BEIJING, Aug 14, 2017 /PRNewswire/ --
Fiscal Year 2017 Financial Highlights
- Non-GAAP net income attributable to Hollysys was
$70.1 million, a decrease of 42.3%
compared to the comparable prior year period.
- Total revenues were $431.9
million, a decrease of 20.6% compared to the comparable
prior year period.
- Non-GAAP gross margin was at 32.7%, compared to 37.9%
for the comparable prior year period.
- Non-GAAP diluted EPS were at $1.16, a decrease of 42.6% compared to the
comparable prior year period.
- Net cash provided by operating activities was
$69.8 million for the current
year.
- DSO of 201 days, compared to 162 days for the comparable
prior year period.
- Inventory turnover days of 51 days, compared to 38 days
for the comparable prior year period.
Fourth Quarter of Fiscal Year 2017 Financial
Highlights
- Non-GAAP net income attributable to Hollysys was
$22.6 million, a decrease of 34.0%
compared to the comparable prior year period.
- Total revenues were $138.0
million, a decrease of 6.6% compared to the comparable prior
year period.
- Non-GAAP gross margin was at 39.1%, compared to 39.9%
for the comparable prior year period.
- Non-GAAP diluted EPS were at $0.37, a decrease of 35.1% compared to the
comparable prior year period.
- Net cash provided by operating activities was
$23.8 million for the current
quarter.
- DSO of 153 days, compared to 146 days for the comparable
prior year period.
- Inventory turnover days of 50 days, compared to 37 days
for the comparable prior year period.
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 2017 and the fourth
quarter ended on June 30, 2017 (see
attached tables). The management of Hollysys, stated:
Industrial automation presented signal of stabilization starting
from the second half of the fiscal year. Our third quarter revenue
achieved year-on-year growth for the first time in the last two
years, recorded at 0.1%, The growth went further up to 6.5% in the
fourth quarter, driving fiscal year revenue decline down to single
digit while new contracts was recovering. Performance in power
remained prominent. We signed contracts to provide products for
large power units, including Sichuan Jiangyou 2X1000MW power units,
Xinjiang East Hope 4X660MW power units, Guohua Yongzhou 2X1000MW
power units, and Datang Pingluo 2X660MW power units. In chemical,
several major contracts we signed include DCS and SIS contract for
the polysilicon of Xinjiang East Hope Company, DCS and Batch
contract for ASIA CUANON in its
Waterborne Coatings Project and DCS, AMS and SIS contract for
Bosheng Clean Energy Company. In nuclear, we continued to provide
products for Tianwan, Fangchenggang and Hongyanhe Nuclear
Stations.
In Factory automation, under the transition from an equipment
provider to be a total solution provider, we are developing
demonstration projects whose practice and model can be
transferrable for future application in related industries. We are
currently running testing projects for some renowned domestic
enterprises, including an automation-and-intelligence boosting
project for Haier's Tianjin-based
and Qingdao-based wash machine
factories, and another project for Hai Di
Lao, the famous hot pot chain, to improve efficiency in hot
pot base material making.
In high-speed railway, a flat fourth quarter performance was not
enough to offset the 48% decline accumulated in the first three
quarters. Weakness persisted throughout the year. Limited
completion of newly planned railway infrastructure in the early
years of the 13th five-year-plan coupled with change in
customer procurement timeline present unfavorable short-term
outlook and rendered uncertainties and volatilities in the
performance of ATP contracts. For ground-based control, we signed
contracts to provide TCC to Jinan-Qingdao Line, Haerbin-Jiamusi
Line and Jiujingqu Line. For subway, we adhered to the expansion
strategy, winning new SCADA contracts in more cities, such as Wuhan
Line 21 and Dalian intercity line
(from Jinzhou to Pulandianwan).Even with short-term uncertainty,
however, outlook for our rail business in the long run remains
positive. National mid and long term plan for the high-speed
railway describes a sizable market, while we are paying adequate
attention to after sale and replacement demand and expanding our
products range.
