Hollysys Automation Technologies Reports Unaudited Financial Results for the Third Quarter and the First Nine Months Ended March 31, 2024
Hollysys Automation Technologies reported its financial results for the third quarter and the first nine months ended March 31, 2024. The company saw a slight increase in total revenues to $597.1 million for the first nine months, but gross margins declined from 33.4% to 31.0%. Net income dropped by 38.8% to $49.7 million, with diluted earnings per share decreasing by 38.9% to $0.80. For the third quarter, revenues increased 3.5% to $173.5 million, but net income fell by 66.2% to $3.9 million, with EPS down 68.4% to $0.06. Hollysys achieved $240.4 million in new contracts and had a backlog of $992.2 million. The company faced increased operating expenses, notably a 91% rise in general and administrative costs. Cash flow from operations was negative, with net cash used in operating activities at $37.4 million. Despite these challenges, Hollysys received recognition for its technological advancements and secured several significant projects in various sectors.
- Total revenues for the first nine months increased by 2.5% to $597.1 million.
- Third-quarter revenues rose by 3.5% to $173.5 million.
- Hollysys secured $240.4 million in new contracts in Q3.
- The company achieved a backlog of $992.2 million.
- Product sales revenue increased by 58.6% to $16.5 million in Q3.
- Gross margin for Q3 improved to 28.9% from 26.8% in the previous year.
- Hollysys received multiple industry recognitions and awards.
- Gross margin for the first nine months decreased from 33.4% to 31.0%.
- Net income for the first nine months fell by 38.8% to $49.7 million.
- Diluted EPS for the first nine months decreased by 38.9% to $0.80.
- Third-quarter net income dropped by 66.2% to $3.9 million.
- Third-quarter diluted EPS fell by 68.4% to $0.06.
- General and administrative expenses increased by 91.0% in Q3.
- Net cash used in operating activities was $37.4 million for Q3.
- Days sales outstanding increased to 183 days from 176 days in the previous year.
Insights
The financial results for Hollysys Automation Technologies reflect a mixed performance, with both positive and negative trends. Key metrics show total revenue increased by
Investors should note the decrease in gross margin from
Another point of concern is the increase in Days Sales Outstanding (DSO) to 183 days, which may point to collection issues or weaker customer payment cycles. Reduced inventory turnover days hint at potential supply chain or demand forecasting challenges.
On the positive side, the company maintains a strong cash position with $697.9 million in cash and equivalents, providing a cushion for future investments and operations. However, the net cash used in operating activities of
Hollysys Automation Technologies' diverse industry operations in industrial automation and rail transportation continue to show significant activity. The company’s work on high-profile projects, such as the grid-connected power generation project and the high-speed rail sector, showcases their technological prowess. The completion of key contracts in energy storage and rail transit reflects their capability to deliver complex engineering solutions.
Despite these accomplishments, the increase in General and Administrative expenses suggests some inefficiencies, potentially related to managing such diverse and complex projects. Additionally, increases in Research and Development (R&D) costs indicate ongoing investments in technological advancements, which could pay off long-term but currently impact profitability.
The awarded recognitions and certifications, such as the AAA-level rating for integrated implementation and the IRIS silver level certification, reinforce the company’s industry standing but don't directly address the immediate financial performance concerns.
From a market perspective, Hollysys Automation Technologies’ financial results present a complex picture for retail investors. The company’s revenue growth in product sales (up
Investors should also be mindful of the competition and market pressures within the automation and control technology sectors. The increase in DSO and inventory turnover days could be indicative of broader market issues or specific customer challenges.
The company’s backlog of
First Nine Months of Fiscal Year 2024 Financial Highlights
- Total revenues were
$597.1 million 2.5% compared to the comparable prior year period. - Gross margin was
31.0% , compared to33.4% for the comparable prior year period. Non-GAAP gross margin was31.2% , compared to33.6% for the comparable prior year period. - Net income attributable to Hollysys was
$49.7 million 38.8% compared to the comparable prior year period. Non-GAAP net income attributable to Hollysys was$51.0 million 40.1% compared to the comparable prior year period. - Diluted earnings per share was
$0.80 38.9% compared to the comparable prior year period. Non-GAAP diluted earnings per share was$0.82 40.1% compared to the comparable prior year period. - Net cash provided by operating activities was
$50.9 million - Days sales outstanding ("DSO") was 151 days, compared to 151 days for the comparable prior year period.
