Hollysys Automation Technologies Reports Unaudited Financial Results for the Second Quarter and the First Half Year Ended December 31, 2018
First Half Year of Fiscal Year 2019 Financial Highlights
- Non-GAAP net income attributable to Hollysys was $72.4 million, an increase of 24.3% compared to the comparable prior year period.
- Total revenues were $288.2 million, an increase of 5.6% compared to the comparable prior year period.
- Non-GAAP gross margin was at 37.7%, compared to 38.2% for the comparable prior year period.
- Non-GAAP diluted EPS were at $1.19, an increase of 24.0% compared to the comparable prior year period.
- Net cash provided by operating activities was $61.5 million for the current period.
- DSO of 171 days, compared to 166 days for the comparable prior year period.
- Inventory turnover days of 51 days, compared to 52 days for the comparable prior year period.
Second Quarter of Fiscal Year 2019 Financial Highlights
- Non-GAAP net income attributable to Hollysys was $44.3 million, an increase of 22.2% compared to the comparable prior year period.
- Total revenues were $149.5 million, a decrease of 5.0% compared to the comparable prior year period.
- Non-GAAP gross margin was at 38.2%, compared to 39.4% for the comparable prior year period.
- Non-GAAP diluted EPS were at $0.73, an increase of 21.7% compared to the comparable prior year period.
- Net cash provided by operating activities was $28.5 million for the current quarter.
- DSO of 157 days, compared to 147 days for the comparable prior year period.
- Inventory turnover days of 39 days, compared to 48 days for the comparable prior year period.
BEIJING, Feb. 15, 2019 /PRNewswire/ -- Hollysys Automation Technologies Ltd. (NASDAQ: HOLI) ("Hollysys" or the "Company"), a leading provider of automation and control technologies and applications in China, today announced its unaudited financial results for the second quarter and the first half of fiscal year 2019 ended December 31, 2018 (see attached tables). The management of Hollysys, stated:
Revenue and new contract for our IA business for the quarter stayed at $49.5 million and $43.9 million, representing a 14.2% and 4.1% YOY decrease, respectively. From a half year perspective, revenue and contract present a 6.9% YOY decrease and 4.5% YOY increase, respectively. Despite macro-economic headwind, management believe that our IA business remains on a healthy path and several highlights are worth mentioning. We kept our leadership in power, and devoted adequate resource in chemical and petrochemical for expansion, while maintaining our involvement in various other industries. In power, despite a slowdown in coal fire construction, steady performance in thermal power and new energy, as well as after-sale services have been stabilizing factors for our power business that should not be ignored. We kept addressing our valuable customer base to respond to various services demand. The communication with our customers have been fruitful and constructive, evidenced by the steady after-sale growth. Beyond that, we are also actively building our matrix of intelligent solution that help bring our customers to the next era of manufacture. Our effort was well rewarded as our value-adding solution on equipment management, control optimization, and information security, etc. were accepted by more customers. Furthermore, we are proud to announce our first intelligent plant solution in the power industry with Liaoning Diaobingshan Power Company. With full-scale data integration as the key, the solution will help realize greater visibility on equipment consumption, greater operational flexibility in power unit and will ultimately improve efficiency and management. With this milestone, we will continue to leverage the know-how we have accumulated and join hands with more customers from various industries to reshape their way of manufacture.
Quarterly revenue and new contract for our railway business were $63.5 million and $173.1 million, representing an 8.7% YOY decrease and 20.4% YOY increase, respectively. From a half year perspective, revenue and new contract recorded an 8.7% and 61.8% YOY increase, respectively. In high-speed rail, we signed 98 sets of C3 ATP for the quarter, along with numerous advanced and heavy maintenance contracts. We also signed a track circuit contract for the regular speed freight railway from Jingbian to Shenmu, Shaanxi Province, China. In subway business, milestone was achieved as we provided our first "SCADA + Integrated Cloud Platform" solution to Hohhot subway line 1 & line 2, as well as Shenzhen Subway Line 6. We see this as an effective addition to our subway business as we keep executing the steady expansion strategy. For high-speed rail business, calendar 2019 is expected to be a busy year as 13th Five Year Plan period is entering its final two years. Going forward into the future and given a visible long-term railway construction plan, we will continue to adhere to the diversity strategy for stable and healthy growth, to improve our local service network for more value-adding and differentiated services, and to keep leveraging our strong R&D capacity for the preparation of next generation railway technology.
