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WKN: A0X91G | ISIN: VGG456671053 | Ticker-Symbol: 46H
Frankfurt
27.05.24
08:08 Uhr
20,400 Euro
0,000
0,00 %
Branche
Elektrotechnologie
Aktienmarkt
ASIEN
1-Jahres-Chart
HOLLYSYS AUTOMATION TECHNOLOGIES LTD Chart 1 Jahr
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HOLLYSYS AUTOMATION TECHNOLOGIES LTD 5-Tage-Chart
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20,40020,60027.05.
PR Newswire
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Hollysys Automation Technologies Ltd: Hollysys Automation Technologies Reports Unaudited Financial Results for the Second Quarter and the First Half Year Ended December 31, 2023

First Half of Fiscal Year 2024 Financial Highlights

  • Total revenues were $423.6 million, an increase of 2.1% compared to the comparable prior year period.
  • Gross margin was 31.9%, compared to 36.1% for the comparable prior year period. Non-GAAP gross margin was 32.1%, compared to 36.3% for the comparable prior year period.
  • Net income attributable to Hollysys was $45.8 million, a decrease of 34.3% compared to the comparable prior year period. Non-GAAP net income attributable to Hollysys was $46.8 million, a decrease of 35.5% compared to the comparable prior year period.
  • Diluted earnings per share was $0.74, a decrease of 33.9% compared to the comparable prior year period. Non-GAAP diluted earnings per share was $0.75, a decrease of 35.9% compared to the comparable prior year period.
  • Net cash provided by operating activities was $88.3 million.
  • Days sales outstanding ("DSO") was 146 days, compared to 144 days for the comparable prior year period.
  • Inventory turnover days were 74 days, compared to 74 days for the comparable prior year period.

Second Quarter of Fiscal Year 2024 Financial Highlights

  • Total revenues were $223.7 million, a decrease of 8.6% compared to the comparable prior year period.
  • Gross margin was 29.5%, compared to 39.6% for the comparable prior year period. Non-GAAP gross margin was 29.7%, compared to 39.7% for the comparable prior year period.
  • Net income attributable to Hollysys was $14.1 million, a decrease of 70.7% compared to the comparable prior year period. Non-GAAP net income attributable to Hollysys was $14.6 million, a decrease of 70.6% compared to the comparable prior year period.
  • Diluted earnings per share was $0.23, a decrease of 70.5% compared to the comparable prior year period. Non-GAAP diluted earnings per share was $0.23, a decrease of 71.3% compared to the comparable prior year period.
  • Net cash provided by operating activities was $60.1 million.
  • DSO was 138 days, compared to 119 days for the comparable prior year period.
  • Inventory turnover days were 68 days, compared to 72 days for the comparable prior year period.

See the section entitled "Non-GAAP Measures" for more information about non-GAAP gross margin, non-GAAP net income attributable to Hollysys and non-GAAP diluted earnings per share.

BEIJING, March 7, 2024 /PRNewswire/ -- Hollysys Automation Technologies Ltd. (NASDAQ: HOLI) ("Hollysys," the "Company" or "we"), a leading provider of automation and control technologies and applications in China, today announced its unaudited financial results for the second quarter and the first half of fiscal year 2024 ended December 31, 2023.

In the Industrial Automation segment, the Company's innovation and development capabilities have once again received industry recognition. In this quarter, the Company was selected for the "2023 Intelligent Manufacturing System Solution List Leading Projects" by the Ministry of Industry and Information Technology of China and "2023 Zhejiang Province High-tech Enterprise Innovation Capability Top 500 List". I t was a lso awarded the title of "2023 Zhejiang Province Technology Leading Enterprise". Meanwhile, the Company continues to strengthen its technological foundation and seek development opportunities in various fields. During this quarter, the Company introduced Advanced Planning and Scheduling Technology Plus, which can optimize the entire process from supply chain to production and order delivery, further promoting the development of the Company's industrial software system.

In the chemical and petrochemical sector, the Company utilized its Advanced Process Control ("APC") platform to successfully support a chemical company's first boiler optimization control project, and achieved a fully automatic optimization of boiler air, water, coal, and environmental protection systems, resulting in a significant improvement in the automatic input rate. Furthermore, the Company successfully signed a contract for a company's 120kt/a carbon fiber precursor production project, where Hollysys will provide production control systems and integrated solution. This project marked a major milestone for Hollysys' Industrial Optical Bus Control System ("OCS") and an expansion of its application in the field of carbon fiber precursor automation control.

In the smart factory sector, the Company successfully signed a contract for a 60,000-ton energy grade titanium (alloy) material intelligent manufacturing control platform project, where Hollysys will provide integrated intelligent manufacturing control solutions such as Distributed Control System ("DCS") and HiaPlant system to assist the company in intelligent production and operation. This project is significant for the Company's smart factory products and overall solutions in the titanium industry. Additionally, the Company signed a smart factory project to develop and utilize 10,000 tons of battery grade lithium carbonate in an environmentally friendly and comprehensive manner, where Hollysys will provide DCS and HOLLiAS MACS for this project. Upon completion, this project will play a crucial role in guaranteeing the security of local lithium resource supply.

