Highway Holdings Reports Fiscal 2021 First Quarter Results

Highway Holdings Limited (Nasdaq: HIHO) today reported results for its fiscal 2021 first quarter ended June 30, 2020.

Net loss for the fiscal first quarter was $223,000, or $0.06 per share, compared with net loss of $102,000, or $0.03 per share, last year. Net sales for the same period were $2.1 million compared with $2.8 million a year earlier.

"The company’s financial results were negatively affected by the COVID-19 pandemic and the temporary closure of operations during the quarter at its Myanmar factory. The effects of the COVID-19-related closure were exacerbated because workers at the Myanmar factory could not return to work from year-end national holidays due to the impact of the pandemic on transportation, which essentially shut down operations for the month of April and impacted the month of May. These factors contributed to substantially lower sales volume in April and May. Both of our factories are now in full operation and we are encouraged by business trends,” said Roland Kohl, chairman, president and chief executive officer.

Gross profit for the 2021 fiscal first quarter was $520,000 compared with $746,000 in the same period a year ago, with gross profit as a percentage of sales approximately 25 percent compared with 26 percent a year ago.

Selling, general and administrative expense for the 2021 fiscal first quarter decreased by $182,000 – benefiting from sharp cost-cutting initiatives. As a percentage of net sales, SG&A expenses increased to 35 percent from 32 percent due to the sharp sales decrease for the quarter.

The company realized a currency exchange loss of $20,000 in the quarter compared with an exchange gain of $41,000 in the same period last year, primarily due to weakness in the RMB during the period.

Kohl highlighted the company’s solid financial position, with cash and cash equivalents of $ 9.1 million -- exceeding combined short- and long-term liabilities by $2.9 million. At June 30, 2020, the company had working capital of $8 million.

Total shareholders’ equity at June 30, 2020 was $10.7 million compared with $10.9 million as of March 31, 2020. The company’s current ratio at June 30, 2020 was 2.9 :1.

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 offices are 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, including all statements about operations in Yangon, Myanmar, the impact of the COVID-19 pandemic on the company’s longer-term business outlook, and the prospects of establishing longer-term relationships with new customers, 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.

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statement of Income
(Dollars in thousands, except per share data)
(Unaudited)
		Quarter Ended
		June 30
		2020				2019
Net sales		$	2,057			$	2,845
Cost of sales			1,537				2,099
Gross profit			520				746
Selling, general and administrative expenses			730				912
Operating (loss) / income			(210	)			(166	)
Non-operating income (expense):
Exchange gain (loss), net			(20	)			41
Interest income			4				10
Gain/(loss) on disposal of asset			1				1
Other income (expense)			1				1
Total non-operating income (expenses)			(14	)			53
Net (loss)/income before income taxes			(224	)			(113	)
Income taxes			-				-
Net (loss)/ income			(224	)			(113	)
Less: net gain/(loss) attributable to non-controlling interests			(1	)			(11	)
Net (loss)/income attributable to Highway Holdings Limited’s Shareholders		($	223	)		($	102	)
Net (loss)/income per share – Basic and Diluted		($	0.06	)		($	0.03	)
Weighted average number of shares outstanding:
Basic			3,910				3,802
Diluted			3,910				3,802

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except per share data)
		June 30				March 31
		2020				2020
Current assets:
Cash and cash equivalents		$	9,099			$	8,827
Accounts receivable, net of doubtful accounts			1,119				2,008
Inventories			1,765				2,000
Prepaid expenses and other current assets			221				388
Total current assets			12,204				13,223
Property, plant and equipment, net			891				878
Operating lease right-of-use assets			3,497				3,710
Long-term deposits			263				263
Long-term loan receivable			95				95
Investments in equity method investees			-				-
Total assets			16,950				18,169
Current liabilities:
Accounts payable		$	749			$	997
Operating lease liabilities, current			806				782
Accrued expenses and other liabilities			2,066				2,294
Income tax payable			571				564
Dividend payable			2				351
Total current liabilities			4,194				4,988
Operating lease liabilities, non-current			1,823				2,034
Deferred income taxes			229				229
Total liabilities			6,246				7,251
Shareholders' equity:
Preferred shares, $0.01 par value			-				-
Common shares, $0.01 par value			40				40
Additional paid-in capital			11,552				11,537
Accumulated deficit			(1,089	)			(865	)
Accumulated other comprehensive income/(loss)			190				196
Treasury shares, at cost – Nil shares as of June 30, 2020; and on March 31, 2020			-				-
Non-controlling interest			11				10
Total shareholders' equity			10,704				10,918
Total liabilities and shareholders' equity		$	16,950			$	18,169

 

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