- Inventory turnover days were 79 days, compared to 78 days for the comparable prior year period.
Third Quarter of Fiscal Year 2024 Financial Highlights
- Total revenues were
$173.5 million 3.5% compared to the comparable prior year period. - Gross margin was
28.9% , compared to26.8% for the comparable prior year period. Non-GAAP gross margin was29.1% , compared to27.0% for the comparable prior year period. - Net income attributable to Hollysys was
$3.9 million 66.2% compared to the comparable prior year period. Non-GAAP net income attributable to Hollysys was$4.2 million 66.6% compared to the comparable prior year period. - Diluted earnings per share was
$0.06 68.4% compared to the comparable prior year period. Non-GAAP diluted earnings per share was$0.07 65.0% compared to the comparable prior year period. - Net cash used in operating activities was
$37.4 million - DSO was 183 days, compared to 176 days for the comparable prior year period.
- Inventory turnover days were 84 days, compared to 87 days for the comparable prior year period.
See the section entitled "Non-GAAP Measures" for more information about non-GAAP gross margin, non-GAAP net income attributable to Hollysys and non-GAAP diluted earnings per share.
In this fiscal quarter, Hollysys overcame numerous challenges and achieved remarkable breakthroughs. Leveraging its years of technological strength, the Company was recognized as one of the Top 50 Brands in
In the Industrial Automation segment, the Company successfully collaborated with a subsidiary of Ansteel Group to carry out the retrofit and upgrade of a 2*2.4 million tons coal pelletizing DCS/IODS project, providing multiple products including the MACS V6 series DCS controller. This project achieved independent control and intelligent transformation of the pelletizing production process control in the iron and steel industry. Meanwhile, the Company successfully supported the grid-connected power generation project of a 300-megawatt compressed air energy storage power station in
In the Rail Transportation Automation segment, the Company continued to promote the innovation and integration of new technologies and industries, and foster diverse cooperation mechanisms to promote the high-quality development of the rail transit industry. Meanwhile, the Company's technological strength gained recognition in the industry. In this fiscal quarter, Hollysys was certified with International Railway Industry Standard (IRIS) silver level. Notably, the scientific and technological achievements of "ZPW-2000S Track Circuit contactless key technology research and high-altitude engineering application" won the First Prize of the Science and Technology Progress Award. Additionally, the "research and demonstration application of key technologies of urban rail transit cloud edge computing platform" was awarded the Second Prize of 2023 Urban Rail Transit Science and Technology Progress Award. In the high-speed rail sector, the Company signed the contract for the train control project of the new-build Xiangyang-Jingmen high-speed railway, providing Train Control Center (TCC), Lineside Electronic Unit (LEU), and safety data network for the project. The project presents great significance for the Company in terms of sustainable development, enabling it to introduce other projects for expansion and renovation in the future. In addition, the full site testing of the first station of the Ziyang Rail Transit Line, in which the Company participated, achieved phased results. The Company provided Integrated Supervisory Control System (ISCS), Building Automation System (BAS), Supervisor Control and Data Acquisition (SCADA), communication systems and so forth for the project.
In the mechanical and electrical solutions ("M&E") segment, the Company achieved stable performance with smooth executions on various projects.
With the Company's continuous dedication to the industry and the support of experienced and passionate experts, Hollysys believes that it will continue to create greater value for clients and shareholders.