In the electricity sector, the Company completed the optimization and control transformation project of the first heating boiler for a heat source plant in the power industry, in partnership with another company, based on the HOLLiAS APC platform.

In the Rail Transportation Automation segment, the Company maintained its market position. In the high-speed rail sector, the Company won the renovation project of ZPW-2000 track circuit equipment and coding equipment for the Zibo-Boshan railway. Meanwhile, the Company has witnessed significant progress in several key projects that it has been involve d in. A s the supplier of the Chinese Train Control System Level 3, the Company successfully contributed to the completion of the Guizhou-Guangzhou High-speed Railway upgrading and renovation project, as well as the official opening and operation of the Chengdu-Yibin High-speed Railway. In the urban rail transit sector, the Company acted as the equipment integrator and successfully assisted in the completion of the Integrated Supervisory and Control System upgrade project for Beijing Metro Line 10. The Company also supported the trial operation of the Shenzhen Metro Line 8 Phase II project, providing integrated monitoring system. Additionally, the Company contributed to the opening of the north section of Beijing Metro Line 17 with its Train Integration Automatic System.

In terms of overseas business, collaborating with other companies, the Company won the bid for the power supply system project of Jurong Regional Line and Sengkang-Punggol Light Rail Depot Line in Singapore. The Company also won the design and construction project of the Overhead Conducting Rail system for the Cross Island Line in Singapore.

In the mechanical and electrical solutions ("M&E") segment, the Company achieved stable performance with smooth executions on various projects.

With the Company's continuous dedication to the industry and the support of experienced and passionate experts, Hollysys believes that it will continue to create greater value for clients and shareholders.

Second Quarter and First Half Year Ended December 31, 2023 Unaudited Financial Results Summary

(In USD thousands, except for %, number of shares and per share data)








Three months ended
December 31,



Six months ended
December 31,




2023

2022

%
Change


2023

2022

%
Change










Revenues

$

223,723

244,731

(8.6) %

$

423,623

414,774

2.1 %

Integrated solutions contracts
revenue

$

180,518

188,929

(4.5) %

$

330,219

332,055

(0.6) %

Products sales

$

9,402

12,014

(21.7) %

$

23,721

23,788

(0.3) %

Service rendered

$

33,803

43,788

(22.8) %

$

69,683

58,931

18.2 %

Cost of revenues

$

157,711

147,892

6.6 %

$

288,435

265,085

8.8 %

Gross profit

$

66,012

96,839

(31.8) %

$

135,188

149,689

(9.7) %

Total operating expenses

$

52,241

48,993

6.6 %

$

87,166

85,296

2.2 %

Selling

$

19,870

16,025

24.0 %

$

36,054

29,038

24.2 %

General and administrative

$

18,864

19,741

(4.4) %

$

24,394

32,473

(24.9) %

Research and development

$

28,270

20,431

38.4 %

$

46,626

37,790

23.4 %

VAT refunds and government
subsidies

$

(14,763)

(7,204)

104.9 %

$

(19,908)

(14,005)

42.1 %

Income from operations

$

13,771

47,846

(71.2) %

$

48,022

64,393

(25.4) %

Other (expense) income, net

$

(653)

56

(1266.1) %

$

(303)

1,121

(127.0) %

Foreign exchange (loss) gain

$

(1,009)

(574)

75.8 %

$

(1,054)

3,523

(129.9) %

Impairment loss of investments in
securities

$

(69)

-

(100.0) %

$

(69)

-

(100.0) %

Share of net income of equity investees

$

1,241

1,068

16.2 %

$

298

1,665

(82.1) %

Gains on disposal of an investment in
securities

$

-

845

(100.0) %

$

-

845

(100.0) %

Interest income

$

3,108

2,918

6.5 %

$

6,669

6,079

9.7 %

Interest expenses

$

(414)

(225)

84.0 %

$

(731)

(369)

98.1 %

Income tax expenses

$

1,851

3,626

(49.0) %

$

7,124

7,506

(5.1) %

Net (loss) income attributable to non-
controlling interests

$

(15)

65

(123.1) %

$

(71)

108

(165.7) %










Net income attributable to Hollysys
Automation Technologies Ltd.

