HONG KONG, Oct. 20, 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 i ncome (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 - B asi c | ($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 o ther 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' equit y | $12,693 | $13,883 |
SOURCE Highway Holdings Limited