Third Quarter and the First Nine months Ended March 31, 2024 Unaudited Financial Results Summary
(In USD thousands, except for %, number of shares and per share data) | ||||||||
Three months ended March 31, | Nine months ended March 31, | |||||||
2024 | 2023 | % | 2024 | 2023 | % | |||
Revenues | $ | 173,466 | 167,636 | 3.5 % | $ | 597,090 | 582,410 | 2.5 % |
Integrated solutions contracts | $ | 138,455 | 139,149 | (0.5) % | $ | 468,674 | 471,204 | (0.5) % |
Products sales | $ | 16,474 | 10,386 | 58.6 % | $ | 40,195 | 34,174 | 17.6 % |
Service rendered | $ | 18,537 | 18,101 | 2.4 % | $ | 88,221 | 77,032 | 14.5 % |
Cost of revenues | $ | 123,343 | 122,641 | 0.6 % | $ | 411,779 | 387,727 | 6.2 % |
Gross profit | $ | 50,123 | 44,995 | 11.4 % | $ | 185,311 | 194,683 | (4.8) % |
Total operating expenses | $ | 47,404 | 33,973 | 39.5 % | $ | 134,569 | 119,269 | 12.8 % |
Selling | $ | 15,470 | 14,577 | 6.1 % | $ | 51,524 | 43,615 | 18.1 % |
General and administrative | $ | 22,771 | 11,921 | 91.0 % | $ | 47,165 | 44,394 | 6.2 % |
Research and development | $ | 19,287 | 15,662 | 23.1 % | $ | 65,912 | 53,452 | 23.3 % |
VAT refunds and government subsidies | $ | (10,124) | (8,187) | 23.7 % | $ | (30,032) | (22,192) | 35.3 % |
Income from operations | $ | 2,719 | 11,022 | (75.3) % | $ | 50,742 | 75,414 | (32.7) % |
Other income, net | $ | 1,139 | 1,626 | (30.0) % | $ | 836 | 2,748 | (69.6) % |
Foreign exchange gain (loss) | $ | 207 | (1,244) | (116.6) % | $ | (847) | 2,280 | (137.1) % |
Impairment loss of investments in securities | $ | - | - | - | $ | (69) | - | - |
Share of net (loss) income of equity | $ | (912) | 690 | (232.2) % | $ | (614) | 2,355 | (126.1) % |
Gains on disposal of an investment in | $ | - | - | - | $ | - | 845 | (100.0) % |
Interest income | $ | 3,675 | 2,941 | 25.0 % | $ | 10,343 | 9,020 | 14.7 % |
Interest expenses | $ | (704) | (252) | 179.4 % | $ | (1,435) | (621) | 131.1 % |
Income tax expenses | $ | 2,320 | 3,188 | (27.2) % | $ | 9,444 | 10,694 | (11.7) % |
Net (loss) income attributable to non- | $ | (105) | 27 | (488.9) % | $ | (177) | 136 | (230.1) % |
Net income attributable to Hollysys | $ | 3,909 | 11,568 | (66.2) % | $ | 49,689 | 81,211 | (38.8) % |
Basic earnings per share | $ | 0.06 | 0.19 | (68.4) % | $ | 0.80 | 1.32 | (39.4) % |
Diluted earnings per share | $ | 0.06 | 0.19 | (68.4) % | $ | 0.80 | 1.31 | (38.9) % |
Share-based compensation expenses | $ | - | 672 | (100.0) % | $ | 348 | 2,849 | (87.8) % |
Amortization of acquired intangible assets | $ | 290 | 340 | (14.7) % | $ | 937 | 1,017 | (7.9) % |
Non-GAAP net income attributable to | $ | 4,199 | 12,580 | (66.6) % | $ | 50,974 | 85,077 | (40.1) % |
Non-GAAP basic earnings per share(1) | $ | 0.07 | 0.20 | (65.0) % | $ | 0.82 | 1.38 | (40.6) % |
Non-GAAP diluted earnings per share(1) | $ | 0.07 | 0.20 | (65.0) % | $ | 0.82 | 1.37 | (40.1) % |
Basic weighted average number of ordinary | 62,127,607 | 61,595,286 | 0.9 % | 61,987,252 | 61,449,939 | 0.9 % | ||
Diluted weighted average number of | 62,426,784 | 62,127,557 | 0.5 % | 62,312,957 | 62,015,929 | 0.5 % | ||
(1) See the section entitled "Non-GAAP Measures" for more information about these non-GAAP measures. | ||||||||
Operational Results Analysis for the Third Quarter Ended March 31, 2024
Total revenues for the three months ended March 31, 2024 were
The following table sets forth the Company's total revenues by segment for the periods indicated.