$

14,139

48,243

(70.7) %

$

45,779

69,643

(34.3) %

Basic earnings per share

$

0.23

0.79

(70.9) %

$

0.74

1.13

(34.5) %

Diluted earnings per share

$

0.23

0.78

(70.5) %

$

0.74

1.12

(33.9) %










Share-based compensation expenses

$

86

940

(90.9) %

$

348

2,178

(84.0) %

Amortization of acquired intangible
assets

$

326

337

(3.3) %

$

648

677

(4.3) %

Non-GAAP net income attributable to
Hollysys Automation Technologies
Ltd.(1)

$

14,551

49,520

(70.6) %

$

46,775

72,498

(35.5) %

Non-GAAP basic earnings per share(1)

$

0.23

0.81

(71.6) %

$

0.76

1.18

(35.6) %

Non-GAAP diluted earnings per share(1)

$

0.23

0.80

(71.3) %

$

0.75

1.17

(35.9) %

Basic weighted average number of
ordinary shares outstanding


61,987,791

61,440,191

0.9 %


61,917,839

61,378,846

0.9 %

Diluted weighted average number of
ordinary shares outstanding


62,305,532

62,007,655

0.5 %


62,254,019

61,969,551

0.5 %










(1) See the section entitled "Non-GAAP Measures" for more information about these non-GAAP measures.

Operational Results Analysis for the First Half Year Ended December 31, 2023

Total revenues for the six months ended December 31, 2023 were $423.6 million, as compared to $414.8 million for the same period of the prior fiscal year, representing an increase of 2.1%. In terms of revenues by type, integrated solutions contracts revenue decreased by 0.6% to $330.2 million, products sales revenue decreased by 0.3% to $23.7 million, and services revenue increased by 18.2% to $69.7 million.

The following table sets forth the Company's total revenues by segment for the periods indicated.

(In USD thousands, except for %)














Six months ended December 31,




2023


2022




$

% of Total
Revenues


$

% of Total
Revenues


Industrial Automation


252,403

59.5


252,777

61.0


Rail Transportation Automation


124,334

29.4


117,068

28.2


Mechanical and Electrical Solution


46,886

11.1


44,929

10.8


Total


423,623

100.0


414,774

100.0


Gross margin was 31.9% for the six months ended December 31, 2023, as compared to 36.1% for the same period of the prior fiscal year. Gross margins of integrated solutions contracts, product sales, and services rendered were 21.6%, 72.9% and 67.0% for the six months ended December 31, 2023, as compared to 28.3%, 78.0% and 63.2% for the same period of the prior fiscal year, respectively. Non-GAAP gross margin was 32.1% for the six months ended December 31, 2023, as compared to 36.3% for the same period of the prior fiscal year. Non-GAAP gross margin of integrated solutions contracts was 21.8% for the six months ended December 31, 2023, as compared to 28.5% for the same period of the prior fiscal year. See the section entitled "Non-GAAP Measures" for more information about non-GAAP gross margin and non-GAAP gross margin of integrated solutions contracts.

Selling expenses were $36.1 million for the six months ended December 31, 2023, representing an increase of $7.0 million, or 24.2%, compared to $29.0 million for the same period of the prior fiscal year. The increase in selling expenses was mainly due to the increase in sales headcount to support the business growth, and the implementation of industry key customer strategy in industrial automation segment. Selling expenses as a percentage of total revenues were 8.5% and 7.0% for the six months ended December 31, 2023 and 2022, respectively.

General and administrative expenses were $24.4 million for the six months ended December 31, 2023, representing a decrease of $8.1 million, or 24.9%, compared to $32.5 million for the same period of the prior fiscal year, which was primarily due to a $10.4 million decrease in credit losses, and a $1.8 million decrease in share-based compensation expenses, partially offset by a $3.6 million increase in third-party consulting fees. Share-based compensation expenses were $0.3 million and $2.2 million for the six months ended December 31, 2023 and 2022, respectively. General and administrative expenses as a percentage of total revenues were 5.8% and 7.8% for the six months ended December 31, 2023 and 2022, respectively.

Research and development expenses were $46.6 million for the six months ended December 31, 2023, representing an increase of $8.8 million, or 23.4%, compared to $37.8 million for the same period of the prior fiscal year, which was primarily due to a $6.2 million increase in labor cost for the increase in R&D staff for strategic technological innovation. Research and development expenses as a percentage of total revenues were 11.0% and 9.1% for the six months ended December 31, 2023 and 2022, respectively.

The VAT refunds and government subsidies were $19.9 million for the six months ended December 31, 2023, as compared to $14.0 million for the same period of the prior fiscal year, representing a $5.9 million, or 42.1%, increase, which was primarily due to a $5.8 million increase in government subsidies.

The income tax expenses and the effective tax rate were $7.1 million and 13.5% for the six months ended December 31, 2023, as compared to $7.5 million and 9.7% for the same period of the prior fiscal year. The effective tax rate fluctuates, as the Company's subsidiaries contributed different pre-tax income at different tax rates.

Net income attributable to Hollysys was $45.8 million for the six months ended December 31, 2023, representing a decrease of 34.3% from $69.6 million reported in the same period of the prior fiscal year. Non-GAAP net income attributable to Hollysys was $46.8 million or $0.75 per diluted share. See the section entitled "Non-GAAP Measures" for more information about non-GAAP net income attributable to Hollysys.

