Hollysys Automation Technologies Reports Unaudited Financial Results for Fiscal Year 2013 First Quarter Ended September 30, 2012 PR Newswire BEIJING, Nov. 14, 2012 BEIJING, Nov. 14, 2012 /PRNewswire-FirstCall/ -- 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 fiscal year 2013 first quarter ended on September 30, 2012 (see attached tables). Q1 Financial Highlights oQuarterly revenues of $88.1 million, representing an increase of 1.0% compared to $87.2 million year-over-year, and an decrease of 0.1% compared to $88.1 million quarter-over-quarter. oGross margin at 34.4%, as compared to 37.8% year-over-year, and 41.4% quarter-over-quarter. oNon-GAAP net income attributable to Hollysys of $15.8 million, representing an increase of 22.7% as compared to $12.8 million year-over-year, and an increase of 26.3% as compared to $12.5 million quarter-over-quarter. oNon-GAAP Diluted EPS at $0.28 reported for the quarter, as compared to $0.23 year-over-year, and $0.22 quarter-over-quarter. oBacklog of $368.7 million as of September 30, 2012, a 22.8% increase compared to $300.1 million year-over-year, and 5.4% decrease compared to $389.8 million quarter-over-quarter. oQuarterly DSO of 140 days, as compared to 138 days year-over-year, and 139 days quarter-over-quarter. oInventory turn-over days of 43 days for this quarter compared to 51 days year-over-year, and 53 days quarter-over-quarter. oGenerate net cash provided by operating activities of $29.1 million for this quarter. Dr. Changli Wang, Chairman and CEO of Hollysys, stated: "We are pleased to report solid financial and operational performance for the first quarter of this fiscal year, here I would like to discuss some key events during this quarter: Industrial automation continued its growth momentum in both revenue and backlog compared to the same period of last fiscal year, besides our strengthened efforts and enhanced core capabilities, the growth is mainly driven by several factors amid the challenging external environment: Firstly, we continued to take market share in industrial automation by our better value proposition and unparallel advantages of industry leading proprietary technology, more extensive service network, flexible customization, industry expertise and total solution capabilities; Secondly, we further segmented industrial automation market into detailed niche sectors and found a lot of opportunities and designed customized systems to satisfy clients' specific requirements; Thirdly, we are providing more total solution for the whole plant's automation and control to address customers' buying behavior change and enlarge our business scope; Lastly, we changed our marketing strategy from hunting for projects to cultivating client base to establish long term close working relationship with customers. All in all, with our brand name recognition, industry leading technology, better customization and service capabilities and better value for money proposition, as well as the vast business opportunities we have envisioned so far, we will continue to maintain the stable and sustainable growth and development of this business sector. In rail sector, we are glad to see that the expedited high-speed construction will continue to bring more opportunities to Hollysys as one of the two major high-speed rail signaling system providers in China. In October, we signed a contract to provide the Line-side Electronic Unit (LEU) and Balise to Chongqing-Lichuan high-speed rail line, which was another major contract we signed in the past few months. Going into the future, we will take on the ride of another round of China's accelerated high-speed construction and take our fair market share. In the subway sector, we are well on track of the subway signaling system development and certification according to the international standards, which will be finished by the end of this calendar year. Overseas market will be another exciting growth driver for Hollysys stepping towards internationalization, we believe that with our world class technology and experienced international team, we will make more exciting achievements in the