In overseas business, M&E recorded a quarterly revenue and new contract of $36.5 million and $36.5 million, representing a 20.8% and 20.1% YOY increase respectively. From a half year perspective, revenue and new contract recorded a 26.6% and 23.3% YOY increase respectively. Measures taken to improve operation have brought constant benefit to the M&E business, while the geopolitical issues in Middle East as well as the macro economy in Southeast Asia remained to be watched. In our IA overseas business, we continued to work with major domestic SOEs on EPC projects while at the same time, contributed adequate effort to expand our partnership. We took one step further in the localization of our business as the construction of our India assembly and testing plant was completed. With this we have set a foothold for improved response time to our overseas customers. Going forward, we expect increasing level of coordination to be built between our overseas and domestic business.
Second Quarter and First Half Year Ended December 31, 2018 Unaudited Financial Results Summary
To facilitate a clear understanding of Hollysys' operational results, a summary of unaudited non-GAAP financial results is shown as below:
(In USD thousands, except for number of shares and per share data) |
||||||||
Three months ended |
Six months ended |
|||||||
Dec 31, |
Dec 31, |
% |
Dec 31, |
Dec 31, |
% |
|||
Revenues |
$ |
149,464 |
157,404 |
(5.0)% |
$ |
288,182 |
272,914 |
5.6% |
Integrated contract revenue |
$ |
116,683 |
134,419 |
(13.2)% |
$ |
233,333 |
230,109 |
1.4% |
Products sales |
$ |
5,917 |
9,717 |
(39.1)% |
$ |
13,957 |
19,177 |
(27.2)% |
Service rendered |
$ |
26,864 |
13,268 |
102.5% |
$ |
40,892 |
23,628 |
73.1% |
Cost of revenues |
$ |
92,389 |
95,424 |
(3.2)% |
$ |
179,567 |
168,663 |
6.5% |
Gross profit |
$ |
57,075 |
61,980 |
(7.9)% |
$ |
108,615 |
104,251 |
4.2% |
Total operating expenses |
$ |
15,076 |
21,072 |
(28.5)% |
$ |
36,576 |
40,277 |
(9.2)% |
Selling |
$ |
7,860 |
7,740 |
1.6% |
$ |
15,569 |
14,438 |
7.8% |
General and administrative |
$ |
11,626 |
12,177 |
(4.5)% |
$ |
20,196 |
23,134 |
(12.7)% |
Research and development |
$ |
10,402 |
10,585 |
(1.7)% |
$ |
19,170 |
19,216 |
(0.2)% |
VAT refunds and government subsidies |
$ |
(14,812) |
(9,430) |
57.1% |
$ |
(18,359) |
(16,511) |
11.2% |
Income from operations |
$ |
41,999 |
40,908 |
2.7% |
$ |
72,039 |
63,974 |
12.6% |
Other income, net |
$ |
5,937 |
2,271 |
161.4% |
$ |
6,495 |
2,710 |
139.7% |
Foreign exchange (loss) gain |
$ |
(704) |
29 |
(2527.6)% |
$ |
(827) |
(1,104) |
(25.1)% |
Share of net (loss) income of equity investees |
$ |
(386) |
1,337 |
(128.9)% |
$ |
(287) |
2,273 |
(112.6)% |
Dividend income from a cost investee |
1,113 |
- |
- |
$ |
1,113 |
1,057 |
5.3% |
|
Interest income |
$ |
2,896 |
1,560 |
85.6% |
$ |
5,995 |
3,036 |
97.5% |
Interest expenses |
$ |
(210) |
(497) |
(57.7)% |
$ |
(316) |
(634) |
(50.2)% |
Income tax expenses |
$ |
6,312 |
9,295 |
(32.1)% |
$ |
11,767 |
13,031 |
(9.7)% |
Net income attributable to non-controlling interests |
$ |
37 |
52 |
(28.8)% |
$ |
83 |
86 |
(3.5)% |
Non-GAAP net income attributable to Hollysys Automation Technologies Ltd. |
$ |
44,296 |
36,261 |
22.2% |
$ |
72,362 |
58,195 |
24.3% |
Non-GAAP basic EPS |
$ |
0.73 |
0.60 |
21.7% |
$ |
1.20 |
0.96 |
25.0% |
Non-GAAP diluted EPS |
$ |
0.73 |
0.60 |
21.7% |
$ |
1.19 |
0.96 |
24.0% |
Share-based compensation expenses |
$ |
67 |
(67) |
(200.0)% |
$ |
151 |
325 |
(53.4)% |
Amortization of acquired intangible assets |
$ |
75 |
101 |
(25.7)% |
$ |
155 |
279 |
(44.4)% |
Fair value adjustments of a bifurcated derivative |
$ |
20 |
- |
- |
20 |
- |
- |
|