Diluted earnings per share was $0.74 for the six months ended December 31, 2023, representing a decrease of 33.9% from $1.12 in the same period of the prior fiscal year. Non-GAAP diluted earnings per share was $0.75 for the six months ended December 31, 2023, representing a decrease of 35.9% from $1.17 in the same period of the prior fiscal year. These were calculated based on 62.3 million and 62.0 million diluted weighted average ordinary shares outstanding for the six months ended December 31, 2023 and 2022, respectively. See the section entitled "Non-GAAP Measures" for more information about non-GAAP diluted earnings per share.

Operational Results Analysis for the Second Quarter Ended December 31, 2023

Total revenues for the three months ended December 31, 2023 were $223.7 million, as compared to $244.7 million for the same period of the prior fiscal year, representing a decrease of 8.6%. In terms of revenues by type, integrated contracts revenue decreased by 4.5% to $180.5 million, products sales revenue decreased by 21.7% to $9.4 million, and services revenue decreased by 22.8% to $33.8 million.

The following table sets forth the Company's total revenues by segment for the periods indicated.

(In USD thousands, except for %)




Three months ended December 31,



2023


2022



$

% of Total
Revenues


$

% of Total
Revenues

Industrial Automation


135,361

60.5


131,727

53.8

Rail Transportation Automation


66,824

29.9


88,826

36.3

Mechanical and Electrical Solution


21,538

9.6


24,178

9.9

Total


223,723

100.0


244,731

100.0

Gross margin was 29.5% for the three months ended December 31, 2023, as compared to 39.6% for the same period of the prior fiscal year. The gross margin fluctuated mainly due to the product and service mix. Gross margins of integrated solutions contracts, product sales, and service rendered were 21.1%, 65.6% and 64.2% for the three months ended December 31, 2023, as compared to 30.8%, 85.2% and 64.9% for the same period of the prior fiscal year, respectively. Non-GAAP gross margin was 29.7% for the three months ended December 31, 2023, as compared to 39.7% for the same period of the prior fiscal year. Non-GAAP gross margin of integrated solutions contracts was 21.3% for the three months ended December 31, 2023, as compared to 31.0% for the same period of the prior fiscal year. See the section entitled "Non-GAAP Measures" for more information about non-GAAP gross margin and non-GAAP gross margin of integrated solutions contracts.

Selling expenses were $19.9 million for the three months ended December 31, 2023, representing an increase of $3.8 million, or 24.0%, compared to $16.0 million for the same period of the prior fiscal year. The increase in selling expenses was mainly due to the increase in sales headcount to support the business growth, and the implementation of industry key customer strategy in industrial automation segment. Selling expenses as a percentage of total revenues were 8.9% and 6.5% for the three months ended December 31, 2023 and 2022, respectively.

General and administrative expenses were $18.9 million for the three months ended December 31, 2023, representing a decrease of $0.8 million, or 4.4%, compared to $19.7 million for the same period of the prior fiscal year, which was primarily due to a $4.9 million decrease in credit losses, and a $0.9 million decrease in share-based compensation expenses, partially offset by a $3.6 million increase in third-party consulting fees. Share-based compensation expenses were $0.1 million and $0.9 million for the three months ended December 31, 2023 and 2022, respectively. General and administrative expenses as a percentage of total revenues were 8.4% and 8.1% for the three months ended December 31, 2023 and 2022, respectively.

Research and development expenses were $28.3 million for the three months ended December 31, 2023, representing an increase of $7.8 million, or 38.4%, compared to $20.4 million for the same period of the prior fiscal year, which was primarily due to a $4.5 million increase in labor cost for the increase in R&D staff for strategic technological innovation. Research and development expenses as a percentage of total revenues were 12.6% and 8.3% for the three months ended December 31, 2023 and 2022, respectively.

The VAT refunds and government subsidies were $14.8 million for three months ended December 31, 2023, as compared to $7.2 million for the same period in the prior fiscal year, representing a $7.6 million, or 104.9%, increase, which was primarily due to a $7.1 million increase in government subsidies.

The income tax expenses and the effective tax rate were $1.9 million and 11.6% for the three months ended December 31, 2023, respectively, as compared to $3.6 million and 7.0% for the same period in the prior fiscal year, respectively. The effective tax rate fluctuates, as the Company's subsidiaries contributed different pre-tax income at different tax rates.

Net income attributable to Hollysys was $14.1 million for the three months ended December 31, 2023, representing a decrease of 70.7% from $48.2 million reported in the same period in the prior fiscal year. Non-GAAP net income attributable to Hollysys was $14.6 million or $0.23 per diluted share. See the section entitled "Non-GAAP Measures" for more information about non-GAAP net income attributable to Hollysys.

