallout of the previous COVID pandemic. Most of our sales are to manufacturers of household related products. Hidden behind the COVID supply chain problems was actually a big boom for our customers’ products, as demand for home and household related products increased as people utilized their time at home to improve their living spaces. Once the COVID restrictions were released worldwide, there was a surge in travel as people left their homes and resumed outdoor and recreational activities. As a result, demand fell significantly for home and household-related products, leaving a big buying hole where many of our customers had previously benefitted."
"The negative impact of this demand boom-to-bust cycle was made worse by the ongoing Russia/Ukraine war, global inflation and continuing severe supply chain constraints, which affected industries worldwide and led to material and product shortages, significant delays, and much higher transportation costs. We tried to work closely with our customers to support their forecasts during this challenging period, including substantially increasing our inventories in an effort to solve or prevent customer shortages. This led to overordering and very high inventory levels at certain customers, as well as suppliers, including us."
"All of these factors taken together caused a sudden breakdown of our business, which started in our last fiscal 4th quarter and became worse in the current fiscal year, which resulted in a 54% decline in our sales in the first quarter of fiscal 2024. Based on discussions with customers, we expect that this prolonged challenging environment will negatively impact our business for at least the next 6-12 months. Given the outlook for continued negative business headwinds, we have taken decisive action to reduce our operating costs, including salary reductions for senior management, reduction in rental space in Hong Kong and China, and the reduction of all non-essential expenses. We have previously operated in challenging environments, and we believe that by taking immediate and significant cost-saving actions, we will be better able to operate and ultimately emerge from this severe business downturn. Importantly, because we have been conservative with our spending in the past, we are well prepared with a healthy cash safety cushion, and we expect to emerge one of the winners when business conditions return to normal and to reap the benefits in the longer-term."
Select Additional First Quarter Fiscal 2024 Financial Results:
Gross profit for the first quarter of fiscal year 2024 was $377,000, or 28%, compared with $1,052,000 and 35.7%, respectively, in the first quarter of fiscal year 2023. The Company noted that the periods are not comparable, as the fiscal 2023 quarter benefitted from reduced rental expenses provided by the Chinese government and some salary subsidies provided by the Hong Kong government to the Company.
Selling, general and administrative expenses for the first quarter of fiscal year 2024 were higher by $90,000 than in the fiscal 2023 quarter despite the Company’s heavy cost cutting actions, because the year ago period’s expenses were decreased by the above mentioned benefits of reduced rental expenses provided by the Chinese government and some salary subsidies provided by the Hong Kong government, which in most cases were reversed in the current first quarter of fiscal year 2024.
The Company realized a currency exchange gain of $17,000 in the first quarter of fiscal year 2024, compared to an exchange gain of $18,000 in the first quarter of fiscal year 2023, as higher interest rates offset weakness in the RMB.
Highlighting the Company’s solid financial position, it ended the first quarter of fiscal year 2024 with $6.8 million of cash and cash equivalents, which exceeded its combined short- and long-term liabilities by $1.7 million. At June 30, 2023, the Company had working capital of $6 million, with a current ratio of 2.6:1, and total shareholders’ equity of $7.5 million, compared to $8.2 million as of March 31, 2023.
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 remaining 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
(In thousands of U.S. dollars, except for shares and per share data)
(Unaudited)
Fiscal First Quarter Ended
June 30,
2023
2022
Net sales
$1,347
$2,942
Cost of sales
970
1,890
Gross profit
377
1,052
Selling, general and administrative expenses
777
687
Operating income (loss)
(400)
365
Non-operating income (expense):
Exchange gain (loss), net
17
18
Interest income
40
4
Gain (loss) on disposal of assets
–
–
Other income (expense)
–
5
Total non-operating income (expenses)
57
27
Net income (loss) before income taxes
(343)
392
Income taxes
3
4
Net income (loss)
(340)
396
Less: net gain/(loss) attributable to non-controlling interests
(2)
6
Net income/(loss) attributable to Highway Holdings Limited’s
($338)
$390
Shareholders
Net income (loss) per share – Basic
($0.08)
$0.10
Net income (loss) per share – Diluted
($0.08)
$0.09
Weighted average number of shares outstanding:
Basic
4,248
4,036
Diluted
4,248
4,279
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands of U.S. dollars)
(Unaudited)
(audited)
June 30,
March 31,
2023
2023
Current assets:
Cash and cash equivalents
$6,841
$6,952
Accounts receivable, net of doubtful accounts
1,148
1,886
Inventories
1,513
1,413
Prepaid expenses and other current assets
261
406
Income tax recoverable
7
3
Total current assets
9,770
10,660
Goodwill, net
–
–
Property, plant and equipment, net
344
401
Operating lease right-of-use assets
2,281
2,514
Long-term deposits
203
213
Long-term loan receivable
95
95
Total assets
12,693
13,883
Current liabilities:
Accounts payable
$397
$928
Operating lease liabilities, current
556
573
Accrued expenses and other liabilities
1,839
1,991
Income tax payable
543
568
Dividend payable
439
1
Total current liabilities
3,774
4,061
Operating lease liabilities, non-current
1,284
1,482
Deferred income taxes
104
107
Long-term accrued expenses
17
17
Total liabilities
5,179
5,667
Shareholders’ equity:
Preferred shares, $0.01 par value
–
–
Common shares, $0.01 par value
44
41
Additional paid-in capital
12,100
12,003
Accumulated deficit
(4,175)
(3,396)
Accumulated other comprehensive income (loss)
(465)
(444)
Non-controlling interest
10
12
Total shareholders’ equity
7,514
8,216
Total liabilities and shareholders’ equity
$12,693
$13,883
Source : HIGHWAY HOLDINGS REPORTS FIRST QUARTER FISCAL 2024 RESULTS
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