In the mechanical and electrical installation services, although
facing uncertain macroeconomic condition in Singapore and South
East Asia as well as political tensions in Middle East, M&E recorded high
single-digit growth at 9%. Concord, for example, signed a contract
to provide electrical installation services for Macau LRT Phase 1
Project. Ongoing economic and political situation in these areas
raised concern on performance and should be closely followed.
Moreover, management and risk control can be addressed to improve
operation efficiency as counter measure. The strategic value of
Concord and Bond as customer resources and international sales
channels remains significant and we expect a moderate growth in the
future.
The Fourth Quarter and Fiscal Year 2017
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
|
|
Fiscal year
ended
|
|
|
Jun 30,
2017
|
Jun 30,
2016
|
%
Change
|
|
Jun 30,
2017
|
Jun 30,
2016
|
%
Change
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
137,961
|
147,669
|
(6.6)%
|
$
|
431,943
|
544,325
|
(20.6)%
|
Integrated
contract revenue
|
$
|
124,733
|
132,861
|
(6.1)%
|
$
|
385,500
|
477,790
|
(19.3)%
|
Products
sales
|
$
|
8,549
|
11,554
|
(26.0)%
|
$
|
32,665
|
54,546
|
(40.1)%
|
Service
rendered
|
$
|
4,679
|
3,254
|
43.8%
|
$
|
13,778
|
11,989
|
14.9%
|
Cost of
revenues
|
$
|
84,065
|
88,780
|
(5.3)%
|
$
|
290,891
|
337,781
|
(13.9)%
|
Gross
profit
|
$
|
53,896
|
58,889
|
(8.5)%
|
$
|
141,052
|
206,544
|
(31.7)%
|
Total operating
expenses
|
$
|
33,894
|
25,991
|
30.4%
|
$
|
79,737
|
81,283
|
(1.9)%
|
Selling
|
$
|
6,593
|
6,680
|
(1.3)%
|
$
|
24,412
|
25,637
|
(4.8)%
|
General and
administrative
|
$
|
14,586
|
13,535
|
7.8%
|
$
|
43,833
|
41,972
|
4.4%
|
Goodwill impairment
charge
|
$
|
11,211
|
-
|
-
|
|
11,211
|
-
|
-
|
Research and
development
|
$
|
8,026
|
8,595
|
(6.6)%
|
$
|
30,109
|
36,564
|
(17.7)%
|
VAT refunds and
government subsidies
|
$
|
(6,522)
|
(2,819)
|
131.4%
|
$
|
(29,828)
|
(22,890)
|
30.3%
|
Income from
operations
|
$
|
20,002
|
32,898
|
(39.2)%
|
$
|
61,315
|
125,261
|
(51.1)%
|
Other income
(expenses), net
|
$
|
(109)
|
933
|
111.7%
|
$
|
1,722
|
2,316
|
(25.6)%
|
Foreign exchange
losses
|
$
|
(267)
|
(1,027)
|
(74.0)%
|
$
|
(135)
|
(299)
|
(54.8)%
|
Gains on disposal of
a subsidiary
|
$
|
628
|
-
|
-
|
$
|
628
|
-
|
-
|
Share of net (loss)
income of equity investees
|
$
|
(1,063)
|
1,347
|
(178.9)%
|
$
|
3,607
|
7,834
|
(54.0)%
|
Gains on dilution and
divestment of the Company's interests in HollyCon
|
$
|
8,085
|
-
|
-
|
$
|
14,514
|
-
|
-
|
Dividend income from
cost investees
|
|
(450)
|
1,109
|
(140.6)%
|
|
-
|
1,109
|
(100.0)%
|
Interest
income
|
$
|
1,256
|
1,807
|
(30.5)%
|
$
|
3,687
|
5,858
|
(37.1)%
|
Interest
expenses
|
$
|
(55)
|
(397)
|
(86.1)%
|
$
|
(849)
|
(1,311)
|
(35.2)%
|
Income tax
expenses
|
$
|
5,383
|
1,100
|
389.4%
|
$
|
14,386
|
14,238
|
1.0%
|
Net income
attributable to noncontrolling interests
|
$
|
42
|
1,305
|
(96.8)%
|
$
|
25
|
5,033
|
(99.5)%
|
Non-GAAP net income
attributable to Hollysys Automation Technologies Ltd.