(In USD thousands, except for %) | ||||||||||||||||||
Three months ended March 31, | Nine months ended March 31, | |||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||
$ | % of Total | $ | % of Total | $ | % of Total | $ | % of Total | |||||||||||
Industrial Automation | 117,361 | 67.6 | 112,407 | 67.0 | 369,764 | 61.9 | 365,183 | 62.7 | ||||||||||
Rail Transportation | 39,998 | 23.1 | 36,197 | 21.6 | 164,333 | 27.5 | 153,265 | 26.3 | ||||||||||
Mechanical and | 16,107 | 9.3 | 19,032 | 11.4 | 62,993 | 10.6 | 63,962 | 11.0 | ||||||||||
Total | 173,466 | 100.0 | 167,636 | 100.0 | 597,090 | 100.0 | 582,410 | 100.0 | ||||||||||
Gross margin was
Selling expenses were
General and administrative expenses were
Research and development expenses were
The VAT refunds and government subsidies were
The income tax expenses and the effective tax rate were
Net income attributable to Hollysys was
Diluted earnings per share was
Contracts and Backlog Highlights
Hollysys achieved
(In USD thousands, except for %) | |||||
Value of new contracts achieved | Backlog | ||||
for the three months ended March 31, 2024 | as of March 31, 2024 | ||||
$ | % of Total | $ | % of Total | ||
Industrial Automation | 183,941 | 76.5 | 412,094 | 41.5 | |
Rail Transportation | 34,158 | 14.2 | 393,073 | 39.6 | |
Mechanical and Electrical Solutions | 22,328 | 9.3 | 187,053 | 18.9 | |
Total | 240,427 | 100.0 | 992,220 | 100.0 | |
Cash Flow Highlights
For the three months ended March 31, 2024, the total net cash outflow was
Balance Sheet Highlights
The total amount of cash and cash equivalents were
For the three months ended March 31, 2024, DSO was 183 days, as compared to 176 days for the comparable period of prior fiscal year and 138 days for the last fiscal quarter; inventory turnover days were 84 days, as compared to 87 days for the comparable period of prior fiscal year and 68 days for the last fiscal quarter.
About Hollysys Automation Technologies Ltd.
Hollysys is a leading automation control system solutions provider in
SAFE HARBOR STATEMENTS
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding the ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident," or similar expressions, involve known and unknown risks and uncertainties. Such forward-looking statements, based upon the current beliefs and expectations of Hollysys' management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For further information, please contact:
Hollysys Automation Technologies Ltd.
www.hollysys.com
+8610-58981386
investors@hollysys.com
HOLLYSYS AUTOMATION TECHNOLOGIES LTD. | ||||||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||||
(In USD thousands except for number of shares and per share data) | ||||||||
Three months ended | Nine months ended | |||||||
2024 | 2023 | 2024 | 2023 | |||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
Net revenues | ||||||||
Integrated solutions contracts | $ | 138,455 | $ | 139,149 | $ | 468,674 | $ | 471,204 |
Products sales | 16,474 | 10,386 | 40,195 | 34,174 | ||||
Revenue from services | 18,537 | 18,101 | 88,221 | 77,032 | ||||
Total net revenues | 173,466 | 167,636 | 597,090 | 582,410 | ||||
Costs of integrated solutions contracts | 112,303 | 113,732 | 371,276 | 351,879 | ||||
Cost of products sold | 4,061 | 3,170 | 10,501 | 8,410 | ||||
Costs of services rendered | 6,979 | 5,739 | 30,002 | 27,438 | ||||
Gross profit | 50,123 | 44,995 | 185,311 | 194,683 | ||||
Operating expenses | ||||||||
Selling | 15,470 | 14,577 | 51,524 | 43,615 | ||||
General and administrative | 22,771 | 11,921 | 47,165 | 44,394 | ||||
Research and development | 19,287 | 15,662 | 65,912 | 53,452 | ||||
VAT refunds and government subsidies | (10,124) | (8,187) | (30,032) | (22,192) | ||||
