HIGHWAY HOLDINGS REPORTS FIRST QUARTER FISCAL 2025 RESULTS; REVENUE INCREASES 39% YoY

Rhea-AI Summary

Highway Holdings (Nasdaq: HIHO) reported a 39.3% increase in net sales to $1.88 million for Q1 FY2025, compared to $1.35 million in Q1 FY2024. The company achieved a net gain of $98,000, or $0.02 per diluted share, reversing a net loss of $338,000 in the previous year. Gross profit increased to $661,000 (35% margin), up from $377,000 (28% margin) in Q1 FY2024. The company maintained a strong financial position with $6.0 million in cash and cash equivalents, exceeding combined liabilities by $1.65 million. CEO Roland Kohl expressed cautious optimism, citing increased orders from customers and potential new business lines contributing to future growth.

Positive

• 39.3% year-over-year increase in net sales to $1.88 million
• Net gain of $98,000 compared to a net loss in the previous year
• Gross profit margin improved from 28% to 35%
• 15.3% reduction in selling, general and administrative expenses
• Strong financial position with $6.0 million in cash and cash equivalents

Negative

• Operating level only reached breakeven, indicating continued challenges
• Net profit mainly derived from interest income and currency exchange gains rather than core operations
• Business has not yet returned to pre-COVID levels

Insights

Financial Analyst

Highway Holdings' Q1 FY2025 results show promising signs of recovery, but caution is still warranted. The 39.3% YoY revenue increase to $1.88 million is significant, driven by increased orders across the customer base. However, it's important to note that this growth is from a low base, as the company is still below pre-COVID levels.

The shift from a net loss of $338,000 to a net gain of $98,000 is positive, but the bulk of this profit comes from non-operational sources - interest income and currency exchange gains. The operating breakeven achieved this quarter, while an improvement from the $400,000 loss last year, indicates that the core business is still struggling to generate substantial profits.

The gross profit margin improvement from 28% to 35% is encouraging, suggesting better pricing power or cost management. The 15.3% reduction in SG&A expenses demonstrates effective cost control measures.

The company's strong balance sheet, with $6.0 million in cash and a current ratio of 2.6:1, provides a safety net. However, the slight decrease in shareholders' equity from $6.6 million to $6.5 million over the quarter warrants monitoring.

While the trend is positive, investors should remain cautious. The company's reliance on interest income and currency gains for profitability, coupled with its inability to reach pre-COVID business levels, suggests that sustainable, operational profitability may still be a challenge in the near term.

Market Research Analyst

Highway Holdings' Q1 results offer a nuanced view of the manufacturing sector's recovery. The 39.3% revenue growth suggests a broader trend of increasing demand across industries, as the company serves diverse sectors including electronics and telecommunications.

The company's mention of "cautious optimism" aligns with current market sentiments. Many manufacturers are seeing order increases but remain wary due to ongoing global economic uncertainties. The potential revival of previously de-emphasized business lines indicates a strategic pivot that could diversify revenue streams.

It's noteworthy that Highway Holdings is maintaining a strong cash position ($6.0 million) despite challenging times. This strategy of financial conservatism is common among small-cap manufacturers navigating uncertain markets, providing a buffer against potential downturns.

The improvement in gross profit margin from 28% to 35% is particularly interesting. It suggests either:

• Improved pricing power, indicating potential market share gains
• A shift towards higher-margin products, reflecting evolving market demands
• Successful cost optimization in production processes

The mention of a "pending new business line" is intriguing but lacks detail. This could represent a significant opportunity for growth and diversification, but its impact remains speculative without further information.

Overall, while the results show improvement, they also reflect the ongoing challenges in the manufacturing sector. The company's performance in subsequent quarters will be important in determining whether this represents a sustained recovery or a temporary uptick.

HONG KONG , Aug. 1, 2024 /PRNewswire/ -- Highway Holdings Limited (Nasdaq: HIHO) today reported financial results for the first quarter of fiscal year 2025 ended June 30, 2024.

Net sales for the first quarter of fiscal year 2025 ended June 30, 2024 increased 39.3% to $1.88 million compared with $1.35 million in the first quarter of fiscal year 2024. Net gain for the first quarter of fiscal year 2025 was $98,000, or $0.02 per diluted share, compared with net loss of $338,000, or a loss of $0.08 per diluted share in the first quarter of fiscal year 2024.

Roland Kohl, chairman, president and chief executive officer of Highway Holdings, commented, "We are seeing signs of improvement and have reason for cautious optimism. The growth in sales this quarter compared to the year ago period was the result of substantially all our customers increasing their orders. We have still not returned to the level our business was at pre-COVID, therefore we were only able to reach breakeven on an operating level, which is a significant improvement compared to the $400,000 operating loss in the year ago period.