international market in the future. The First Quarter Ended September 2012 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 share numbers and EPS Three months ended September30, September30, % 2012 2011 Change Revenues $ 88,067 87,164 1.0% Integrated Contract Revenue $ 82,852 83,482 (0.8)% Products Sales $ 5,215 3,682 41.6% Cost of Revenues $ 57,800 54,217 6.6% Gross Profit $ 30,267 32,947 (8.1)% Total Operating Expenses $ 15,517 17,515 (11.4)% Selling $ 6,593 6,982 (5.6)% General and Administrative $ 5,832 4,858 20.0% Research and Development $ 7,675 6,069 26.4% VAT refunds and government $ (4,583) (394) 1061.6% subsidies Income from operations $ 14,750 15,432 (4.4)% Other income, net $ 2,037 188 983.8% Share of net income (loss) of equity $ 739 (55) (1,439.4)% investees Interest income $ 982 205 378.9% Interest expenses $ (716) (926) (22.7)% Income tax expenses $ 1,966 1,866 5.4% Non-GAAP net income attributable to $ 75 141 (46.9)% non-controlling interests Non-GAAP net income attributable to $ 15,750 12,837 22.7% Hollysys Automation Technologies Ltd. Basic Non-GAAP EPS $ 0.28 0.23 21.7% Diluted Non-GAAP EPS $ 0.28 0.23 21.7% Stock-based Compensation Cost $ 527 157 234.8% Net income attributable to Hollysys $ 15,223 12,679 20.1% Automation Technologies Ltd.(GAAP) Basic GAAP EPS $ 0.27 0.23 17.4% Diluted GAAP EPS $ 0.27 0.23 17.4% Basic Weighted Average Common Shares 55,998,917 55,009,486 1.8% Outstanding Diluted Weighted Average Common 56,062,950 55,238,035 1.5% Shares Outstanding Operational Results Analysis for the First quarter ended September 30, 2012 For the three months ended September 30, 2012, total revenues increased by 1.0% to $88.1 million, from $87.2 million in the prior fiscal year period. Of the total revenues, revenue from integrated contracts decreased by 0.8% to $82.9 million, as compared to $83.5 million for the same period of the prior year; revenue from products sales increased by 41.6% to $5.2 million, as compared to $3.7 million for the same period of the prior year. The Company's total revenue by segment was as followings: Three months ended Sep 30, 2012 2011 $ % to Total $ % to Total Revenue Revenue Industrial Automation 60.1 68.3% 54.8 62.9% Rail Transportation 14.9 16.9% 25.6 29.4% Miscellaneous 13.0 14.8% 6.7 7.7% Total 88.1 100.0% 87.2 100.0% As a percentage of total revenues, overall gross margin was 34.4% for the three months ended September 30, 2012, as compared to 37.8% for the same period of last year. The gross margin for integrated contracts and product sales were 32.4% and 66.0% for the three months ended September 30, 2012, as compared to 36.6% and 64.4% for the same period of last year respectively. The gross margin fluctuation was mainly due to the different revenue mix with different margin. For the three months ended September 30, 2012, selling expenses were $6.6 million, compared to $7.0 million year over year, representing a decrease of $0.4 million, or 5.6%. As a percentage of total revenues, selling expenses were 7.5% and 8.0% for the three months ended September 30, 2012, and 2011, respectively. General and administrative expenses, excluding non-cash stock-based compensation expense, were $5.8 million for the quarter ended September 30, 2012, representing an increase of $0.9 million, or 20.0%, as compared to $4.9 million for the same period of prior year, mainly due to an increase of 0.6 million of bad debt allowance. As a percentage of total revenues, G&A expenses were 6.6% and 5.6% for the three months ended September 30, 2012 and 2011, respectively. Including the non-cash stock-based compensation cost recorded on a GAAP basis, G&A expenses were $6.4 million and $5.0 million for three months ended September 30, 2012 and 2011, respectively. Research and development expenses were $7.7 million for the three months ended September 30, 2012, compared to $6.1 million year over year, representing an increase of $1.6 million, or 26.4%. Compared to the same period of prior year, the increase was mainly due to the Company's increased R&D activities. As a percentage of total revenues, R&D expenses were 8.7% and 7.0% for the quarter