Total operating expenses | 47,404 | 33,973 | 134,569 | 119,269 | ||||
Income from operations | 2,719 | 11,022 | 50,742 | 75,414 | ||||
Other income, net | 1,139 | 1,626 | 836 | 2,748 | ||||
Foreign exchange gain (loss) | 207 | (1,244) | (847) | 2,280 | ||||
Gains on disposal of an investment in securities | - | - | - | 845 | ||||
Impairment loss of investments in investment in securities | - | - | (69) | - | ||||
Share of net (loss) income of equity investees | (912) | 690 | (614) | 2,355 | ||||
Interest income | 3,675 | 2,941 | 10,343 | 9,020 | ||||
Interest expenses | (704) | (252) | (1,435) | (621) | ||||
Income before income taxes | 6,124 | 14,783 | 58,956 | 92,041 | ||||
Income taxes expenses | 2,320 | 3,188 | 9,444 | 10,694 | ||||
Net income | 3,804 | 11,595 | 49,512 | 81,347 | ||||
Net (loss) income attributable to non-controlling interests | (105) | 27 | (177) | 136 | ||||
Net income attributable to Hollysys Automation | $ | 3,909 | $ | 11,568 | $ | 49,689 | $ | 81,211 |
Other comprehensive (loss) income, net of tax of nil | ||||||||
Translation adjustments | (16,355) | 20,805 | 4,792 | (29,577) | ||||
Comprehensive income | (12,551) | 32,400 | 54,304 | 51,770 | ||||
Less: comprehensive (loss) income attributable to non- | (122) | 345 | (177) | 536 | ||||
Comprehensive (loss) income attributable to Hollysys | $ | (12,429) | $ | 32,055 | $ | 54,481 | $ | 51,234 |
Net income per ordinary share: | ||||||||
Basic | 0.06 | 0.19 | 0.80 | 1.32 | ||||
Diluted | 0.06 | 0.19 | 0.80 | 1.31 | ||||
Shares used in net income per share computation: | ||||||||
Basic | 62,127,607 | 61,595,286 | 61,987,252 | 61,449,939 | ||||
Diluted | 62,426,784 | 62,127,557 | 62,312,957 | 62,015,929 | ||||
HOLLYSYS AUTOMATION TECHNOLOGIES LTD. | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(In USD thousands except for number of shares and per share data) | ||||||
March 31, | December | |||||
2024 | 2023 | |||||
(Unaudited) | (Unaudited) | |||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 697,936 | $ | 747,507 | ||
Short-term investments | 9,902 | 9,074 | ||||
Restricted cash | 24,217 | 24,492 | ||||
Accounts receivable, net of allowance for credit losses of | 330,311 | 352,399 | ||||
Costs and estimated earnings in excess of billings, net of allowance for credit losses | 253,859 | 244,154 | ||||
Accounts receivable retention | 5,128 | 5,297 | ||||
Other receivables, net of allowance for credit losses of | 21,871 | 16,011 | ||||
Advances to suppliers | 29,059 | 31,687 | ||||
Amounts due from related parties | 30,521 | 22,482 | ||||
Inventories | 111,061 | 106,691 | ||||
Prepaid expenses | 778 | 441 | ||||
Income tax recoverable | 1,109 | 1,115 | ||||
Total current assets | 1,515,752 | 1,561,350 | ||||
Non-current assets | ||||||
Restricted cash | 11,297 | 11,425 | ||||
Costs and estimated earnings in excess of billings | 2,086 | 1,570 | ||||
Accounts receivable retention | 6,337 | 7,070 | ||||
Prepaid expenses | 3 | 2 | ||||
Property, plant and equipment, net | 162,225 | 164,833 | ||||
Prepaid land leases | 11,278 | 11,569 | ||||
Intangible assets, net | 8,169 | 8,598 | ||||
Investments in equity investees | 47,887 | 48,683 | ||||
Investments securities | 1,535 | 1,552 | ||||
Goodwill | 19,247 | 19,359 | ||||
Deferred tax assets | 12,404 | 9,454 | ||||
Operating lease right-of-use assets | 2,985 | 3,435 | ||||
Total non-current assets | 285,453 | 287,550 | ||||
Total assets | 1,801,205 | 1,848,900 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Short-term bank loans | 53 | 67 | ||||
Current portion of long-term loans | 15,241 | 15,245 | ||||
Accounts payable | 173,457 | 181,618 | ||||
Construction costs payable | 15,443 | 18,650 | ||||
Deferred revenue | 216,702 | 223,005 | ||||
