HIGHWAY HOLDINGS REPORTS FISCAL YEAR 2025 THIRD QUARTER AND NINE MONTH RESULTS

Rhea-AI Summary

Highway Holdings (NASDAQ: HIHO) reported mixed financial results for Q3 FY2025 and nine months ended December 31, 2024. While nine-month revenue increased 21% to $5.9 million with net income of $421,000 ($0.10 per share), Q3 showed declines with revenue down 13.5% to $1.9 million and net income dropping to $92,000 ($0.02 per share).

The company's gross margin for Q3 FY2025 was 34%, down from 41% year-over-year, while nine-month gross margin improved to 36.5%. The company maintained a strong financial position with $5.2 million in cash ($1.19 per diluted share) and a current ratio of 2.56:1.

Management noted ongoing challenges from macro uncertainties but is pursuing growth strategies including a restructured deal with Synova, exploring manufacturing options outside Asia, and developing a new business line for diversification.

Positive

• 21% revenue increase for nine months to $5.9 million
• Nine-month net income nearly doubled to $421,000
• Gross margin improved 250 basis points to 36.5% for nine months
• Strong cash position of $5.2 million ($1.19 per diluted share)
• Currency exchange gain of $144,000 for nine months

Negative

• Q3 revenue declined 13.5% to $1.9 million
• Q3 net income dropped 73.6% to $92,000
• Q3 gross margin decreased from 41% to 34%
• Ongoing business challenges from macro uncertainties

Insights

Financial Analyst

Highway Holdings' Q3 FY2025 results present a mixed financial picture. The 21% YoY revenue growth for the nine-month period to $5.9 million is encouraging, but the 13.5% decline in Q3 revenue to $1.9 million signals near-term challenges. The gross margin compression in Q3 to 34% from 41% YoY warrants attention, though the nine-month margin improved by 250 basis points to 36.5%.

The company's strong balance sheet, with $5.2 million in cash ($1.19 per diluted share) and a healthy current ratio of 2.56:1, provides financial flexibility during this transitional period. The $144,000 currency exchange gain, while positive, exposes the company's vulnerability to currency fluctuations, particularly with the Chinese RMB and Myanmar Kyat.

The strategic initiatives, including potential ventures outside Asia and diversification efforts, could help reduce customer dependency. However, macroeconomic headwinds from geopolitical tensions and policy uncertainties continue to impact order volumes. The restructured Synova deal and exploration of new business lines could be pivotal for future growth, though execution risks remain.

Market Research Analyst

The OEM manufacturing sector's dynamics are clearly reflected in Highway Holdings' performance. The company's vulnerability to customer health and macro factors is evident in the Q3 slowdown. The geopolitical tensions - including the Russia/Ukraine war and Middle East conflict - have created a ripple effect through the supply chain, impacting end-market demand.

The strategic pivot towards geographical diversification and business line expansion is timely, considering the shifting global manufacturing landscape. The focus on ventures outside Asia aligns with the broader industry trend of supply chain diversification. The company's game console customer relationship highlights both opportunities and risks in consumer electronics manufacturing, where product mix can significantly impact margins.

The market's cautious stance on small-cap manufacturing stocks is warranted given the current environment, but Highway Holdings' healthy balance sheet and strategic initiatives position it for potential upside when market conditions improve.

• 21% YoY Increase in Revenue for the Fiscal Year 2025 Nine Months

HONG KONG, Jan. 21, 2025 /PRNewswire/ -- Highway Holdings Limited (Nasdaq: HIHO) (the "Company" or "Highway Holdings") today reported financial results for its fiscal third quarter 2025 and fiscal nine months ended December 31, 2024, with a 21% increase in revenue and a $0.05 increase in diluted earnings per share for the nine months results of fiscal year 2025, compared to the year ago period.

Net revenue for the third quarter of fiscal year 2025 decreased 13.5% to $1.9 million compared with $2.2 million in the year ago period. Net income for the third quarter of fiscal year 2025 decreased to $92,000, or $0.02 per diluted share, compared with $348,000 or $0.08 per diluted share in the year ago period.

Net revenue for the first nine months of fiscal year 2025 increased 21% to $5.9 million, compared with $4.9 million in the year ago period. Net income for the first nine months of 2025 was $421,000, or $0.1 per diluted share, compared with a net income of $223,000, or $0.05 per diluted share for the year ago period.

Roland Kohl, chairman, president and chief executive officer of Highway Holdings, said, "While our revenue growth was healthy for the first nine months of fiscal year 2025, the overall near-term situation remains generally challenged as previously reported. Being an OEM manufacturer, we depend on the business health and quality of our customers. We are seeing some encouraging signs at specific customers, but the broader rebound has been slowed by the uncertain macro environment, following the fallout of COVID, as orders for customer products have been adversely impacted by the Russia/Ukraine war, the conflict in the Middle East, and uncertainty around potential policy changes from the incoming new administration in the U.S. It remains to be seen how much of the uncertainty and paused demand will be short-term in nature."

