HIGHWAY HOLDINGS REPORTS FISCAL 2024 THIRD QUARTER AND NINE MONTH RESULTS; THIRD QUARTER SALES INCREASE 60% YEAR OVER YEAR
- 60% increase in revenue for fiscal third quarter of 2024
- $0.06 increase in diluted earnings per share for fiscal third quarter of 2024
- Net sales for third quarter increased to $4.1 million
- Net income for third quarter increased to $302,000
- Net sales for first nine months of fiscal year 2024 decreased to $6.8 million
- Net income for first nine months of 2023 was $177,000, significantly impacted by the COVID boom and post-COVID bust cycle on Highway Holdings' customers
Insights
The substantial 60% increase in revenue and an improvement in diluted earnings per share by $0.06 for Highway Holdings Limited's fiscal third quarter are indicative of a robust turnaround in the company's operational performance. This is particularly impressive given the context of a post-COVID environment which has presented challenges for many businesses. A deeper dive into the financials shows a strong quarter-on-quarter growth, signaling potential market share gains or successful implementation of strategic initiatives such as cost control, product diversification, or expansion into new markets.
However, it's crucial to note that the first nine months' performance reflects a decline in net sales from the previous year. This suggests that while the third quarter was strong, earlier quarters faced significant headwinds, possibly due to the 'COVID boom and post-COVID bust' cycle mentioned. Investors should consider the volatility of the company's performance in the context of these broader economic cycles when assessing the sustainability of recent gains.
Understanding the industry dynamics is essential when evaluating Highway Holdings' impressive quarterly results. The company's performance must be weighed against industry benchmarks and competitors' results to determine if the growth is a result of market-wide recovery or company-specific strategies. An increase in market demand, shifts in consumer behavior, or competitive advantages such as technological innovation could explain the significant revenue uptick.
Long-term implications for stakeholders hinge on the company's ability to maintain this growth trajectory. Key factors include the elasticity of demand for Highway Holdings' products, the scalability of their operations and the potential for future market disruptions. Insight into the company's supply chain resilience and customer diversification strategy would provide a clearer picture of the stability of these results.
The reference to a 'COVID boom and post-COVID bust' cycle suggests that Highway Holdings' financial performance is closely tied to macroeconomic conditions. The pandemic has led to unprecedented market fluctuations and as such, the company's short-term gains may not necessarily extrapolate to long-term trends. Stakeholders should consider external economic factors such as inflation rates, consumer spending power and global supply chain issues when evaluating the company's future prospects.
Moreover, the discrepancy between the strong third-quarter results and the weaker nine-month performance raises questions about the consistency of the company's growth. It's important to analyze whether the recent upswing is a result of temporary market conditions or if it demonstrates a fundamental improvement in the company's business model and operational efficiency.
Net sales for the third quarter of fiscal year 2024 increased
Net sales for the first nine months of fiscal year 2024 were
Roland Kohl, chairman, president and chief executive officer of Highway Holdings, said, "We ended the calendar year on a positive note, as compared to the year ago period, with revenue increasing about
"There are three main reasons for our cautious optimism. First, we are seeing a slow but steady return to more normal order patterns of our customers. This represents an important inflection point after almost 12 months since the start of the downturn. Our strong revenue growth in the third quarter of fiscal 2024 was led in part by this return to more normal order patterns and we read this as a sign that the huge inventory levels of our customers now have been depleted, which indicates that the time with zero or little order quantities are behind us."
"Second, as we noted last quarter, we are benefitting from a restarting of the business from our customer Playmaji, Inc., which owns the Polymega game console business. This business has now returned to full production after the motherboard supplier stabilized its supply chain and finally achieved a reasonable component lead time last year. We expect to see continued regular orders for the existing Polymega products in 2024, while also adding on manufacturing support for some very promising new products that could be further additive to our sales in the near future."
"Finally, we are excited about our intended acquisition of a majority of Synova, for which we announced a letter of intent last month. Our customers' response to the transaction has been very positive and we are working to complete the acquisition over the coming month. Synova serves as an all-encompassing OEM manufacturer, with a comparable technological proficiency and a parallel business approach with Highway Holdings. Sharing the extensive synergies will make both companies highly attractive to our combined customer base, while allowing increased cost savings for a more profitable operation."
"As a result of the above catalysts, we are looking cautiously optimistic into the future. We have remained focused on the turnaround of our business after fighting against the many challenges that negatively impacted our customers and our business, and resulted at the beginning of the fiscal year in an almost complete evaporation of previously stable revenue streams. This was a tremendously challenging period, which we believe we have emerged from stronger due to our resilience supported by our very strong and solid financial situation. We are cautiously confident entering the new calendar year 2024 and focused on achieving a significant turnaround in our Company's performance as we continue to navigate continued volatility worldwide."