ended September 30, 2012 and 2011, respectively. The VAT refunds and government subsidies amounted to $4.6 million for three months ended September 30, 2012, as compared to $0.4 million for the comparative prior year period, representing an increase of $4.2 million. No VAT refunds were recognized during the quarter ended September 30, 2011,as the VAT refunds policy was undetermined by then, and all the VAT refunds for the whole calendar year 2011 was recognized during the December quarter of fiscal year 2012. The income tax expenses and the effective tax rate were $2.0 million and 11.4% for the three months ended September 30, 2012, as compared to $1.9 million and 12.7% for the same prior year period. For the three months ended September 30, 2012, the non-GAAP net income attributable to Hollysys excluding non-cash stock compensation cost was $15.8 million or $0.28 per diluted share based on 56 million shares outstanding. This represents an increase of $2.9 million, or 22.7%, over the $12.9 million, or $0.23 per share based on 55 million shares outstanding, reported in the prior year period. On a GAAP basis, net income attributable to Hollysys was $15.2 million, or $0.27 per diluted share representing an increase of $2.5 million or 20.1%, over the $12.7 million, or $0.23 per diluted share reported in the prior year period. Backlog Highlights Hollysys' backlog as of September 30, 2012 was $368.7 million, compared to $389.8 million on June 30, 2012, and $300.1 million on September 30, 2011. There is slight decrease compared with last quarter. The large increase compared with prior year was mainly contributed by contracts with Hong Kong MTR Corporation to provide High-Speed Rail Signaling Systems. The detailed breakdown of the backlog by segment is as followings: Quarter-over-Quarter Year-over-Year Analysis Analysis 2012-9-30 2012-6-30 2011-9-30 % to % to % % to % $ Total $ Total Change $ Total Change Backlog Backlog Backlog Industrial 145.2 39.4% 150.9 38.7% (3.8%) 128.7 42.9% 12.8% Automation Rail 185.3 50.2% 196.9 50.5% (5.9%) 157.2 52.4% 17.9% Transportation Miscellaneous 38.2 10.4% 42.0 10.8% (9.0%) 14.2 4.7% 168.7% Total 368.7 100.0% 389.8 100.0% (5.4%) 300.1 100.0% 22.8% Cash Flow Highlights The net cash provided by operating activities was $29.1 million for the three months ended September 30, 2012; including investing and financing activities, the total net cash inflow for this quarter was $24.8 million. Balance Sheet Highlights The total amount of cash and cash equivalents and time deposits with original maturities over three months were $139.2 million, $117.9 million, and $75.5 million as of September 30, 2012, June 30, 2012, and September 30, 2011, respectively. Of the total $139.2 million as of September 30, 2012, cash and cash equivalents were $121.2 million, and time deposits with original maturities over three months were $18.0 million. For the three months ended September 30, 2012, Days Sales Outstanding ("DSO") is 140 days, as compared to 138 days year over year and 139 days quarter over quarter; and inventory turnover is 43 days, as compared to 51 days year over year and 53 days quarter over quarter. Outlook for FY 2013 Dr. Wang concluded, "Given our strong backlog currently on-hand and sales pipeline envisioned so far, we reiterate our guidance of fiscal year 2013 with revenue in the range of $385 million to $410 million and non-GAAP net income in the range of $63 million to $67 million unchanged." Conference Call Management will discuss the current status of the Company's operations during a conference call at 8:30 AM ET/9:30 PM Beijing time on Wednesday, November 14, 2012. Interested parties may participate in the call by dialing the following numbers approximately 10 minutes before the call is scheduled to begin and ask to be connected to the Hollysys Automation Technologies conference call. The conference call identification number is 57520064. 1-866-519-4004 (USA) 800-930-346 (HK) +852-24750994 (HK) 800-819-0121 (China Landline) 400-620-8038 (China Mobile) +65-67239381 (International） In addition, a recorded replay of the conference call will be accessible within 24 hours via Hollysys' website at: http://www.hollysys.com.sg/home/index.php/investor-relations/events-a-webcast About Hollysys Automation Technologies, Ltd. 