GAAP Net income attributable to Hollysys Automation Technologies Ltd. |
$ |
44,134 |
36,227 |
21.8% |
$ |
72,036 |
57,591 |
25.1% |
GAAP basic EPS |
$ |
0.73 |
0.60 |
21.7% |
$ |
1.19 |
0.95 |
25.3% |
GAAP diluted EPS |
$ |
0.72 |
0.60 |
20.0% |
$ |
1.18 |
0.95 |
24.2% |
- |
- |
|||||||
Basic weighted average common shares outstanding |
60,453,770 |
60,431,250 |
0.0% |
60,450,930 |
60,428,431 |
0.0% |
||
Diluted weighted average common shares outstanding |
61,273,353 |
61,251,116 |
0.0% |
61,271,864 |
61,241,092 |
0.0% |
||
Operational Results Analysis for the Second Quarter Ended December 31, 2018
Comparing to the second quarter of the prior fiscal year, the total revenues for the three months ended December 31, 2018 decreased from $157.4 million to $149.5 million, representing a decrease of 5.0%. Broken down by the revenue types, integrated contracts revenue decreased by 13.2% to $116.7 million, products sales revenue decreased by 39.1% to $5.9 million, and services revenue increased by 102.5% to $26.9 million.
The Company's total revenues can also be presented in segments as shown in the following chart:
(In USD thousands) |
|||||||||||
Three months ended Dec 31, |
Six months ended Dec 31, |
||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||
$ |
% to |
$ |
% to |
$ |
% to |
$ |
% to |
||||
Industrial Automation |
49,458 |
33.1% |
57,647 |
36.6% |
107,177 |
37.2% |
115,130 |
42.2% |
|||
Rail Transportation Automation |
63,503 |
42.5% |
69,550 |
44.2% |
113,871 |
39.5% |
104,745 |
38.4% |
|||
Mechanical and Electrical Solution |
36,503 |
24.4% |
30,207 |
19.2% |
67,134 |
23.3% |
53,039 |
19.4% |
|||
Total |
149,464 |
100.0% |
157,404 |
100.0% |
288,182 |
100.0% |
272,914 |
100.0% |
|||
Overall gross margin excluding non-cash amortization of acquired intangibles (non-GAAP gross margin) was 38.2% for the three months ended December 31, 2018, as compared to 39.4% for the same period of the prior year. The non-GAAP gross margin for integrated contracts, product sales, and services rendered were 30.8%, 72.0% and 62.9% for the three months ended December 31, 2018, as compared to 34.5%, 67.4% and 68.6% for the same period of the prior year, respectively. The gross margin fluctuation was mainly due to the different revenue mix with different margins. The GAAP overall gross margin which includes non-cash amortization of acquired intangibles was 38.1% for the three months ended December 31, 2018, as compared to 39.3% for the same period of the prior year. The GAAP gross margin for integrated contracts, product sales, and service rendered were 30.7%, 72.0% and 62.9% for the three months ended December 31, 2018, as compared to 34.4%, 67.4% and 68.6% for the same period of the prior year, respectively.
Selling expenses were $7.9 million for the three months ended December 31, 2018, representing an increase of $0.2 million or 1.6% compared to $7.7 million for the same quarter of the prior year. Presented as a percentage of total revenues, selling expenses were 5.3% and 4.9% for the three months ended December 31, 2018, and 2017, respectively.
General and administrative expenses, excluding non-cash share-based compensation expenses (non-GAAP G&A expenses), were $11.6 million for the quarter ended December 31, 2018, representing a decrease of $0.6 million or 4.5% compared to $12.2 million for the same quarter of the prior year. Presented as a percentage of total revenues, non-GAAP G&A expenses were 7.8% and 7.7% for quarters ended December 31, 2018 and 2017, respectively. The GAAP G&A expenses which include the non-cash share-based compensation expenses were $11.7 million and $12.1 million for the three months ended December 31, 2018 and 2017, respectively.