Diluted earnings per share was $0.23 for the three months ended December 31, 2023, representing a decrease of 70.5% from $0.78 reported in the same period in the prior fiscal year. Non-GAAP diluted earnings per share was $0.23 for the three months ended December 31, 2023, representing a decrease of 71.3% from $0.80 reported in the same period in the prior fiscal year. These were calculated based on 62.3 million and 62.0 million diluted weighted average ordinary shares outstanding for the three months ended December 31, 2023 and 2022, respectively. See the section entitled "Non-GAAP Measures" for more information about non-GAAP diluted earnings per share.

Contracts and Backlog Highlights

Hollysys achieved $495.2 million and $235.4 million of value of new contracts for the six months and three months ended December 31, 2023, respectively. Order backlog of contracts presents the amount of unrealized revenue to be earned from the contracts that Hollysys won. The backlog was $962.2 million as of December 31, 2023. The following table sets forth a breakdown of the value of new contracts achieved and backlog by segment.

(In USD thousands, except for %)



Value of new contracts
achieved


Value of new contracts
achieved


Backlog


for the six months

ended December 31, 2023


for the three months

ended December 31,
2023



as of December 31, 2023


$

% of Total
Contract
Value


$

% of
Total
Contract
Value


$

% of Total
Backlog

Industrial Automation

226,130

45.7


67,579

28.7


368,937

38.4

Rail Transportation Automation

225,859

45.6


151,609

64.4


408,176

42.4

Mechanical and Electrical
Solutions

43,200

8.7


16,194

6.9


185,093

19.2

Total

495,189

100.0


235,382

100.0


962,206

100.0

Cash Flow Highlights

For the six months ended December 31, 2023, the total net cash inflow was $135.3 million. The net cash provided by operating activities was $88.3 million. The net cash provided by investing activities was $4.3 million, mainly consisting of $44.9 million maturity of short-term investments, which was partially offset by$20.5 million purchases of short-term investments, and $20.6 million purchases of property, plant and equipment. The net cash provided by financing activities was $31.3 million, mainly consisting of $31.6 million of proceeds from long-term bank loans.

For the three months ended December 31, 2023, the total net cash inflow was $97.4 million. The net cash provided by operating activities was $60.1 million. The net cash provided by investing activities was $20.2 million, mainly consisting of $25.7 million maturity of short-term investments, partially offset by $2.3 million purchases of short-term investments, and $3.7 million purchases of property, plant and equipment. The net cash provided by financing activities was $1.9 million, mainly consisting of $2.0 million of proceeds from long-term bank loans.

Balance Sheet Highlights

The total amount of cash and cash equivalents was $747.5 million and $650.4 million as of December 31, 2023 and September 30, 2023, respectively.

For the six months ended December 31, 2023, DSO was 146 days, as compared to 144 days from the same period of the prior fiscal year, and inventory turnover days were 74 days, as compared to 74 days from the same period of the prior fiscal year.

For the three months ended December 31, 2023, DSO was 138 days, as compared to 119 days for the same period of the prior fiscal year and 145 days for the last fiscal quarter; inventory turnover days were 68 days, as compared to 72 days for the same period of the prior fiscal year and 84 days for the last fiscal quarter.

About Hollysys Automation Technologies Ltd.

Hollysys is a leading automation control system solutions provider in China, with overseas operations in eight other countries and regions throughout Asia. Leveraging its proprietary technology and deep industry know-how, Hollysys empowers its customers with enhanced operational safety, reliability, efficiency, and intelligence which are critical to their businesses. Hollysys derives its revenues mainly from providing integrated solutions for industrial automation and rail transportation automation. In industrial automation, Hollysys delivers the full spectrum of automation hardware, software, and services spanning field devices, control systems, enterprise manufacturing management and cloud-based applications. In rail transportation automation, Hollysys provides advanced signaling control and SCADA (Supervisory Control and Data Acquisition) systems for high-speed rail and urban rail (including subways). Founded in 1993, with technical expertise and innovation, Hollysys has grown from a research team specializing in automation control in the power industry into a group providing integrated automation control system solutions for customers in diverse industry verticals. As of June 30, 2023, Hollysys had cumulatively carried out more than 45,000 projects for approximately 23,000 customers in various sectors including power, petrochemical, high-speed rail, and urban rail, in which Hollysys has established leading market positions.

SAFE HARBOR STATEMENTS

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding the ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident," or similar expressions, involve known and unknown risks and uncertainties. Such forward-looking statements, based upon the current beliefs and expectations of Hollysys' management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

For further information, please contact:

Hollysys Automation Technologies Ltd.
www.hollysys.com
+8610-58981386
[email protected]

HOLLYSYS AUTOMATION TECHNOLOGIES LTD.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In USD thousands except for number of shares and per share data)



Three months ended
December 31,


Six months ended
December 31,



2023


2022


2023


2022



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Net revenues









Integrated solutions contracts revenue

$

180,518

$

188,929

$

330,219

$

332,055

Products sales


9,402


12,014


23,721


23,788

Revenue from services


33,803


43,788


69,683


58,931

Total net revenues


223,723


244,731


423,623


414,774










Costs of integrated solutions contracts


142,387


130,751


258,973


238,147

Cost of products sold


3,234


1,775


6,440


5,240

Costs of services rendered


12,090


15,366


23,022


21,698

Gross profit


66,012


96,839


135,188


149,689










Operating expenses









Selling


19,870


16,025


36,054


29,038

General and administrative


18,864


19,741


24,394


32,473

Research and development


28,270


20,431


46,626


37,790

VAT refunds and government subsidies


(14,763)


