OREANDA-NEWS. Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal fourth quarter and year ended March 31, 2016, reflecting increased profitability for both periods.

Net income for the fiscal fourth quarter increased 33.5 percent to $215,000, or $0.06 per diluted share, from $161,000, or $0.04 per diluted share, in the same quarter a year ago. Net sales for the same period increased 7.4 percent to $5.2 million from $4.9 million a year ago.

Net income for fiscal 2016 increased 8.8 percent to $1.25 million, or $0.33 per diluted share, from $1.15 million, or $0.30 per diluted share, a year earlier.  Net sales for fiscal 2016 were $22.9 million compared with $22.4 million a year ago, reflecting the benefit of price increases to major customers during the fiscal year.  

Operating income for fiscal 2016 increased 19.3 percent to $1.5 million from $1.27 million a year earlier.

“Results for fiscal 2016 reflect solid improvement in operational profitability, attributable to price increases, as noted above, a reduction in low-margin business and the benefits of the company’s continued focus on streamlining our OEM business – including increased utilization of our Myanmar subsidiary,” said Roland Kohl, chairman, president and chief executive officer.

He noted that the company’s expansion in Myanmar is expected to be an attractive alternative to competition from other low-cost manufacturers focused on gaining manufacturing business due to escalating prices in China. “Nonetheless, the timing of business we expect to transition to our operations in Myanmar depends on a variety of factors and may impact quarterly results due to higher or lower sales contributions,” Kohl added.

Gross profit as a percentage of sales increased in fiscal 2016 to 25.8 percent from 25.6 percent a year earlier, attributable to pricing adjustments to customers – despite higher labor costs and increased costs of operating in China. Gross profit as a percentage of sales for the fourth quarter was impacted by product mix and increased raw material costs.

Selling, general and administrative expenses remained at the same annual level compared with a year ago. Selling, general and administrative expenses as a percentage of net sales decreased to 19.2 percent in fiscal 2016 from 19.9 percent in fiscal 2015, primarily due to the streamlining of administrative operations.

Currency exchange rates negatively affected the company’s net income for fiscal 2016.  The company realized a currency exchange loss of $21,000 compared with a currency exchange loss of $125,000 a year ago, mainly due to weakness of the RMB. The company traditionally does not undertake any currency hedging transactions. 

Kohl noted that the company’s balance sheet remains strong, despite four dividend payments in fiscal 2016 -- representing an aggregate of $0.40 per share.  Total current assets at March 31, 2016 were $15.7 million, with working capital of $11 million and a current ratio of 3.1:1.  Total cash was $9.1 million, or $2.40 per diluted share, exceeding all current and long term liabilities combined by $4 million.

Kohl highlighted the company’s total shareholders’ equity of $11.9 million at March 31, 2016 -- representing approximately $3.14 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.

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statement of Income
(Dollars in thousands, except per share data)

  Three Months Ended   Year Ended
  March 31,
(Unaudited) 		  March 31,
(Audited)
               
    2016       2015       2016       2015  
               
Net sales $ 5,248     $ 4,887     $ 22,935     $ 22,373  
Cost of sales   3,812       3,394       17,007       16,656  
Gross profit   1,436       1,493       5,928       5,717  
Selling, general and administrative expenses   1,108       1,299       4,412       4,446  
               
Operating income   328       194       1,516       1,271  
               
Non-operating items              
               
Exchange (loss) gain, net   (1 )     (73 )     (21 )     (125 )
Interest income   2       7       10       18  
Gain on disposal of assets   -       -       0       110  
Other income   0       1       2       3  
               
Total non-operating income   1       (65 )     (9 )     6  
               
Share of profits (loss) of equity investee   -       (7 )     -       -  
Income before income tax and non-controlling Interest   329       122       1,507       1,277  
Income taxes credit (expense)   (112 )     33       (243 )     (134 )
Net Income before non-controlling interests   217       155       1,264       1,143  
               
Net (profit) loss attributable to non-controlling Interests   (2 )     6       (13 )     7  
Net Income attributable to Highway Holdings Limited shareholders $ 215     $ 161     $ 1,251     $ 1,150  
               
Net Income per share:              
Basic $ 0.06     $ 0.04     $ 0.33     $ 0.30  
Diluted $ 0.06     $ 0.04     $ 0.33     $ 0.30  
      ?        
Weighted average number of shares outstanding:              
Basic   3,802     ?3,787     3,802       3,787  
Diluted   3,802     ?3,795     3,802       3,795  

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES 
Consolidated Balance Sheet 
(In thousands, except per share data)

  March 31,  March 31,
    2016     2015  
Current assets:    
Cash and cash equivalents $ 9,140   $ 9,727  
Accounts receivable, net of doubtful accounts   4,321     2,943  
Inventories   1,425     2,081  
Prepaid expenses and other current assets   844     987  
Total current assets   15,730     15,738  
     
Property, plant and equipment, (net)    1,121     1,094  
Goodwill   77     77  
Long-term deposits   111     78  
Investments in equity method investees   -     -  
-Total assets $ 17,039   $ 16,987  
     
Current liabilities:    
Accounts payable $ 1,307   $ 1,579  
Accrual expenses and other liabilities   2,789     2,429  
Income tax payable   440     334  
Dividend payable   537     380  
Total current liabilities   5,073     4,722  
Deferred income taxes   32     32  
Total liabilities   5,105     4,754  
     
Shareholders' equity:    
Common shares, $0.01 par value   38     38  
Additional paid-in capital   11,370     11,370  
Retained earnings   512     782  
Treasury shares, at cost – 5,049 shares as of March 31, 2016 and 2015   (14 )   (14 )
Accumulated other comprehensive income   (34 )   8  
Total Highway Holdings Limited shareholders’ equity   11,872     12,184  
Non-controlling interest   62     49  
Total Equity   11,934      12,233  
Total liabilities and shareholders' equity $ 17,039   $ 16,987