Research and development expenses were $10.4 million for the three months ended December 31, 2018, representing a decrease of $0.2 million or 1.7% compared to $10.6 million for the same quarter of the prior year. Presented as a percentage of total revenues, R&D expenses were 7.0% and 6.7% for the quarter ended December 31, 2018 and 2017, respectively.
The VAT refunds and government subsidies were $14.8 million for three months ended December 31, 2018, as compared to $9.4 million for the same period in the prior year, representing a $5.4 million or 57.1% increase, which was primarily due to increase of the VAT refunds.
The income tax expenses and the effective tax rate were $6.3 million and 12.5% for the three months ended December 31, 2018, as compared to $9.3 million and 20.4% for comparable prior year period. The effective tax rate fluctuation was mainly due to the different pre-tax income mix with different tax rates, as the Company's subsidiaries are subject to different tax rates in various jurisdictions.
The non-GAAP net income attributable to Hollysys, which excludes the non-cash share-based compensation expenses calculated based on grant-date fair value of shares or options granted, amortization of acquired intangible assets, and fair value adjustments of a bifurcated derivative, was $44.3 million or $0.73 per diluted share based on 61.3 million diluted weighted average common shares outstanding for the three months ended December 31, 2018. This represents a 22.2% increase over the $36.3 million or $0.60 per share based on 61.3 diluted weighted average common million shares outstanding reported in the comparable prior year period. On a GAAP basis, net income attributable to Hollysys was $44.1 million or $0.72 per diluted share representing an increase of 21.8% over the $36.2 million or $0.60 per diluted share reported in the comparable prior year period.
Contracts and Backlog Highlights
Hollysys achieved $253.5 million of new contracts for the three months ended December 31, 2018. The backlog as of December 31, 2018 was $590.1 million. The detailed breakdown of the new contracts and backlog by segments is shown below:
(In USD thousands) |
New contracts achieved |
Backlog |
||||
for the three months ended Dec 31, 2018 |
as of Dec 31, 2018 |
|||||
$ |
% to Total Contract |
$ |
% to Total Backlog |
|||
Industrial Automation |
43,927 |
17.3% |
165,285 |
28.0% |
||
Rail Transportation |
173,056 |
68.3% |
329,744 |
55.9% |
||
Mechanical and Electrical Solutions |
36,496 |
14.4% |
95,032 |
16.1% |
||
Total |
253,479 |
100.0% |
590,061 |
100.0% |
||
Cash Flow Highlights
For the three months ended December 31, 2018, the total net cash outflow was $2.2 million. The net cash provided by operating activities was $28.5 million. The net cash used in investing activities was $20.4 million, mainly consisted of $108.5 million time deposits placed with banks, which was partially offset by $88.6 million maturity of time deposits. The net cash used in financing activities was $11.1 million, mainly consisted of $10.9 million payment of dividends, and $3.2 million repayments of short-term bank loans, which were partially offset by $2.9 million proceeds from short-term bank loans.
Balance Sheet Highlights
The total amount of cash and cash equivalents were $270.8 million, $276.9 million, and $231.1 million as of December 31, 2018, September 30, 2018 and December 31, 2017, respectively.
For the three months ended December 31, 2018, DSO was 157 days, as compared to 147 days for the comparable prior year period and 170 days for the last quarter; and inventory turnover was 39 days, as compared to 48 days for the comparable prior year period and 51 days for the last quarter.
Conference Call
The Company will host a conference call at 8:00 pm February 17, 2019 U.S. Eastern Time / 9:00 am February 18, 2019 Beijing Time, to discuss the financial results for the second quarter and the first half of fiscal year 2019 ended December 31, 2018 and business outlook.
To participate, please call the following numbers ten minutes before the scheduled start of the call. The conference call identification number is 2182982.