Gross margin for the third quarter of fiscal year 2024 was 21.3 percent, compared to 28.4 percent in the year ago period, mainly due to a different product mix with various margin levels particularly for Polymega game console deliveries in the current quarter. Gross margin for the first nine months of fiscal year 2024 was 24.1 percent, compared to 33.7 percent in the year ago period which is not considered comparable as it included some rental subsidy from PRC government in fiscal year 2023, which affected the product margin.
The Company reported a
The Company's balance of cash at December 31, 2023 was approximately
The Company's current ratio was 2.13:1 at December 31, 2023.
About Highway Holdings
Highway Holdings is an international manufacturer of a wide variety of quality parts and products for blue chip equipment manufacturers based primarily in Germany. Highway Holdings' administrative offices are located in
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 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 | ||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||
(Unaudited) | ||||||||||||
Three MonthsEnded | Nine Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Net sales | ||||||||||||
Cost of sales | 3,231 | 1,835 | 5,140 | 5,669 | ||||||||
Gross profit | 876 | 727 | 1,636 | 2,878 | ||||||||
Selling, general and administrative expenses | 679 | 722 | 1,728 | 2,130 | ||||||||
Operating income | 197 | 5 | (92) | 748 | ||||||||
Non-operating items | ||||||||||||
Exchange gain /(loss), net | 27 | 3 | 58 | 26 | ||||||||
Interest income | 63 | 16 | 156 | 35 | ||||||||
Gain/(Loss) on disposal of Asset | 3 | 2 | 16 | 7 | ||||||||
Other income/(expenses) | 8 | 0 | 14 | 5 | ||||||||
Total non-operating income/ (expenses) | 101 | 21 | 244 | 73 | ||||||||
Net income before income tax and non-controlling interests | 298 | 26 | 152 | 821 | ||||||||
Income taxes | 1 | 15 | 7 | 10 | ||||||||
Net income before non-controlling interests | 299 | 41 | 159 | 831 | ||||||||
Net loss /(income) attributable to non-controlling interests | 3 | 11 | 18 | 0 | ||||||||
Net income attributable to Highway Holdings Limited's shareholders |
302 |
52 |
177 |
831 | ||||||||
Net Gain/ (loss) per share – Basic
| ||||||||||||
Net Gain/ (loss) per share - Diluted |
|
| ||||||||||
Weighted average number of shares outstanding | ||||||||||||
Basic | 4,386 | 4,072 | 4,314 | 4,058 | ||||||||
Diluted |
4,396 |
4,130 |
4,323 |
4,115 | ||||||||
IGHWAY HOLDINGS LIMITED AND SUBSIDIARIES | |||
Consolidated Balance Sheet | |||
(Dollars in thousands, except per share data) | |||
Dec 31, | Mar 31, | ||
2023 | 2023 | ||
Current assets: | |||
Cash and cash equivalents | |||
Accounts receivable, net of doubtful accounts | 3,533 | 1,886 | |
Inventories | 1,812 | 1,413 | |
Prepaid expenses and other current assets | 200 | 406 | |
Income tax recoverable | - | 3 | |
Total current assets | 11,731 | 10,660 | |
Property, plant and equipment, (net) | 379 | 401 | |
Operating lease right-of-use assets | 2,004 | 2,514 | |
Long-term deposits | 205 | 213 | |
Long-term loan receivable | 95 | 95 | |
Investments in equity method investees | - | - | |
Total assets | |||
Current liabilities: | |||
Accounts payable | |||
Operating lease liabilities, current | 586 | 573 | |
Other liabilities and accrued expenses | 1,845 | 1,991 | |
Income tax payable | 551 | 568 | |
Dividend payable | 46 | 1 | |
Total current liabilities | 5,505 | 4,061 | |
Long term liabilities: | |||
Operating lease liabilities, non-current | 1,013 | 1,482 | |
Deferred income taxes | 98 | 107 | |
Long terms accrued expenses | 17 | 17 | |
Total liabilities | 6,633 | 5,667 | |
Shareholders' equity: | |||
Preferred shares, | - | - | |
Common shares, | 44 | 41 | |
Additional paid-in capital | 12,140 | 12,003 | |
Accumulated deficit | (3,879) | (3,396) | |
Accumulated other comprehensive income/(loss) | (517) | (444) | |
Non-controlling interest | (7) | 12 | |
Total shareholders' equity | 7,781 | 8,216 | |
Total liabilities and shareholders' equity | |||
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SOURCE Highway Holdings Limited
FAQ
What was the increase in revenue for Highway Holdings in the fiscal third quarter of 2024?
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