|
$
|
22,602
|
34,265
|
(34.0)%
|
$
|
70,078
|
121,497
|
(42.3)%
|
Non-GAAP basic
EPS
|
$
|
0.37
|
0.58
|
(36.2)%
|
$
|
1.16
|
2.05
|
(43.4)%
|
Non-GAAP diluted
EPS
|
$
|
0.37
|
0.57
|
(35.1)%
|
$
|
1.16
|
2.02
|
(42.6)%
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
$
|
534
|
594
|
(10.1)%
|
$
|
464
|
3,860
|
(88.0)%
|
Amortization of
acquired intangible assets
|
$
|
318
|
165
|
92.7%
|
$
|
581
|
818
|
(29.0)%
|
Acquisition-related
incentive share contingent consideration
|
$
|
-
|
-
|
-
|
$
|
-
|
(1,745)
|
(100.0)%
|
Convertible bond
related fair value adjustments
|
$
|
89
|
93
|
(4.3)%
|
|
89
|
93
|
(4.3)%
|
GAAP Net income
attributable to Hollysys Automation Technologies Ltd.
|
$
|
21,661
|
33,413
|
(35.2)%
|
$
|
68,944
|
118,471
|
(41.8)%
|
GAAP basic
EPS
|
$
|
0.36
|
0.56
|
(35.7)%
|
$
|
1.15
|
2.00
|
(42.5)%
|
GAAP diluted
EPS
|
$
|
0.36
|
0.55
|
(34.5)%
|
$
|
1.14
|
1.97
|
(42.1)%
|
|
|
|
|
|
|
|
|
|
Basic weighted
average common shares outstanding
|
|
60,420,004
|
59,511,267
|
1.5%
|
|
60,190,780
|
59,170,050
|
1.7%
|
Diluted weighted
average common shares outstanding
|
|
61,268,999
|
60,675,636
|
1.0%
|
|
61,013,386
|
60,611,456
|
0.7%
|
Operational Results Analysis for the Fiscal Year Ended
June 30, 2017
Comparing to the prior fiscal year, the total revenues
for fiscal year 2017 decreased from $544.3
million to $431.9 million,
representing a decrease of 20.6%. Broken down by the revenue types,
services revenue increased by 14.9% to $13.8
million, integrated contracts revenue decreased by 19.3% to
$385.5 million, and products sales
revenue decreased by 40.1% to $32.7
million. In July 2016, the
company's interests in Hollycon were diluted from 51.0% to 30.0%
and the Company lost the control of Hollycon. As a result,
Hollycon's financials would not be included in the Company's
consolidated financials from July
2016 on. If Hollycon's revenue was excluded from the
comparable figure for the prior fiscal year, the products sales
revenue for fiscal year 2017 should be increased by 13.8%, and the
total revenues for fiscal year 2017 should be decreased by
16.7%.