Standard International Dial-In Number: |
+65 67135090 |
Participant Local Dial-In Numbers: |
|
Australia, Sydney *NEW* |
+61 290833212 |
China, Domestic |
8008190121 |
China, Domestic |
4006208038 |
China, Hong Kong |
+852 30186771 |
Japan, Tokyo |
+81 345036012 |
Korea (South), Seoul |
+82 27395177 |
China, Taiwan |
+886 255723895 |
United Kingdom, London *NEW* |
+44 2036214779 |
United States, New York |
+1 8456750437 |
Participant ITFS Dial-In Numbers: |
|
Australia, *NEW* |
1800411623 |
Australia, *NEW* |
1300717205 |
Belgium |
080071900 |
Canada |
18663861016 |
France |
0800912761 |
Germany |
08001820671 |
China, Hong Kong |
800906601 |
India |
18002666846 |
Indonesia, PT Indosat access |
0018030179156 |
Indonesia, PT Telkom access |
0078030179156 |
Italy |
800874737 |
Japan |
0120925376 |
Korea (South), Domestic |
0808500474 |
Malaysia |
1800820152 |
Netherlands |
08000221931 |
New Zealand |
0800880084 |
Norway |
80010719 |
Philippines |
180016120306 |
Switzerland |
0800561006 |
China, Taiwan |
0809091568 |
Thailand |
001800656772 |
United Kingdom |
08082346646 |
United States |
18665194004 |
In addition, a recording of the conference call will be accessible within 48 hours via Hollysys' website at: http://hollysys.investorroom.com
About Hollysys Automation Technologies Ltd. (NASDAQ: HOLI)
Hollysys Automation Technologies is a leading provider of automation and control technologies and applications in China that enables its diversified industry and utility customers to improve operating safety, reliability, and efficiency. Founded in 1993, Hollysys has approximately 3,300 employees with nationwide presence in over 60 cities in China, with subsidiaries and offices in Singapore, Malaysia, Dubai, India, and serves over 10,000 customers more than 30,000 projects in the industrial, railway, subway & nuclear industries in China, South-East Asia, and the Middle East. Its proprietary technologies are applied in its industrial automation solution suite including DCS (Distributed Control System), PLC (Programmable Logic Controller), RMIS (Real-time Management Information System), HAMS (HolliAS Asset Management System), OTS (Operator Training System), HolliAS BATCH (Batch Application Package), HolliAS APC Suite (Advanced Process Control Package), SIS (Safety Instrumentation System), high-speed railway signaling system of TCC (Train Control Center), ATP (Automatic Train Protection), Subway Supervisory and Control platform, SCADA (Supervisory Control and Data Acquisition), nuclear power plant automation and control system and other products.
SAFE HARBOUR:
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 "believes," "expects" 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
[email protected]
HOLLYSYS AUTOMATION TECHNOLOGIES LTD. |
|||||||||
Three months ended |
Six months ended |
||||||||
2018 |
2017 |
2018 |
2017 |
||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
||||||
Net revenues |
|||||||||
Integrated contract revenue |
$ |
116,683 |
$ |
134,419 |
$ |
233,333 |
$ |
230,109 |
|
Products sales |
5,917 |
9,717 |
13,957 |
19,177 |
|||||
Revenue from services |
26,864 |
13,268 |
40,892 |
23,628 |
|||||
Total net revenues |
149,464 |
157,404 |
288,182 |
272,914 |
|||||
Cost of integrated contracts |
80,845 |
88,186 |
161,593 |
155,998 |
|||||
Cost of products sold |
1,654 |
3,167 |
3,662 |
5,834 |
|||||
Costs of services rendered |
9,965 |
4,172 |
14,467 |
7,110 |
|||||
Gross profit |
57,000 |
61,879 |
108,460 |
103,972 |
|||||
Operating expenses |
|||||||||
Selling |
7,860 |
7,740 |
15,569 |
14,438 |
|||||
General and administrative |
11,693 |
12,110 |
20,347 |
23,459 |
|||||
Research and development |
10,402 |
10,585 |
19,170 |
19,216 |
|||||
VAT refunds and government subsidies |
(14,812) |
(9,430) |
(18,359) |
(16,511) |
|||||
Total operating expenses |