Accrued payroll and related expenses | 21,521 | 39,496 | ||||
Income tax payable | 5,221 | 4,004 | ||||
Warranty liabilities | 3,712 | 3,663 | ||||
Other tax payables | 5,604 | 10,540 | ||||
Accrued liabilities | 39,263 | 35,580 | ||||
Amounts due to related parties | 3,890 | 4,043 | ||||
Operating lease liabilities | 1,497 | 1,934 | ||||
Total current liabilities | 501,604 | 537,845 | ||||
Non-current liabilities | ||||||
Accrued liabilities | 728 | 666 | ||||
Long-term loans | 50,279 | 48,638 | ||||
Accounts payable | 2,789 | 2,851 | ||||
Deferred tax liabilities | 11,178 | 11,665 | ||||
Warranty liabilities | 2,564 | 2,573 | ||||
Operating lease liabilities | 1,180 | 1,227 | ||||
Total non-current liabilities | 68,718 | 67,620 | ||||
Total liabilities | 570,322 | 605,465 | ||||
Commitments and contingencies | - | - | ||||
Stockholders' equity: | ||||||
Ordinary shares, par value | 62 | 62 | ||||
Additional paid-in capital | 247,255 | 247,256 | ||||
Statutory reserves | 86,914 | 81,060 | ||||
Retained earnings | 1,003,430 | 1,005,375 | ||||
Accumulated other comprehensive income | (107,625) | (91,287) | ||||
Total Hollysys Automation Technologies Ltd. stockholder's equity | 1,230,036 | 1,242,466 | ||||
Non-controlling interests | 847 | 969 | ||||
Total equity | 1,230,883 | 1,243,435 | ||||
Total liabilities and equity | $ | 1,801,205 | $ | 1,848,900 | ||
HOLLYSYS AUTOMATION TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (In USD thousands) | |||||
Three months | Nine months | ||||
March 31, 2024 | March 31, | ||||
(Unaudited) | (Unaudited) | ||||
Cash flows from operating activities: | |||||
Net income | $ | 3,804 | $ | 49,512 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation of property, plant and equipment | 2,969 | 7,543 | |||
Amortization of prepaid land leases | 81 | 244 | |||
Amortization of intangible assets | 290 | 937 | |||
Allowance for credit losses | 2,915 | (4,924) | |||
Loss (gain) on disposal of property, plant and equipment | (70) | (136) | |||
Share of net income (loss) of equity investees | 912 | 614 | |||
Share-based compensation expenses | - | 348 | |||
Deferred income tax expenses | (3,456) | (2,337) | |||
Impairment loss of investments in investment in securities | - | 69 | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable and retention | 13,100 | (11,796) | |||
Costs and estimated earnings in excess of billings | (13,117) | 427 | |||
Inventories | (5,554) | 1,753 | |||
Advances to suppliers | 2,266 | (424) | |||
Other receivables | (6,033) | (2,442) | |||
Prepaid expenses | (344) | (180) | |||
Due from related parties | (8,280) | (4,482) | |||
Accounts payable | (5,837) | 2,089 | |||
Deferred revenue | (3,707) | 33,372 | |||
Accruals and other payables | (13,646) | (10,376) | |||
Due to related parties | (154) | (2,265) | |||
Income tax payable | 1,250 | (1,679) | |||
Other tax payables | (4,803) | (4,983) | |||
Net cash (used in) provided by operating activities | (37,414) | 50,884 | |||
Cash flows from investing activities: | |||||
Purchases of short-term investments | (1,492) | (21,965) | |||
Purchases of property, plant and equipment | (4,873) | (25,499) | |||
Proceeds from disposal of property, plant and equipment | 111 | 268 | |||
Maturity of short-term investments | 399 | 45,260 | |||
Investment of an investment in securities | - | (35) | |||
Investment of an equity investee | (664) | (664) | |||
Proceeds from acquisition of a subsidiary | - | 390 | |||
Net cash used in investing activities | (6,519) | (2,245) | |||
Cash flows from financing activities: | |||||
Proceeds from short-term bank loans | 171 | 237 | |||
Repayments of short-term bank loans | (184) | (184) | |||
Proceeds from long-term bank loans | 2,348 | 33,915 | |||