The Company's total revenues can also be presented in
segments as shown in the following chart:
(In USD
thousands)
|
|
|
|
|
|
|
|
|
Fiscal year ended
Jun 30,
|
|
|
2017
|
|
2016
|
|
|
$
|
% to Total
Revenue
|
|
$
|
% to Total
Revenue
|
Industrial
Automation
|
|
172,667
|
39.9%
|
|
182,902
|
33.6%
|
Rail Transportation
Automation
|
|
155,732
|
36.1%
|
|
240,310
|
44.2%
|
Mechanical and
Electrical Solution
|
103,544
|
24.0%
|
|
95,277
|
17.5%
|
Miscellaneous
|
|
-
|
0.0%
|
|
25,836
|
4.7%
|
Total
|
|
431,943
|
100.0%
|
|
544,325
|
100.0%
|
Overall gross margin excluding non-cash
amortization of acquired intangibles (non-GAAP gross
margin) was 32.7% for fiscal year 2017, as compared to 37.9%
for the prior year. The non-GAAP gross margin for
integrated contracts, product sales, and services
rendered were 28.2%, 69.5% and 70.8% for fiscal year 2017, as
compared to 35.2%, 56.0%, and 66.4% for the prior year
respectively. The gross margin fluctuation was mainly due to the
different revenue mix with different margin. The GAAP
overall gross margin which includes non-cash amortization of
acquired intangibles was 32.5% for fiscal year 2017, as compared to
37.8% for the prior year. The GAAP gross margin
for integrated contracts, product sales, and service
rendered were 28.0%, 69.5% and 70.8% for fiscal year 2017, as
compared to 35.0%, 56.0%, and 66.4% for the prior year
respectively.
Selling expenses were $24.4
million for fiscal year 2017, representing a decrease of
$1.2 million or 4.8% compared to
$25.6 million for the prior year.
Presented as a percentage of total revenues, selling expenses were
5.7% and 4.7% for fiscal year 2017 and 2016, respectively.
General and
administrative expenses, excluding non-cash
share-based compensation expenses (non-GAAP G&A expenses),
were $43.8 million for fiscal year
2017, representing an increase of $1.8
million, or 4.4%, as compared to $42.0 million for the prior year. Presented as a
percentage of total revenues, non-GAAP G&A expenses were 10.1%
and 7.7% for fiscal year 2017 and 2016 respectively. The GAAP
G&A expenses which include the non-cash share-based
compensation expenses were $44.3
million and $45.8 million for
fiscal year 2017 and 2016, respectively.
Goodwill impairment charge was $11.2 million for fiscal year 2017. Concord's
operating results deviated from previous expectation, and the
management estimation was made in forecast of Concord's
performances, which led the company to make an estimation of
impairment of goodwill related to Concord acquisition.
Research and development expenses were $30.1 million for fiscal year 2017, a decrease of
$6.5 million or 17.7% compared to
$36.6 million for the prior year.
Presented as a percentage of total revenues, R&D expenses were
7.0% and 6.7% for fiscal year 2017 and 2016, respectively. If
Hollycon's R&D expenses were excluded from the comparable
figure for the prior fiscal year, the R&D expenses for fiscal
year 2017 should be decreased by 12.6%.
The VAT refunds and government subsidies were
$29.9 million for fiscal year 2017,
as compared to $22.9 million for the
prior year, representing a $7.0
million or 30.3% increase which was primarily due to
increase of the government subsidies for $10.0 million.
The income tax expenses and the effective tax rate were
$14.4 million and 17.2% for fiscal
year 2017, as compared to $14.2
million and 10.3% for the prior year. During the fourth
quarter of fiscal year 2017, the company recorded a deferred tax
expense of $5.4 million related to
the dilution of the Company's interest in Hollycon. Excluding the
impact of the abovementioned tax expenses, the effective tax rate
for fiscal year 2017 should be 10.8%.
The non-GAAP net income attributable to Hollysys, which
excludes non-cash share-based compensation expenses, amortization
of acquired intangibles, acquisition-related consideration fair
value adjustments and convertible bond related fair value
adjustments was $70.1 million or
$1.16 per diluted share based on 61.0
million shares outstanding for fiscal year 2017. This represents a
42.3% decrease over the $121.5
million or $2.02 per share
based on 60.6 million shares outstanding reported in prior year.
On a GAAP basis, net income attributable to Hollysys was
$68.9 million or $1.14 per diluted share representing a decrease
41.8% over the $118.5 million or
$1.97 per diluted share reported in
prior year.