15,143 |
21,005 |
36,727 |
40,602 |
|||||
Income from operations |
41,857 |
40,874 |
71,733 |
63,370 |
|||||
Other income, net |
5,917 |
2,271 |
6,475 |
2,710 |
|||||
Foreign exchange loss |
(704) |
29 |
(827) |
(1,104) |
|||||
Share of net (loss) income of equity investees |
(386) |
1,337 |
(287) |
2,273 |
|||||
Dividend income from a cost investee |
1,113 |
- |
1,113 |
1,057 |
|||||
Interest income |
2,896 |
1,560 |
5,995 |
3,036 |
|||||
Interest expenses |
(210) |
(497) |
(316) |
(634) |
|||||
Income before income taxes |
50,483 |
45,574 |
83,886 |
70,708 |
|||||
Income taxes expenses |
6,312 |
9,295 |
11,767 |
13,031 |
|||||
Net income |
44,171 |
36,279 |
72,119 |
57,677 |
|||||
Net income attributable to non-controlling interests |
37 |
52 |
83 |
86 |
|||||
Net income attributable to Hollysys Automation Technologies Ltd. |
$ |
44,134 |
$ |
36,227 |
$ |
72,036 |
$ |
57,591 |
|
Other comprehensive income (loss), net of tax of nil |
|||||||||
Translation adjustments |
2,046 |
17,512 |
(27,090) |
32,270 |
|||||
Comprehensive income |
46,217 |
53,791 |
45,029 |
89,947 |
|||||
Less: comprehensive (loss) income attributable to non-controlling interests |
(225) |
54 |
(179) |
87 |
|||||
Comprehensive (loss) income attributable to Hollysys Automation Technologies Ltd. |
$ |
46,442 |
$ |
53,737 |
$ |
45,208 |
$ |
89,860 |
|
Net income per ordinary share: |
|||||||||
Basic |
0.73 |
0.60 |
1.19 |
0.95 |
|||||
Diluted |
0.72 |
0.60 |
1.18 |
0.95 |
|||||
Shares used in income per share computation: |
|||||||||
Weighted average number of ordinary shares |
60,453,770 |
60,431,250 |
60,450,930 |
60,428,431 |
|||||
Weighted average number of diluted ordinary shares |
61,273,353 |
61,251,116 |
61,271,864 |
61,241,092 |
|||||
HOLLYSYS AUTOMATION TECHNOLOGIES LTD. |
||||||
Dec 31, |
Sep 30, |
|||||
2018 |
2018 |
|||||
(Unaudited) |
(Unaudited) |
|||||
ASSETS |
||||||
Current assets |
||||||
Cash and cash equivalents |
$ |
270,806 |
$ |
276,867 |
||
Time deposits with maturities over three months |
168,999 |
148,659 |
||||
Restricted cash |
16,897 |
15,795 |
||||
Accounts receivable, net of allowance for doubtful accounts of $45,125 and $45,139 as of December 31,2018 and September 31, 2018, respectively |
272,008 |
248,875 |
||||
Costs and estimated earnings in excess of billings, net of allowance for doubtful accounts of $7,881 and $9,205 as of December 31, 2018 and September 30, 2018, respectively |
221,581 |
210,935 |
||||
Other receivables, net of allowance for doubtful accounts of $4,914 and $4,874 as of December 31, 2018 and September 30, 2018, respectively |
18,470 |
21,025 |
||||
Advances to suppliers |
15,374 |
13,413 |
||||
Amounts due from related parties |
33,424 |
38,335 |
||||
Inventories |
35,568 |
36,583 |
||||
Prepaid expenses |
911 |
645 |
||||
Income tax recoverable |
276 |
6,155 |
||||
Total current assets |
1,054,314 |
1,017,287 |
||||
Non-current assets |
||||||
Restricted cash |
4,076 |
1,348 |
||||
Prepaid expenses |
4 |
1 |
||||
Property, plant and equipment, net |
75,119 |
74,803 |
||||
Prepaid land leases |
9,832 |
9,867 |
||||
Intangible assets, net |
1,540 |
1,610 |
||||
Investments in equity investees |
52,708 |
46,705 |
||||
Investments in cost investees |
4,785 |
4,765 |
||||
Goodwill |
48,346 |
48,263 |
||||
Deferred tax assets |
11,714 |
7,142 |
||||
Total non-current assets |
208,124 |
194,504 |
||||
Total assets |
1,262,438 |
1,211,791 |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||
Current liabilities |
||||||
Derivative financial liability |
432 |
412 |
||||
Short-term bank loans |
2,215 |
2,293 |
||||
Current portion of long-term loans |
20,258 |
313 |
||||
Dividends payable |
- |
10,862 |
||||
Accounts payable |
116,362 |
121,807 |
||||
Construction costs payable |
- |
304 |
||||
Deferred revenue |
141,365 |
126,688 |