"Longer-term, we see market changes as a positive and a better option than being stuck in neutral. We are optimistic and focused on leveraging the company's strengths, customer relationships, highly valued experience and healthy financial position to benefit from the eventual uptick in demand and build value for shareholders. As noted last quarter, as part of our business growth strategy, we are evaluating numerous possible ventures, which could substantially improve the Company's future. This includes diligently working a new restructured deal with Synova to reflect the significantly changed market situation. We are separately evaluating other potential strategic transactions regarding both direct and indirect manufacturing outside of Asia which may benefit our company and our customers. Lastly, we are working diligently on creating a new second line of business to help drive growth and diversification. We are confident that with our present efforts we will be less reliant on the business health our customers. In this respect, we are cautiously optimistic that the company is on the right track for a better future as we continue to build on our track record of success over the long-term."

Select Additional Financial Results:

Gross margin for the third quarter of fiscal year 2025 was 34 percent, compared to 41 percent in the year ago period, mainly reflecting the impact of a different product mix with various margin levels particularly for a large game console customer. Gross margin for the first nine months of fiscal year 2025 increased 250 basis points to 36.5 percent, compared to 34 percent in the year ago period, with the improvement led by higher revenue and slight rebound in utilization levels.  

The Company reported a $144,000 currency exchange gain for the first nine months of fiscal year 2025, compared with a $58,000 currency exchange gain in the year ago period, primarily due to the weakening of the Chinese RMB and Myanmar Kyat. The Company does not engage in currency exchange rate hedging, and the fluctuation in the exchange rate of the RMB and Kyat are expected to affect the Company's future results.

The Company's balance of cash at December 31, 2024 was approximately $5.2 million, or a balance of cash of approximately $1.19 per diluted share.

The Company's current ratio was 2.56:1 at December 31, 2024.

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 Hong Kong and its manufacturing facilities are located in Yangon, Myanmar and Shenzhen, China. For more information visit website www.highwayholdings.com.

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 Months Ended					Nine Months Ended
	December 31,					December 31,
	2024		2023		2024			2023
Net sales	$1,929		$2,232		$5,925			$4,901
Cost of sales	1,259		1,310		3,760			3,219
Gross profit	670		922		2,165			1,682
Selling, general and administrative expenses	666		679		2,048			1,728
Operating income	4		243		117			(46)
Non-operating items
Exchange gain /(loss), net	48		27		144			58
Interest income	44		63		147			156
Gain/(Loss) on disposal of assets	-		3		-			16
Other income/(expenses)	4		8		16			14
Total non-operating income/ (expenses)	96		101		307			244
Net income before income tax and non-controlling interests	100		344		424			198
Income taxes	-		1		-			7
Net income before non-controlling interests	100		345		424			205
Less: net gain attributable to non-controlling interests	(8)		3		(3)			18
Net income attributable to Highway Holdings Limited's shareholders	92		348		421			223
Net Gain/ (loss) per share – Basic	$0.02		$0.08		$0.10			$0.05
Net Gain/ (loss) per share - Diluted	$0.02		$0.08		$0.10			$0.05
Weighted average number of shares outstanding
Basic	4,402		4,386		4,398			4,314
Diluted	4,402		4,396		4,398			4,323

 

 

 

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(Dollars in thousands, except per share data)
	(unaudited) Dec 31,		(audited) Mar 31,
	2024		2024
Current assets:
Cash and cash equivalents	$5,235		$6,601
Accounts receivable, net of doubtful accounts	1,959		1,253
Inventories	1,469		1,566
Prepaid expenses and other current assets	402		226
Total current assets	9,065		9,646
Property, plant and equipment, (net)	53		-
Operating lease right-of-use assets	1,012		1,375
Long-term deposits	206		202
Long-term loan receivable	95		95
Investments in equity method investees	-		-
Total assets	$10,431		$11,318
Current liabilities:
Accounts payable	$953		$935
Operating lease liabilities, current	633		588
Other liabilities and accrued expenses	1,402		1,789
Income tax payable	490		480
Dividend payable	67		45
Total current liabilities	3,545		3,837
Long term liabilities:
Operating lease liabilities, non-current	351		803
Long term accrued expenses	40		40
Total liabilities	3,936		4,680
Shareholders' equity:
Preferred shares, $0.01 par value	-		-
Common shares, $0.01 par value	44		44
Additional paid-in capital	12,169		12,117
Accumulated deficit	(5,124)		(5,015)
Accumulated other comprehensive income/(loss)	(590)		(501)
Non-controlling interest	(4)		(7)
Total shareholders' equity	6,495		6,638
Total liabilities and shareholders' equity	$10,431		$11,318

 

 

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SOURCE Highway Holdings Limited

FAQ

What was Highway Holdings (HIHO) revenue growth in the first nine months of FY2025?

Highway Holdings reported a 21% increase in revenue to $5.9 million for the first nine months of fiscal year 2025, compared to $4.9 million in the previous year.

How much did HIHO's Q3 FY2025 earnings per share decline?

HIHO's earnings per diluted share decreased to $0.02 in Q3 FY2025 from $0.08 in the same quarter of the previous year.

What is Highway Holdings' (HIHO) cash position as of December 31, 2024?

Highway Holdings reported a cash balance of approximately $5.2 million, or $1.19 per diluted share, as of December 31, 2024.

How did HIHO's gross margin perform in Q3 FY2025 versus the previous year?

HIHO's gross margin decreased to 34% in Q3 FY2025 compared to 41% in the same period of the previous year, primarily due to a different product mix.

What strategic initiatives is Highway Holdings (HIHO) pursuing for growth?

HIHO is pursuing a restructured deal with Synova, exploring manufacturing options outside Asia, and developing a new second line of business for growth and diversification.