"We are pleased to maintain a solid financial position, which we believe gives us the ability to navigate the operating challenges and forge a path that supports a return to long-term growth. In the most recent quarter, our reported net profit came mainly from interest income based on the fortified cash position we built, and a favorable currency exchange gain. Overall, the favorable trend of orders for our existing business from our main customers is stable to slightly increasing. We are cautiously optimistic this trend will continue along with the contribution of a pending new business line, and the revival of some mature previously deemphasized business lines, which taken together would ultimately help us return to improved profitability." 

Gross profit for the first quarter of fiscal year 2025 increased to $661,000, or 35%, compared with $377,000 and 28%, respectively, in the first quarter of fiscal year 2024, primarily due to a favorable product mix.

Selling, general and administrative expenses for the first quarter of fiscal year 2025 declined by 15.3% to $658,000 in the first quarter 2025 from $777,000 in the year ago period, reflecting the positive benefit of the Company's operating expense reduction strategy.  

The Company recognized a $38,000 currency exchange gain in the first quarter of fiscal year 2025, compared to $17,000 in the first quarter of fiscal year 2024, with $52,000 in interest and other income in the first quarter of 2025 compared to $40,000 in the year ago period, primarily due to the continued benefit of foreign currency hedging activities and higher interest rates.

The Company ended the first quarter of fiscal year 2025 in a solid financial position with $6.0 million of cash and cash equivalents, which exceeded its combined short- and long-term liabilities by $1.65 million. At June 30, 2024, the Company had a working capital balance of $5.7 million, with a current ratio of 2.6:1, and total shareholders' equity of $6.5 million, compared to $6.6 million as of March 31, 2024.

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)
			Fiscal First Quarter Ended
			June 30 (Unaudited)
			2024		2023
Net sales			$1,879		$1,347
Cost of sales			1,218		970
Gross profit			661		377
Selling, general and administrative expenses			658		777
Operating income (loss)			3		(400)
Non-operating income (expense):
Exchange gain (loss), net			38		17
Interest income			45		40
Gain (loss) on disposal of assets			-		-
Other income (expense)			7		-
Total non-operating income (expenses)			90		57
Net income (loss) before income taxes			93		(343)
Income taxes			-		3
Net income (loss)			93		(340)
Less: net gain/(loss) attributable to non-controlling interests			(5)		(2)
Net income attributable to Highway Holdings Limited's			$98		($338)
Shareholders
Net income (loss) per share – Basic			$0.02		($0.08)
Net income (loss) per share - Diluted			$0.02		($0.08)
Weighted average number of shares outstanding:
Basic			4,506		4,248
Diluted			4,506		4,248

 

 

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES Consolidated Balance Sheet (In thousands of U.S. dollars, except for shares and per share data)
			June 30 (Unaudited)	March 31 (Audited)
			2024	2024
Current assets:
Cash and cash equivalents			$5,991	$6,601
Accounts receivable, net of doubtful accounts			1,660	1,253
Inventories			1,532	1,566
Prepaid expenses and other current assets			149	226
Total current assets			9,332	9,646
Goodwill, net			-	-
Property, plant and equipment, net			34	-
Operating lease right-of-use assets			1,217	1,375
Long-term deposits			201	202
Long-term loan receivable			95	95
Total assets			10,879	11,318
Current liabilities:
Accounts payable			$807	$935
Operating lease liabilities, current			595	588
Accrued expenses and other liabilities			1,719	1,789
Income tax payable			471	480
Dividend payable			60	45
Total current liabilities			3,652	3,837
Operating lease liabilities, non-current			650	803
Long term accrued expenses			40	40
Total liabilities			4,342	4,680
Shareholders' equity:
Preferred shares, $0.01 par value			-	-
Common shares, $0.01 par value			44	44
Additional paid-in capital			12,144	12,117
Accumulated deficit			(5,137)	(5,015)
Accumulated other comprehensive (loss) / income			(502)	(501)
Non-controlling interest			(12)	(7)
Total shareholders' equity			6,537	6,638
Total liabilities and shareholders' equity			$10,879	$11,318

 

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SOURCE Highway Holdings Limited

FAQ

What was Highway Holdings' (HIHO) revenue for Q1 FY2025?

Highway Holdings (HIHO) reported revenue of $1.88 million for Q1 FY2025, representing a 39.3% increase from $1.35 million in Q1 FY2024.

Did Highway Holdings (HIHO) report a profit or loss in Q1 FY2025?

Highway Holdings (HIHO) reported a net gain of $98,000, or $0.02 per diluted share, in Q1 FY2025, compared to a net loss of $338,000 in Q1 FY2024.

How much cash does Highway Holdings (HIHO) have as of June 30, 2024?

As of June 30, 2024, Highway Holdings (HIHO) reported $6.0 million in cash and cash equivalents, exceeding its combined short- and long-term liabilities by $1.65 million.

What was Highway Holdings' (HIHO) gross profit margin in Q1 FY2025?

Highway Holdings (HIHO) reported a gross profit margin of 35% in Q1 FY2025, an improvement from 28% in Q1 FY2024.