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 3,500 employees with nationwide presence in over 60 cities in China, with subsidiaries and offices in Singapore, Malaysia, Dubai, India, and serves over 4,000 customers more than 15,000 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 (Surveillance Control and Data Acquisition), nuclear conventional island 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. Contact Information: Hollysys Automation Technologies, Ltd. www.hollysys.com Investor Relations +86-10-5898-1386 email@example.com HOLLYSYS AUTOMATION TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (In US Dollars) Three months ended September 30, 2012 2011 (Unaudited) (Unaudited) Net revenues Integrated contract revenue $ 82,852,035 $ 83,481,883 Products sales 5,214,583 3,682,190 Total net revenues 88,066,618 87,164,073 Cost of integrated contracts 56,027,759 52,905,654 Cost of products sold 1,772,187 1,311,271 Gross profit 30,266,672 32,947,148 Operating expenses Selling 6,592,885 6,981,831 General and administrative 6,358,859 5,015,483 Research and development 7,674,707 6,069,469 VAT refunds and government subsidies (4,582,586) (394,491) Total operating expenses 16,043,865 17,672,292 Income from operations 14,222,807 15,274,856 Other income, net 2,036,663 187,926 Share of net income (loss) of equity investees 739,018 (55,175) Interest income 981,711 204,978 Interest expenses (715,831) (926,117) Income before income taxes 17,264,368 14,686,468 Income taxes expenses 1,966,056 1,866,180 Net income 15,298,312 12,820,288 Less: Net income attributable to non-controlling 74,824 140,930 interests Net income attributable to Hollysys Automation $ 15,223,488 $ 12,679,358 Technologies Ltd. Other comprehensive income, net of tax Foreign currency translation adjustments, net of (1,917,454) 3,939,572 nil tax Comprehensive income 13,380,858 16,759,860 Less: Comprehensive income attributable to 67,961 158,051 non-controlling interests Comprehensive income attributable to Hollysys $ 13,312,897 $ 16,601,809 Automation Technologies Ltd. Net income per ordinary share: Basic 0.27 0.23 Diluted 0.27 0.23 Weighted average ordinary shares used in income per share computation: Basic 55,998,917 55,009,486 Diluted 56,062,950 55,238,035 HOLLYSYS AUTOMATION TECHNOLOGIES LTD. CONSOLIDATED BALANCE SHEETS (In US Dollars) September 30, June 30, 2012 2012 (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 121,157,212 $ 96,332,962 Time deposits with original maturities over 18,015,398 21,586,896 three months Restricted cash 3,829,739 5,544,273 Accounts receivable, net of allowance for doubtful accounts of $15,777,271 and $14,287,361 as of September 136,752,983 136,589,994 30, 2012 and June 30, 2012, respectively Cost and estimated earnings in excess of billings, net of allowance for doubtful accounts of $1,768,528 and 126,344,148 115,161,236 $1,890,108 as of September 30, 2012 and June 30, 2012, respectively Other receivables, net of allowance for doubtful accounts of $354,214 and $344,978 as of September 30, 5,948,416 7,287,214 2012 and June 30, 2012, respectively Advances to suppliers 8,542,288 10,300,182 Amount due from related parties 14,750,841 16,336,558 Inventories, net 28,553,597 26,745,225 Prepaid expenses 288,241 876,363 Income tax recoverable 319,298 139,469 Deferred tax assets 652,979 772,061 Total current assets 465,155,140 437,672,433 Restricted cash 675,651 - Property, plant and equipment, net 69,137,613 63,536,646 Prepaid land leases 6,813,632 6,870,076 Acquired intangible assets, net 503,328 594,971 Investments in equity investees 14,256,245 13,080,929 Investments in cost investees 2,989,025 2,996,638 Goodwill 27,643,846 27,588,883 Deferred tax assets 1,376,462 414,399 Total assets 588,550,942 552,754,975 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term loans 7,895,145 7,914,668 Accounts payable 83,314,254 78,761,476 Construction cost payable 3,309,360 923,205 Deferred revenue 70,235,032 