(7,204)


(19,908)


(14,005)

Total operating expenses


52,241


48,993


87,166


85,296










Income from operations


13,771


47,846


48,022


64,393










Other (expense) income, net


(653)


56


(303)


1,121

Foreign exchange (loss) gain


(1,009)


(574)


(1,054)


3,523

Impairment loss of investments in investment in securities


(69)


-


(69)


-

Gains on disposal of an investment in securities


-


845


-


845

Share of net income of equity investees


1,241


1,068


298


1,665

Interest income


3,108


2,918


6,669


6,079

Interest expenses


(414)


(225)


(731)


(369)

Income before income taxes


15,975


51,934


52,832


77,257










Income taxes expenses


1,851


3,626


7,124


7,506

Net income


14,124


48,308


45,708


69,751










Net (loss) income attributable to non-controlling interests

(15)


65


(71)


108

Net income attributable to Hollysys Automation
Technologies Ltd.

$

14,139

$

48,243

$

45,779

$

69,643










Other comprehensive income, net of tax of nil








Translation adjustments


28,499


20,110


21,147


(50,382)

Comprehensive income


42,623


68,418


66,855


19,369










Less: comprehensive income (loss) attributable to non-
controlling interests

9


75


(55)


190

Comprehensive income attributable to Hollysys
Automation Technologies Ltd.

$

42,614

$

68,343

$

66,910

$

19,179










Net income per ordinary share:









Basic


0.23


0.79


0.74


1.13

Diluted


0.23


0.78


0.74


1.12

Shares used in net income per share computation:









Basic

61,987,791


61,440,191


61,917,839


61,378,846

Diluted

62,305,532


62,007,655


62,254,019


61,969,551

HOLLYSYS AUTOMATION TECHNOLOGIES LTD.

CONSOLIDATED BALANCE SHEETS

(In USD thousands except for number of shares and per share data)












December
31,


September
30,





2023


2023





(Unaudited)


(Unaudited)

ASSETS






Current assets







Cash and cash equivalents

$

747,507

$

650,413



Short-term investments


9,074


32,100



Restricted cash


24,492


24,392



Accounts receivable, net of allowance for credit losses of $62,968 and $63,925 as
of December 31, 2023 and September 30, 2023, respectively


352,399


308,788



Costs and estimated earnings in excess of billings, net of allowance for credit losses
of $12,431 and $13,908 as of December 31, 2023 and September 30, 2023,
respectively


244,154


285,218



Accounts receivable retention


5,297


5,783



Other receivables, net of allowance for credit losses of $15,707 and $15,584 as of
December 31, 2023 and September 30, 2023, respectively


16,011


20,389



Advances to suppliers


31,687


31,216



Amounts due from related parties


22,482


28,712



Inventories


106,691


112,261



Prepaid expenses


441


280



Income tax recoverable


1,115


449


Total current assets


1,561,350


1,500,001








Non-current assets







Restricted cash


11,425


11,174



Costs and estimated earnings in excess of billings


1,570


1,451



Accounts receivable retention


7,070


7,418



Prepaid expenses


2


2



Property, plant and equipment, net


164,833


145,885



Prepaid land leases


11,569


11,357



Intangible assets, net


8,598


8,079



Investments in equity investees


48,683


46,381



Investments securities


1,552


1,552



Goodwill


19,359


18,827



Deferred tax assets


9,454


11,364



Operating lease right-of-use assets


3,435


2,997


Total non-current assets


287,550


266,487


Total assets


1,848,900


1,766,488








LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities







Short-term bank loans


67


-



Current portion of long-term loans


15,245


15,237



Accounts payable


181,618


174,713



Construction costs payable


18,650


11,328



Deferred revenue


223,005


202,782



Accrued payroll and related expenses


39,496


27,752



Income tax payable


4,004


5,667



Warranty liabilities


3,663


3,094



Other tax payables


10,540


14,197



Accrued liabilities


35,580


36,885



Amounts due to related parties


4,043


5,111



Operating lease liabilities


1,934


1,542


Total current liabilities


537,845


498,308








Non-current liabilities







Accrued liabilities


666


2,118



Long-term loans


48,638


45,899



Accounts payable


2,851


2,754



Deferred tax liabilities


11,665


12,773



Warranty liabilities


2,573


2,885



Operating lease liabilities


1,227


1,024


Total non-current liabilities


67,620


67,453


Total liabilities


605,465


565,761









Commitments and contingencies


-


-









Stockholders' equity:







Ordinary shares, par value $0.001 per share, 100,000,000 shares authorized;
62,095,839 shares and 62,024,409 shares issued and outstanding as of
December 31, 2023 and September 30, 2023


62


62



Additional paid-in capital


247,256


247,170



Statutory reserves


81,060


78,875



Retained earnings


1,005,375


993,423



Accumulated other comprehensive income


(91,287)


(119,763)


Total Hollysys Automation Technologies Ltd. stockholder's equity


1,242,466


1,199,767



Non-controlling interests


969


960


Total equity


1,243,435


1,200,727


Total liabilities and equity

$

1,848,900

$

1,766,488

HOLLYSYS AUTOMATION TECHNOLOGIES LTD

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In USD thousands)




Three months
ended


Six months
ended

December 31,
2023


December 31,
2023




(Unaudited)


(Unaudited)

Cash flows from operating activities:






Net income

$

14,124

$

45,708

Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation of property, plant and equipment


2,457


4,574


Amortization of prepaid land leases


82


163


Amortization of intangible assets


326


648


Allowance for credit losses


(1,246)


(7,839)


Gains on disposal of property, plant and equipment


(70)


(66)


Share of net income of equity investees


(1,241)


(298)


Share-based compensation expenses


86


348


Deferred income tax expenses


862


1,119


Impairment loss of investments in investment in securities


69


69

Changes in operating assets and liabilities:






Accounts receivable and retention


(31,117)


(24,898)


Costs and estimated earnings in excess of billings


46,830


13,543


Inventories


8,600


7,308


Advances to suppliers


211


(2,690)


Other receivables


4,832


3,592


Prepaid expenses


(151)


164


Due from related parties


6,767


3,798


Accounts payable


2,612


7,926


Deferred revenue


14,534


37,079


Accruals and other payables


(1,039)


3,270


Due to related parties


(1,067)


(2,111)


Income tax payable


(2,415)


(2,929)


Other tax payables


(3,947)


(180)


Net cash provided by operating activities


60,099


88,298







Cash flows from investing activities:






Purchases of short-term investments


(2,268)


(20,474)


Purchases of property, plant and equipment


(3,730)


(20,626)


Proceeds from disposal of property, plant and equipment


83


157


Maturity of short-term investments


25,725


44,862


Investment of an investment in securities


(35)


(35)


Proceeds from acquisition of a subsidiary


390


390


Net cash provided by investing activities


20,165


4,274







Cash flows from financing activities:






Proceeds from short-term bank loans


66


66


Proceeds from long-term bank loans


2,022


31,567


Repayments of long-term bank loans


(144)


(374)


Net cash provided by financing activities


1,944


31,259








Effect of foreign exchange rate changes


15,237


11,463


Net increase in cash, cash equivalents and restricted cash

$

97,445


135,294








Cash, cash equivalents and restricted cash, beginning of period

$

685,979


648,130


Cash, cash equivalents and restricted cash, end of period


783,424


783,424

Non-GAAP Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, in evaluating our results, we use the following non-GAAP financial measures: non-GAAP gross profit and non-GAAP gross margin, non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts, non-GAAP net income attributable to Hollysys Automation Technologies Ltd., as well as non-GAAP basic and diluted earnings per share.

These non-GAAP financial measures serve as additional indicators of our operating performance and not as any replacement for other measures in accordance with U.S. GAAP. We believe these non-GAAP measures help identify underlying trends in the Company's business that could otherwise be distorted by the effect of the share-based compensation expenses, which are calculated based on the number of shares or options granted and the fair value as of the grant date, and amortization of acquired intangible assets. They will not result in any cash inflows or outflows. We believe that using non-GAAP measures help our shareholders to have a better understanding of our operating results and growth prospects.

Non-GAAP gross profit and non-GAAP gross margin, non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts, non-GAAP net income attributable to Hollysys Automation Technologies Ltd., as well as non-GAAP basic and diluted earnings per share should not be considered in isolation or construed as an alternative to gross profit and gross margin, gross profit and gross margin of integrated solutions contracts, net income attributable to Hollysys Automation Technologies Ltd., basic and diluted earnings per share, or any other measure of performance, or as an indicator of the Company's operating performance. Investors are encouraged to review the historical non-GAAP financial measures to the most directly comparable GAAP measures. Non-GAAP gross profit and gross margin, non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts, non-GAAP net income attributable to Hollysys Automation Technologies Ltd., as well as non-GAAP basic and diluted earnings per share presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data. The Company encourages investors and others to review the Company's financial information in its entirety and not rely on a single financial measure.

We define non-GAAP gross profit and non-GAAP gross margin as gross profit and gross margin, respectively, adjusted to exclude non-cash amortization of acquired intangibles. The following table provides a reconciliation of our gross profit and gross margin to non-GAAP gross profit and non-GAAP gross margin for the periods indicated.

