Highway Holdings Reports Fiscal 2014 Third Quarter and Nine-Month Results

HONG KONG, Jan. 27, 2014 (GLOBE NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal third quarter ended December 31, 2013 -– reflecting increased sales and profitability for both the quarter and nine-month period.

Net income for the fiscal 2014 third quarter was $149,000, or $0.04 per diluted share, compared with $18,000, or $0.01 per diluted share, in the third quarter a year earlier. Net sales for the same period increased 3.5 percent to $5.8 million from $5.6 million a year ago.

Net income for the nine-month period of fiscal 2014 increased sharply to $451,000, or $0.12 per diluted share, from $174,000, or $0.05 per diluted share, a year earlier. Net sales for the nine months climbed 7 percent to $17.5 million from $16.4 million in the comparable period a year earlier.

Gross profit margin for the three- and nine-month periods ended December 31, 2013 increased to 22.6 percent and 22.6 percent, respectively, compared with 22.2 percent and 21.9 percent, respectively, a year earlier. Gross profit margin increased due to ongoing streamlining efforts and slight price increases to customers.

Operating income for the three-month period ended December 31, 2013 was $132,000 compared with $8,000 in the prior year. Operating income for the nine months more than doubled to $563,000 from $255,000 a year earlier.

"Results for the quarter reflect the company's focus on quality manufacturing and customer service to increase business to existing customers and attract additional business opportunities. A key challenge is to balance a highly inflationary environment in China and Hong Kong, including higher wages for employees, with customer pricing expectations," said Roland Kohl, chairman, president and chief executive officer of Highway Holdings.

Kohl noted that the company is presently in discussions with most of its major customers for further price increases to match escalating operating costs in China and/or authorization to transfer labor intensive assembly work to its lower-cost, sub-contracting operation in Myanmar. "The relocation of certain labor intensive assembly services to Myanmar should be an attractive alternative to our customers, since it is a practical solution to maintaining quality and service without, in most cases, further price increases," Kohl said.

He noted that the Chinese government recently announced another minimum wage increase of approximately 13 percent effective February 1, 2014 for the Shenzhen region, reflecting the difficulty of attracting workers and further contributing to an inflationary environment in China.

Currency exchange rates positively affected the company's net income for the nine-month period ended December 31, 2013. The company reported a $28,000 currency exchange gain compared with a $26,000 exchange loss in 2012 -- mainly due to the increased strength of the RMB currency at December month ended.

Kohl noted the company's balance sheet remains strong. The company's total cash, cash equivalents and restricted cash position at December 31, 2013 was $4.5 million compared with $5.3 million at March 31, 2013, despite aggregate dividend payments of $302,000, or $0.08 per diluted share since March 2013, and approximately $1 million of cash that the company was required to deposit with the Chinese Customs Department. The Customs Department has commenced returning a portion of the deposits, and Highway Holdings anticipates that most of its deposits will be returned by mid-year.

The company's current ratio was 4:1 at December 31, 2013. The total cash, cash equivalents and restricted cash exceeded all current and long term liabilities combined by $954,000.

About Highway Holdings

Highway Holdings produces a wide variety of high-quality products for blue chip original equipment manufacturers -- from simple parts and components to sub-assemblies and finished products. Highway Holdings' administrative offices are located in Hong Kong and its manufacturing facilities are located in Shenzhen in the People's Republic of 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, 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)

Consolidated Statement of Income
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
December 31, December 31,
2013 2012 2013 2012
Net sales $5,816 $5,619 $17,543 $16,398
Cost of sales 4,503 4,369 13,586 12,804
Gross profit 1,313 1,250 3,957 3,594
Selling, general and administrative expenses 1,181 1,242 3,394 3,339
Operating income 132 8 563 255
Non-operating items
Interest expenses 0 2 1 7
Exchange gain (loss), net 53 8 28 (26)
Interest income 4 2 13 7
Other income 48 4 47 50
Total non-operating income 105 12 87 24
Net income before income tax and non-controlling Interest 237 20 650 279
Income taxes 89 2 200 105
Net Income before non-controlling interest 148 18 450 174
Less : Net income attributable to non-controlling interest 1 0 1 0
Net income attributable to Highway Holdings Limited shareholders $149 $18 $451 $174
Net Income per share – basic and diluted $0.04 $0.01 $0.12 $0.05
Weight average number of shares
Basic 3,778 3,778 3,778 3,778
Diluted 3,788 3,788 3,788 3,788
Consolidated Balance Sheet
(In thousands, except per share data)
Dec 31 March 31
2013 2013
Current assets:
Cash and cash equivalents $3,864 $4,634
Restricted cash 643 643
Accounts receivable, net of doubtful accounts 3,774 3,958
Inventories 3,478 2,957
Amount due from an equity method investee -- 110
Prepaid expenses and other current assets 2,191 1,114
Total current assets 13,950 13,416
Property, plant and equipment, (net) 1,356 1,769
Loan receivables 435 167
Total assets $15,741 $15,352
Current liabilities:
Accounts payable $1,637 $1,515
Current portion of long-term debt -- 112
Accrual payroll and employee benefits 986 885
Other liabilities and accrued expenses 529 501
Dividend payable -- 114
Net Tax payable 342 158
Total current liabilities 3,494 3,285
Long term liabilities :
Deferred income taxes 59 59
Total liabilities 3,553 3,344
Shareholders' equity:
Common shares, $0.01 par value 38 38
Additional paid-in capital 11,340 11,340
Retained earnings 777 628
Accumulated other comprehensive income 42 16
Treasury shares, at cost – 5,049 shares as of
December, 31, 2013; and March 31, 2013 respectively (14) (14)
Total Highway Holdings Limited shareholders' equity 12,183 12,008
Non-controlling interest 5 --
Total shareholders' equity 12,188 12,008
Total liabilities and shareholders' equity $15,741 $15,352

CONTACT: Gary S. Maier Maier & Company, Inc. (310) 471-1288Source:Highway Holdings Limited