Operational Results Analysis for the quarter Ended
June 30, 2017
Comparing to the fourth quarter of the prior fiscal year, the
total revenues for the three months ended June 30, 2017 decreased from $147.7 million to $138.0
million, representing a decrease of 6.6%. Broken down by the
revenue types, services revenue increased by 43.8% to $4.7 million, integrated contracts revenue
decreased by 6.1% to $124.7 million,
and products sales revenue decreased by 26.0% to $8.5 million. If Hollycon's revenue was excluded
from the comparable figure for the fourth quarter of the prior
fiscal year, the products sales revenue for the three months ended
June 30, 2017 should be increased by
101.5%, and the total revenues for the three months ended
June 30, 2017 should be decrease by
1.7%.
The Company's total revenues can also be presented in
segments as shown in the following chart:
(In USD
thousands)
|
|
|
|
|
|
|
|
|
Three months
ended Jun 30,
|
|
|
2017
|
|
2016
|
|
|
$
|
% to Total
Revenue
|
|
$
|
% to Total
Revenue
|
Industrial
Automation
|
|
43,783
|
31.7%
|
|
41,134
|
27.8%
|
Rail Transportation
Automation
|
|
64,647
|
46.9%
|
|
65,944
|
44.7%
|
Mechanical and
Electrical Solution
|
29,531
|
21.4%
|
|
32,921
|
22.3%
|
Miscellaneous
|
|
-
|
0.0%
|
|
7,670
|
5.2%
|
Total
|
|
137,961
|
100.0%
|
|
147,669
|
100.0%
|
Overall gross margin excluding non-cash
amortization of acquired intangibles (non-GAAP gross
margin) was 39.1% for the three months ended June 30, 2017, as compared to 39.9% for the same
period of the prior year. The non-GAAP gross
margin for integrated contracts, product sales, and services
rendered were 35.7%, 71.5% and 69.9% for the three months ended
June 30, 2017, as compared to 37.4%,
58.0% and 74.7% for the same period of the prior year respectively.
The gross margin fluctuation was mainly due to the different
revenue mix with different margin. The GAAP overall gross
margin which includes non-cash amortization of acquired
intangibles was 38.8% for the three months ended June 30, 2017, as compared to 39.8% for the same
period of the prior year. The GAAP gross margin
for integrated contracts, product sales, and service
rendered were 35.4%, 71.5% and 69.9% for the three months ended
June 30, 2017, as compared to 37.3%,
58.0% and 74.7% for the same period of the prior year
respectively.
Selling expenses were $6.6
million for the three months ended June 30, 2017, representing a decrease of
$0.1 million or 1.3% compared to
$6.7 million for the same quarter of
the prior year. Presented as a percentage of total revenues,
selling expenses were 4.8% and 4.5% for the three months ended
June 30, 2017, and 2016,
respectively.
General and
administrative expenses, excluding non-cash
share-based compensation expenses (non-GAAP G&A expenses),
were $14.6 million for the three
months ended June 30, 2017,
representing an increase of $1.1
million or 7.8% compared to $13.5
million for the same quarter of the prior year.. Presented
as a percentage of total revenues, non-GAAP G&A expenses were
10.6% and 9.2% for quarters ended June 30,
2017 and 2016 respectively. The GAAP G&A expenses
which include the non-cash share-based compensation expenses were
$15.1 million and $14.1 million for the three months ended
June 30, 2017 and 2016,
respectively.
Research and development expenses were $8.0 million for the three months ended
June 30, 2017, representing a
decrease of $0.6 million or 6.6%
compared to $8.6 million for the same
quarter of the prior year. Presented as a percentage of total
revenues, R&D expenses were 5.8% and 5.8% for the quarter ended
June 30, 2017 and 2016,
respectively.
The VAT refunds and government subsidies were
$6.5 million for three months ended
June 30, 2017, as compared to
$2.8 million for the same period in
the prior year, representing a $3.7
million or 131.4% increase which was primarily due to the
increase of the government subsidies for $4.5 million.