||||
Accrued payroll and related expenses |
19,557 |
15,035 |
||||
Income tax payable |
3,668 |
4,330 |
||||
Warranty liabilities |
5,318 |
5,284 |
||||
Other tax payables |
6,054 |
10,252 |
||||
Accrued liabilities |
23,322 |
19,859 |
||||
Amounts due to related parties |
4,596 |
3,775 |
||||
Total current liabilities |
343,147 |
321,214 |
||||
Non-current liabilities |
||||||
Accrued liabilities |
5,885 |
5,800 |
||||
Long-term loans |
900 |
20,719 |
||||
Deferred tax liabilities |
12,083 |
10,828 |
||||
Warranty liabilities |
2,363 |
2,186 |
||||
Total non-current liabilities |
21,231 |
39,533 |
||||
Total liabilities |
364,378 |
360,747 |
||||
Commitments and contingencies |
- |
- |
||||
Stockholders' equity: |
||||||
Ordinary shares, par value $0.001 per share, 100,000,000 shares authorized; 60,342,099 shares issued and outstanding as of December, 2018 and September 30, 2018 |
60 |
60 |
||||
Additional paid-in capital |
223,547 |
223,481 |
||||
Statutory reserves |
46,283 |
45,970 |
||||
Retained earnings * |
660,329 |
615,775 |
||||
Accumulated other comprehensive income |
(32,281) |
(34,589) |
||||
Total Hollysys Automation Technologies Ltd. stockholder's equity |
897,938 |
850,697 |
||||
Non-controlling interests |
122 |
347 |
||||
Total equity |
898,060 |
851,044 |
||||
Total liabilities and equity |
$ |
1,262,438 |
$ |
1,211,791 |
||
* The adoption of ASC 606 commenced on July 1, 2018 had a one-off effect on the beginning of balance sheet accounts. |
||||||
HOLLYSYS AUTOMATION TECHNOLOGIES LTD CONSOLIDATED STATEMENTS OF CASH FLOWS (In USD thousands). |
|||||
Three months ended |
Six months ended |
||||
Dec 31, 2018 |
Dec 31, 2018 |
||||
(Unaudited) |
(Unaudited) |
||||
Cash flows from operating activities: |
|||||
Net income |
$ |
44,172 |
$ |
72,119 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||
Depreciation of property, plant and equipment |
1,688 |
3,826 |
|||
Amortization of prepaid land leases |
66 |
132 |
|||
Amortization of intangible assets |
77 |
155 |
|||
Allowance for doubtful accounts |
71 |
514 |
|||
Loss (gain) on disposal of property, plant and equipment |
(2) |
39 |
|||
Share of net loss from equity investees |
386 |
287 |
|||
Share-based compensation expenses |
67 |
151 |
|||
Deferred income tax expenses |
(3,366) |
(899) |
|||
Accretion of convertible bond |
57 |
115 |
|||
Fair value adjustments of a bifurcated derivative |
20 |
20 |
|||
Gains on deconsolidation of a subsidiary |
(4,748) |
(4,748) |
|||
Changes in operating assets and liabilities: |
|||||
Accounts receivable |
(22,465) |
(9,041) |
|||
Costs and estimated earnings in excess of billings |
9,473 |
(27,703) |
|||
Inventories |
(13,203) |
3,603 |
|||
Advances to suppliers |
(3,421) |
(7,843) |
|||
Other receivables |
2,606 |
11,345 |
|||
Deposits and other assets |
(268) |
(211) |
|||
Due from related parties |
5,149 |
9,571 |
|||
Accounts payable |
(6,154) |
(7,883) |
|||
Deferred revenue |
14,305 |
10,420 |
|||
Accruals and other payables |
6,924 |
9,638 |
|||
Due to related parties |
820 |
(2,312) |
|||
Income tax payable |
5,274 |
6,275 |
|||
Other tax payables |
(9,044) |
(6,092) |
|||
Net cash provided by operating activities |
28,484 |
61,478 |
|||
Cash flows from investing activities: |
|||||
Time deposits placed with banks |
(108,521) |
(156,940) |
|||
Purchases of property, plant and equipment |
(743) |
(1,234) |
|||
Proceeds from disposal of property, plant and equipment |
178 |
251 |
|||
Maturity of time deposits |
88,647 |
122,854 |
|||
Investment of an equity investee |
- |
(740) |
|||
Cash reduced upon deconsolidation of subsidiary |
- |
(1,878) |
|||
Net cash used in investing activities |
(20,439) |
(37,687) |
|||
Cash flows from financing activities: |
|||||
Proceeds from short-term bank loans |
2,934 |
3,207 |
|||
Repayments of short-term bank loans |