Repayments of long-term bank loans | (136) | (510) | |||
Net cash provided by financing activities | 2,199 | 33,458 | |||
Effect of foreign exchange rate changes | (8,240) | 3,223 | |||
Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (49,974) | 85,320 | ||
Cash, cash equivalents and restricted cash, beginning of period | $ | 783,424 | 648,130 | ||
Cash, cash equivalents and restricted cash, end of period | 733,450 | 733,450 | |||
Non-GAAP Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, in evaluating our results, we use the following non-GAAP financial measures: non-GAAP gross profit and non-GAAP gross margin, non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts, non-GAAP net income attributable to Hollysys Automation Technologies Ltd., as well as non-GAAP basic and diluted earnings per share.
These non-GAAP financial measures serve as additional indicators of our operating performance and not as any replacement for other measures in accordance with
Non-GAAP gross profit and non-GAAP gross margin, non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts, non-GAAP net income attributable to Hollysys Automation Technologies Ltd., as well as non-GAAP basic and diluted earnings per share should not be considered in isolation or construed as an alternative to gross profit and gross margin, gross profit and gross margin of integrated solutions contracts, net income attributable to Hollysys Automation Technologies Ltd., basic and diluted earnings per share, or any other measure of performance, or as an indicator of the Company's operating performance. Investors are encouraged to review the historical non-GAAP financial measures to the most directly comparable GAAP measures. Non-GAAP gross profit and gross margin, non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts, non-GAAP net income attributable to Hollysys Automation Technologies Ltd., as well as non-GAAP basic and diluted earnings per share presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data. The Company encourages investors and others to review the Company's financial information in its entirety and not rely on a single financial measure.
We define non-GAAP gross profit and non-GAAP gross margin as gross profit and gross margin, respectively, adjusted to exclude non-cash amortization of acquired intangibles. The following table provides a reconciliation of our gross profit and gross margin to non-GAAP gross profit and non-GAAP gross margin for the periods indicated.
(In USD thousands, except for %) | |||||||||
Three months ended | Nine months ended | ||||||||
March 31, | March 31 | ||||||||
2024 | 2023 | 2024 | 2023 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
Gross profit | $ | 50,123 | $ | 44,995 | 185,311 | $ | 194,683 | ||
Gross margin(1) | 28.9 % | 26.8 % | 31.0 % | 33.4 % | |||||
Add: | |||||||||
Amortization of acquired intangible assets | 290 | 340 | 937 | 1,017 | |||||
Non-GAAP gross profit | $ | 50,413 | $ | 45,335 | $ | 186,248 | $ | 195,700 | |
Non-GAAP gross margin(2) | 29.1 % | 27.0 % | 31.2 % | 33.6 % | |||||
(1) Gross margin represents gross profit for the period as a percentage of revenue for such period. | |||||||||
(2) Non-GAAP gross margin represents non-GAAP gross profit for the period as a percentage of revenue for such period. | |||||||||
We define non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts as gross profit and gross margin of integrated solutions contracts, respectively, adjusted to exclude non-cash amortization of acquired intangibles associated with integrated solutions contracts. The following table provides a reconciliation of the gross profit of integrated solutions contracts to non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts for the periods indicated.