The income tax expenses and the effective tax rate were
$5.4 million and 19.9% for the three
months ended June 30, 2017, as
compared to $1.1 million and 3.1% for
comparable prior year period. During the fourth quarter of fiscal
year 2017, the company recorded a deferred tax expense of
$5.4 million related to the dilution
of the Company's interest in Hollycon. In addition, in the process
of Settlement and Payment of Enterprise Income Tax for calendar
year 2016 in May 2017, Beijing
Hollysys and Hangzhou Hollysys satisfied to a preferential income
tax rate of 10% for calendar year 2016 due to its "Key Software
Enterprise" status, instead of the 15% used by the Company in
calendar year 2016. As a result, the Company recorded a tax benefit
of $4.4 million during the fourth
quarter of fiscal 2017. Excluding the impact of the abovementioned
tax expenses and tax benefit, the effective tax rate for the three
months ended June 30, 2017 should be
16.2%.
The non-GAAP net income attributable to Hollysys, which
excludes non-cash share-based compensation expenses, amortization
of acquired intangibles, acquisition-related consideration fair
value adjustments and convertible bond related fair value
adjustments was $22.6 million or
$0.37 per diluted share based on 61.3
million shares outstanding for the three months ended June 30, 2017. This represents a 34.0% decrease
over the $34.3 million or
$0.57 per share based on 60.7 million
shares outstanding reported in the comparable prior year period.
On a GAAP basis, net income attributable to Hollysys was
$21.7 million or $0.36 per diluted share representing a decrease
of 35.2% over the $33.4 million or
$0.55 per diluted share reported in
the comparable prior year period.
Contracts and Backlog Highlights
Hollysys achieved $169.9 million
new contracts for the three months ended June 30, 2017. And the backlog as of June 30, 2017 was $524.0
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 Jun
30, 2017
|
|
as of Jun 30,
2017
|
|
|
$
|
% to Total
Contract
|
|
$
|
% to Total
Backlog
|
Industrial
Automation
|
|
84,081
|
49.5%
|
|
158,749
|
30.2%
|
Rail
Transportation
|
|
69,863
|
41.1%
|
|
235,578
|
45.0%
|
Mechanical and
Electrical Solutions
|
|
15,927
|
9.4%
|
|
129,713
|
24.8%
|
Total
|
|
169,871
|
100.0%
|
|
524,040
|
100.0%
|
Cash Flow Highlights
For the fiscal year ended June 30,
2017, the total net cash outflow was
$31.5 million. The net cash
provided by operating activities was $69.8 million. The net cash used in investing
activities was $89.6 million,
mainly consisted of $154.8 million
time deposit with original maturities over three months placed with
banks, and $16.7million cash reduced
upon deconsolidation of subsidiary, which was partially offset by
the $89.3 million generated from
matured time deposits with original maturities over three months.
The net cash used in financing activities was $7.4 million, mainly consisted of $12.0 million used for payment of dividends,
$7.4 million used for repayments of
long-term loans, $4.9 million used
for repayments of short-term loans, which was partially offset by
$10.1 million proceeds from
short-term bank loans, and $6.3
million proceeds from exercise of options.
For the three months ended June 30,
2017, the total net cash inflow was $15.2 million. The net cash provided by
operating activities was $23.8
million. The net cash used in investing activities
was $13.1 million, mainly consisted
of $57.3 million time deposits placed
with banks, which was partially offset by $48.8 million maturity of time deposits. The
net cash provided by financing activities was $2.0 million.
Balance Sheet Highlights
The total amount of cash and cash equivalents and time
deposits with original maturities over three months were
$293.9 million, $268.8 million, and $271.5
million as of June 30, 2017,
March 30, 2017 and June 30, 2016, respectively. As of June 30, 2017, the company held $197.6 million in cash and cash equivalents and
$96.3 million in time deposits with
original maturities over three months.
