Highway Holdings Reports Fiscal 2015 Fourth Quarter/ Year-End Results

HONG KONG, June 30, 2015 (GLOBE NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal fourth quarter and year ended March 31, 2015, reflecting a sharp increase in profitability on a year-over-year basis and solid financial strength for the quarter and full year.

Net income for the fiscal fourth quarter increased 11 percent to $161,000, or $0.04 per diluted share, from $145,000, or $0.04 per diluted share, in the same quarter a year ago. Net sales for the same period were $4.9 million compared with $5.4 million a year ago.

Net income for fiscal 2015 increased 93 percent to $1.1 million, or $0.30 per diluted share, from $596,000, or $0.16 per diluted share, in fiscal 2014. Net sales for fiscal 2015 were $22.4 million compared with $22.9 million a year ago, reflecting a previously announced planned phase out of certain low margin business during fiscal 2015.

Operating income for fiscal 2015 increased sharply to $1.3 million from $793,000 a year earlier.

"Results for fiscal 2015 reflect solid improvement in operational profitability, attributable to price increases, a reduction in low-margin business and the benefits of the company's continued focus on streamlining its OEM business," said Roland Kohl, chairman, president and chief executive officer.

He highlighted the company's purchase in the fiscal fourth quarter of an additional 50 percent ownership interest in a Myanmar entity that operates an approximately 15,000 sq. ft. manufacturing and assembly factory in Yangon, Myanmar, that Highway Holdings has utilized for more than two years under a subcontracting arrangement. As a result of the purchase of the additional interest, the company now has a total current ownership position of 75 percent.

"Our goal in the new fiscal year is to further utilize Myanmar for labor-intensive assembly of parts and components, which enables us to offer cost-effective and competitive benefits to our customers. These cost savings are expected to support organic growth and new business opportunities," Kohl said. He noted that OE manufacturing in China continues to be challenging due to increasing labor and operational costs, and Myanmar is expected to become increasingly important to the company's future success.

Gross profit as a percentage of net sales increased in fiscal 2015 to 25.6 percent from 23.8 percent a year earlier, attributable to higher margin product sales and improved pricing – despite higher labor costs and increased costs of operating in China. Gross margins also increased as a result of the lower cost of assembly on the products assembled in Myanmar.

Selling, general and administrative expenses decreased for the full year compared with a year ago. Selling, general and administrative expenses as a percentage of net sales decreased to 19.9 percent in fiscal 2015 from 20.3 percent in fiscal 2014, primarily due to streamlining initiatives and improved operating efficiencies.

Currency exchange rates negatively affected the company's net income for fiscal 2015. The company realized a currency exchange loss of $125,000 compared with a currency exchange loss of $31,000 a year ago, mainly due to weakness of the Euro and the weakening of the RMB. The company traditionally does not undertake any currency hedging transactions.

Kohl noted that the company's balance sheet remains strong, despite three dividend distributions in fiscal 2015 -- representing an aggregate $0.20 per share. Total current assets at March 31, 2015 were $15.8 million, with working capital of $11 million and a current ratio of 3.3:1. Total cash was $9.7 million, or $2.60 per diluted share, exceeding all current and long term liabilities combined by $5 million. Kohl noted that the company's cash position increased by $3.7 million over the prior year -- due primarily to the phase out of certain low-margin business, which reduced inventory and accounts receivable and contributed to increased profitability for the fiscal year.

Kohl highlighted the company's total shareholders' equity of $12.2 million at March 31, 2015 -- representing approximately $3.22 per diluted share.

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, with manufacturing and assembly facilities located in Shenzhen in the People's Republic of China and Myanmar.

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 Year Ended
March 31, March 31,
(Unaudited) (Audited)
2015 2014 2015 2014
Net sales $4,887 $5,393 $22,373 $22,936
Cost of sales 3,394 3,754 16,656 17,484
Gross profit 1,493 1,639 5,717 5,452
Selling, general and administrative expenses 1,299 1,409 4,446 4,659
Operating income 194 230 1,271 793
Non-operating items
Interest expenses -- -- -- (1)
Exchange (loss) gain, net (73) (59) (125) (31)
Interest income 7 4 18 17
Gain on disposal of Asset -- -- 110 (23)
Other income 1 (58) 3 12
Total non-operating income (65) (113) 6 (26)
Share of profits (loss) of equity investee (7) -- -- --
Income before income tax and non-controlling Interest 122 117 1,277 767
Income taxes credit (expense) 33 28 (134) (172)
Net Income before non-controlling interests 155 145 1,143 595
Less : Net loss attributable to non-controlling Interests (6) -- (7) (1)
Net Income attributable to Highway Holdings Limited shareholders $161 $145 $1,150 $596
Net Income per share:
Basic $0.04  $0.04 $0.30 $0.16
Diluted $0.04 $0.04 $0.30 $0.16
Weighted average number of shares outstanding:
Basic 3,787  3,779 3,787 3,779
Diluted 3,795  3,789 3,795 3,789
Consolidated Balance Sheet
(In thousands, except per share data)
March 31, March 31,
2015 2014
Current assets:
Cash and cash equivalents $9,727 $5,416
Restricted cash -- 643
Accounts receivable, net of doubtful accounts 2,943 3,157
Inventories 2,081 3,700
Amount due from an equity method investee -- --
Prepaid expenses and other current assets 987 1,044
Total current assets 15,738 13,960
Property, plant and equipment, (net) 1,094 1,213
Goodwill 77 --
Long-term deposits 78 167
Loan receivable -- 436
Total assets 16,987 $15,776
Current liabilities:
Accounts payable $1,579 $1,577
Long-term loans-current portion -- --
Accrual expenses and other liabilities 2,429 1,730
Income tax payable 334 279
Dividend payable 380 --
Total current liabilities 4,722 3,586
Deferred income taxes 32 44
Total liabilities 4,754 3,630
Shareholders' equity:
Common shares, $0.01 par value 38 38
Additional paid-in capital 11,370 11,340
Retained earnings 782 770
Treasury shares, at cost – 5,049 shares as of March 31, 2015 and 2014 (14) (14)
Accumulated other comprehensive income 8 7
Total Highway Holdings Limited shareholders' equity 12,184 12,141
Non-controlling interest 49 5
Total Equity 12,233 12,146
Total liabilities and shareholders' equity $16,987 $15,776

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