(In USD thousands, except for %)





Three months ended


Six months ended




December 31,


December 31,




2023


2022


2023


2022




(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)











Gross profit

$

66,012


96,839


135,188


149,689

Gross margin(1)


29.5 %


39.6 %


31.9 %


36.1 %

Add:









Amortization of acquired intangible assets


326


337


648


677

Non-GAAP gross profit

$

66,338

$

97,176

$

135,836

$

150,366

Non-GAAP gross margin(2)


29.7 %


39.7 %


32.1 %


36.3 %










(1) Gross margin represents gross profit for the period as a percentage of revenue for such period.

(2) Non-GAAP gross margin represents non-GAAP gross profit for the period as a percentage of revenue for such period.

We define non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts as gross profit and gross margin of integrated solutions contracts, respectively, adjusted to exclude non-cash amortization of acquired intangibles associated with integrated solutions contracts. The following table provides a reconciliation of the gross profit of integrated solutions contracts to non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts for the periods indicated.

(In USD thousands, except for %)




Three months ended December 31,


Six months ended December 31,



2023


2022


2023


2022



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Gross profit of integrated
solutions contracts

$

38,131

$

58,178

$

71,246

$

93,908

Gross margin of integrated
solutions contracts(1)


21.1 %


30.8 %


21.6 %


28.3 %










Add:

Amortization of acquired
intangible assets


326


337


648


677

Non-GAAP gross profit of
integrated solutions
contracts

$

38,457

$

58,515

$

71,894

$

94,585

Non-GAAP gross margin of
integrated solutions
contracts(2)


21.3 %


31.0 %


21.8 %


28.5 %










(1) Gross margin of integrated solutions contracts represents gross profit of integrated solutions contracts for the period as a
percentage of integrated solutions contracts revenue for such period.

(2) Non-GAAP gross margin of integrated solutions contracts represents non-GAAP gross profit of integrated solutions contracts
for the period as a percentage of integrated solutions contracts revenue for such period.

We define non-GAAP net income attributable to Hollysys as net income attributable to Hollysys adjusted to exclude the share-based compensation expenses and non-cash amortization of acquired intangible assets. The following table provides a reconciliation of net income attributable to Hollysys to non-GAAP net income attributable to Hollysys for the periods indicated.

(In USD thousands)





Three months ended


Six months ended




December 31,


December 31,




2023


2022


2023


2022




(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)











Net income attributable to Hollysys Automation
Technologies Ltd.

$

14,139

$

48,243

$

45,779

$

69,643

Add:










Share-based compensation expenses


86


940


348


2,178


Amortization of acquired intangible assets


326


337


648


677

Non-GAAP net income attributable to Hollysys
Automation Technologies Ltd.

$

14,551

$

49,520

$

46,775

$

72,498

Non-GAAP basic (or diluted) earnings per share represents non-GAAP net income attributable to Hollysys divided by the weighted average number of ordinary shares outstanding during the periods (or on a diluted basis). The following table provides a reconciliation of our basic (or diluted) earnings per share to non-GAAP basic (or diluted) earnings per share for the periods indicated.

(In USD thousands, except for number of shares and per share data)





Three months ended


Six months ended




December 31,


December 31,




2023


2022


2023


2022




(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)











Net income attributable to Hollysys Automation
Technologies Ltd.

$

14,139

$

48,243

$

45,779

$

69,643

Add:










Share-based compensation expenses


86


940


348


2,178


Amortization of acquired intangible assets


326


337


648


677

Non-GAAP net income attributable to
Hollysys Automation Technologies Ltd.

$

14,551

$

49,520

$

46,775

$

72,498










Weighted average number of basic ordinary
shares


61,987,791


61,440,191


61,917,839


61,378,846

Weighted average number of diluted ordinary
shares


62,305,532


62,007,655


62,254,019


61,969,551










Basic earnings per share(1)


0.23


0.79


0.74


1.13

Add:
non-GAAP adjustments to net income per share(2)


0.00


0.02


0.02


0.05

Non-GAAP basic earnings per share(3)

$

0.23

$

0.81

$

0.76

$

1.18










Diluted earnings per share(1)


0.23


0.78


0.74


1.12

Add:
non-GAAP adjustments to net income per share(2)


0.00


0.02


0.01


0.05

Non-GAAP diluted earnings per share(3)

$

0.23

$

0.80

$

0.75

$

1.17


(1) Basic (or diluted) earnings per share is derived from net income attributable to Hollysys Automation Technologies Ltd. for
computing basic (or diluted) earnings per share divided by weighted average number of shares (or on a diluted basis).

(2) Non-GAAP adjustments to net income per share is derived from non-GAAP adjustments to net income divided by weighted
average number of shares (or on a diluted basis).

(3) Non-GAAP basic (or diluted) earnings per share is derived from non-GAAP net income attributable to Hollysys Automation
Technologies Ltd. for computing non-GAAP basic (or diluted) earnings per share divided by weighted average number of shares (or on
a diluted basis).

SOURCE Hollysys Automation Technologies Ltd

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