(In USD thousands, except for %) | ||||||||
Three months ended March 31, | Nine months ended March 31, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
Gross profit of integrated | $ | 26,152 | $ | 25,417 | $ | 97,398 | $ | 119,325 |
Gross margin of integrated | 18.9 % | 18.3 % | 20.8 % | 25.3 % | ||||
Add: Amortization of acquired intangible | 290 | 340 | 937 | 1,017 | ||||
Non-GAAP gross profit of | $ | 26,442 | $ | 25,757 | $ | 98,335 | $ | 120,342 |
Non-GAAP gross margin of | 19.1 % | 18.5 % | 21.0 % | 25.5 % | ||||
(1) Gross margin of integrated solutions contracts represents gross profit of integrated solutions contracts for the period as a | ||||||||
(2) Non-GAAP gross margin of integrated solutions contracts represents non-GAAP gross profit of integrated solutions contracts | ||||||||
We define non-GAAP net income attributable to Hollysys as net income attributable to Hollysys adjusted to exclude the share-based compensation expenses and non-cash amortization of acquired intangible assets. The following table provides a reconciliation of net income attributable to Hollysys to non-GAAP net income attributable to Hollysys for the periods indicated.
(In USD thousands) | |||||||||
Three months ended | Nine months ended | ||||||||
March 31, | March 31, | ||||||||
2024 | 2023 | 2024 | 2023 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
Net income attributable to Hollysys Automation | $ | 3,909 | $ | 11,568 | $ | 49,689 | $ | 81,211 | |
Add: | |||||||||
Share-based compensation expenses | - | 672 | 348 | 2,849 | |||||
Amortization of acquired intangible assets | 290 | 340 | 937 | 1,017 | |||||
Non-GAAP net income attributable to Hollysys | $ | 4,199 | $ | 12,580 | $ | 50,974 | $ | 85,077 | |
Non-GAAP basic (or diluted) earnings per share represents non-GAAP net income attributable to Hollysys divided by the weighted average number of ordinary shares outstanding during the periods (or on a diluted basis). The following table provides a reconciliation of our basic (or diluted) earnings per share to non-GAAP basic (or diluted) earnings per share for the periods indicated.
(In USD thousands, except for number of shares and per share data) | |||||||||
Three months ended | Nine months ended | ||||||||
March 31, | March 31, | ||||||||
2024 | 2023 | 2024 | 2023 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
Net income attributable to Hollysys Automation | $ | 3,909 | $ | 11,568 | $ | 49,689 | $ | 81,211 | |
Add: | |||||||||
Share-based compensation expenses | - | 672 | 348 | 2,849 | |||||
Amortization of acquired intangible assets | 290 | 340 | 937 | 1,017 | |||||
Non-GAAP net income attributable to | $ | 4,199 | $ | 12,580 | $ | 50,974 | $ | 85,077 | |
Weighted average number of basic ordinary | 62,127,607 | 61,595,286 | 61,987,252 | 61,449,939 | |||||
Weighted average number of diluted ordinary | 62,426,784 | 62,127,557 | 62,312,957 | 62,015,929 | |||||
Basic earnings per share(1) | 0.06 | 0.19 | 0.80 | 1.32 | |||||
Add: | 0.01 | 0.01 | 0.02 | 0.06 | |||||
Non-GAAP basic earnings per share(3) | $ | 0.07 | $ | 0.20 | $ | 0.82 | $ | 1.38 | |
Diluted earnings per share(1) | 0.06 | 0.19 | 0.80 | 1.31 | |||||
Add: | 0.01 | 0.01 | 0.02 | 0.06 | |||||
Non-GAAP diluted earnings per share(3) | $ | 0.07 | $ | 0.20 | $ | 0.82 | $ | 1.37 | |
(1) Basic (or diluted) earnings per share is derived from net income attributable to Hollysys Automation Technologies Ltd. for | |||||||||
(2) Non-GAAP adjustments to net income per share is derived from non-GAAP adjustments to net income divided by weighted | |||||||||
(3) Non-GAAP basic (or diluted) earnings per share is derived from non-GAAP net income attributable to Hollysys Automation | |||||||||
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SOURCE Hollysys Automation Technologies Ltd
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