(3,229) |
(3,555) |
|||
Proceeds from long-term bank loans |
332 |
332 |
|||
Repayments of long-term bank loans |
(300) |
(300) |
|||
Payment of Dividends
|
(10,862) |
(10,862) |
|||
Net cash used in financing activities |
(11,125)
|
(11,178)
|
|||
Effect of foreign exchange rate changes |
849 |
(8,143) |
|||
Net (decrease) increase in cash, cash equivalents and restricted cash |
$ |
(2,231) |
4,470 |
||
Cash, cash equivalents and restricted cash, beginning of period |
$ |
294,010 |
287,309 |
||
Cash, cash equivalents and restricted cash, end of period |
291,779 |
291,779 |
|||
Non-GAAP Measures
In evaluating our results, the non-GAAP measures of "Non-GAAP general and administrative expenses", "Non-GAAP net income attributable to Hollysys Automation Technologies Ltd. stockholders", "Non-GAAP basic earnings per share", and "Non-GAAP diluted earnings per share" serve as additional indicators of our operating performance and not as a replacement for other measures in accordance with U.S. GAAP. We believe these non-GAAP measures are useful to investors, as they exclude the non-cash share-based compensation expenses, which is calculated based on the number of shares or options granted and the fair value as of the grant date, amortization of acquired intangible assets, and fair value adjustments of a bifurcated derivative. They will not result in any cash inflows or outflows. We believe that using non-GAAP measures help our shareholders to have a better understanding of our operating results and growth prospects. In addition, given the business nature of the Company, it has been a common practice for investors to use such non-GAAP measures to evaluate the Company.
The following table provides a reconciliation of U.S. GAAP measures to the non-GAAP measures for the periods indicated:
(In USD thousands, except for number of shares and per share data) |
|||||||||||
Three months ended |
Six months ended |
||||||||||
Dec 31, |
Dec 31, |
||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
||||||||
Cost of integrated contracts |
$ |
80,845 |
$ |
88,186 |
$ |
161,593 |
$ |
155,998 |
|||
Less: Amortization of acquired intangible assets |
75 |
101 |
155 |
279 |
|||||||
Non-GAAP cost of integrated contracts |
$ |
80,770 |
$ |
88,085 |
$ |
161,438 |
$ |
155,719 |
|||
General and administrative expenses |
$ |
11,693 |
$ |
12,110 |
$ |
20,347 |
$ |
23,459 |
|||
Less: Share-based compensation expenses |
67 |
(67) |
151 |
325 |
|||||||
Non-GAAP general and administrative expenses |
$ |
11,626 |
$ |
12,177 |
$ |
20,196 |
$ |
23,134 |
|||
Other income (expenses), net |
$ |
5,917 |
2,271 |
6,475 |
2,710 |
||||||
Add: Fair value adjustments of a bifurcated derivative |
20 |
- |
20 |
- |
|||||||
Non-GAAP other income (expenses), net |
$ |
5,937 |
2,271 |
6,495 |
2,710 |
||||||
Net income attributable to Hollysys Automation Technologies Ltd. |
$ |
44,134 |
$ |
36,227 |
$ |
72,036 |
$ |
57,591 |
|||
Add: |
|||||||||||
Share-based compensation expenses |
67 |
(67) |
151 |
325 |
|||||||
Amortization of acquired intangible assets |
75 |
101 |
155 |
279 |
|||||||
Fair value adjustments of a bifurcated derivative |
20 |
- |
20 |
- |
|||||||
Non-GAAP net income attributable to Hollysys Automation Technologies Ltd. |
$ |
44,296 |
$ |
36,261 |
$ |
72,362 |
$ |
58,195 |
|||
Weighted average number of basic ordinary shares |
60,453,770 |
60,431,250 |
60,450,930 |
60,428,431 |
|||||||
Weighted average number of diluted ordinary shares |
61,273,353 |
61,251,116 |
61,271,864 |
61,241,092 |
|||||||
Non-GAAP basic earnings per share |
$ |
0.73 |
$ |
0.60 |
$ |
1.20 |
$ |
0.96 |
|||
Non-GAAP diluted earnings per share |
$ |
0.73 |
$ |
0.60 |
$ |
1.19 |
$ |
0.96 |
|||
SOURCE Hollysys Automation Technologies, Ltd
Related Links
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article