59,293,745 Accrued payroll and related expense 7,239,996 6,448,623 Income tax payable 3,148,875 3,605,030 Warranty liabilities 1,602,545 3,575,920 Other tax payables 18,504,017 18,225,344 Accrued liabilities 14,077,091 7,746,036 Amounts due to related parties 1,835,253 1,964,275 Deferred tax liabilities 1,351,906 370,300 Total current liabilities 212,513,474 188,828,622 Long-term bank loans 22,610,747 24,641,374 Deferred tax liabilities 234,111 - Total liabilities 235,358,332 213,469,996 Commitments and contingencies - - Equity: Ordinary shares 55,999 55,999 Additional paid-in capital 151,831,919 151,305,146 Statutory reserves 23,091,072 23,091,072 Retained earnings 146,157,830 130,934,342 Accumulated other comprehensive income 30,803,965 32,714,556 Total Hollysys Automation Technologies Ltd. stockholder's 351,940,785 338,101,115 equity Non-controlling interests 1,251,825 1,183,864 Total equity 353,192,610 339,284,979 Total liabilities and stockholders' equity $ 588,550,942 $ 552,754,975 HOLLYSYS AUTOMATION TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (In US Dollars) Three months ended September 30, 2012 (Unaudited) Cash flows from operating activities: Net income $ 15,298,312 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation of property, plant and equipment 1,467,299 Amortization of prepaid land leases 39,050 Amortization of intangible assets 43,311 Allowance for doubtful accounts 1,565,846 Loss on disposal of property, plant and equipment 24,115 Share of net income from equity investees (739,018) Share based compensation expenses 526,773 Deferred income tax expenses 362,962 Changes in operating assets and liabilities: Accounts receivable (1,495,557) Costs and estimated earnings in excess of billings (11,358,382) Inventories (1,849,936) Advances to suppliers 1,734,237 Other receivables 1,361,238 Deposits and other assets 1,753,793 Due from related parties 1,073,204 Accounts payable 4,558,155 Deferred revenue 10,889,531 Accruals and other payable 4,300,639 Due to related parties (124,035) Income tax payable (629,264) Other tax payables 325,601 Net cash provided by operating activities 29,127,874 Cash flows from investing activities: Time deposits placed with banks (5,217,245) Purchases of property, plant and equipment (4,033,240) Maturity of time deposits 8,766,465 Net cash used in investing activities (484,020) Cash flows from financing activities: Repayments of long-term bank loans (1,975,998) Net cash used in financing activities (1,975,998) Effect of foreign exchange rate changes (1,843,606) Net increase in cash and cash equivalents $ 24,824,250 Cash and cash equivalents, beginning of period $ 96,332,962 Cash and cash equivalents, end of period 121,157,212 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.", "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 stock-based compensation cost, which is calculated based on the number of shares or options granted and the fair value as of the grant date. It 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 Hollysys, it has been a common practice for investors and analysts 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: Three months ended September 30, 2012 2011 (Unaudited) (Unaudited) General and administrative expenses $ 6,358,859 $ 5,015,483 Minus: Stock-based compensation cost 526,773 157,356 Non-GAAP general and administrative expenses $ 5,832,086 $ 4,858,127 Net income attributable to Hollysys Automation $ 15,223,488 $ 12,679,358 Technologies Ltd. Add: Stock-based compensation cost 526,773 157,356 Non-GAAP net income attributable to Hollysys $ 15,750,261 $ 12,836,714 Automation Technologies Ltd. Weighted average number of ordinary shares 55,998,917 55,009,486 Weighted average number of diluted ordinary 56,062,950 55,238,035 shares Non-GAAP basic earnings per share $ 0.28 $ 0.23 Non-GAAP diluted earnings per share $ 0.28 $ 0.23 SOURCE Hollysys Automation Technologies, Ltd. Website: http://www.hollysys.com
Hollysys Automation Technologies Reports Unaudited Financial Results for Fiscal Year 2013 First Quarter Ended September 30,
Press spacebar to pause and continue. Press esc to stop.