For fiscal year ended June 30,
2017, Days Sales Outstanding ("DSO") was 201 days, as
compared to 162 days from the prior year; and inventory turnover
was 51 days, as compared to 38 days from the prior year.
For the three months ended June 30,
2017, DSO was 153 days, as compared to 146 days for the
comparable prior year period and 219 days for the last quarter; and
inventory turnover was 50 days, as compared to 37 days for the
comparable prior year period and 61 days for the last quarter.
Outlook for FY 2018
The management concluded, "Based on our backlog currently
on-hand and sales pipeline envisioned so far, we set our guidance
for fiscal year 2018 with revenue in the range of $500 million to $530 million and non-GAAP net
income in the range of $100 million to $110
million."
Conference Call
The Company will host a conference call at 9:00 pm August 14,
2017 U.S. Eastern Time / 9:00
am August 15, 2017 Beijing
Time, to discuss the financial results for the fourth quarter and
the fiscal year 2017 ended June 30,
2017 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 8301952.
1 800 573
793
|
(Australia)
|
+61 (0)2 9193
3706
|
(Australia,
Sydney)
|
4001-209-101
|
(China)
|
0805 101
219
|
(France)
|
0800 589
4609
|
(Germany)
|
800 961
105
|
(Hong
Kong)
|
+852 3008
1527
|
(Hong
Kong)
|
0120 001
836
|
(Japan)
|
007 9814 2032
546
|
(Korea, Republic
of)
|
1800 806
802
|
(Malaysia)
|
0800 868
298
|
(Taiwan)
|
+65 6320
9025
|
(Singapore,
Singapore)
|
0800 200
831
|
(Switzerland)
|
0800 358
6377
|
(United
Kingdom)
|
+44 (0)330 336
9105
|
(United Kingdom,
Local)
|
866-548-4713
|
(United
States/Canada)
|
+1
719-457-1036
|
(United States,
Colorado Springs)
|
+1
323-794-2093
|
(United States, Los
Angeles)
|
In addition, a recording of the conference call will be
accessible within 48 hours via Hollysys' website at:
http://ir.hollysys.com/ or 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 3,600 employees with nationwide presence in over 60
cities in China, with subsidiaries
and offices in Singapore,
Malaysia, Dubai, India,
and serves over 6,000 customers more than 20,000 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
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
Jun 30,
|
|
Fiscal year
ended
Jun 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Net
revenues
|
|
|
|
|
|
|
|
|
Integrated contract
revenue
|
$
|
124,733
|
$
|
132,861
|
$
|
385,500
|
$
|
477,790
|
Products
sales
|
|
8,549
|
|
11,554
|
|
32,665
|
|
54,546
|
Revenue from
services
|
|
4,679
|
|
3,254
|
|
13,778
|
|
11,989
|
Total net
revenues
|
|
137,961
|
|
147,669
|
|
431,943
|
|
544,325
|
|
|
|
|
|
|
|
|
|
Cost of integrated
contracts
|
|
80,540
|
|
83,275
|
|
277,476
|
|
310,545
|
Cost of products
sold
|
|
2,434
|
|
4,847
|
|
9,971
|
|
24,023
|
Costs of services
rendered
|
|
1,409
|
|
823
|
|
4,025
|
|
4,031
|
Gross
profit
|
|
53,578
|
|
58,724
|
|
140,471
|
|
205,726
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Selling
|
|
6,593
|
|
6,680
|
|
24,412
|
|
25,637
|
General and
administrative
|
|
15,120
|
|
14,129
|
|
44,297
|
|
45,832
|
Goodwill impairment
charge
|
|
11,211
|
|
-
|
|
11,211
|
|
-
|
Research and
development
|
|
8,026
|
|
8,595
|
|
30,109
|
|
36,564
|
VAT refunds and
government subsidies
|
|
(6,522)
|
|
(2,819)
|
|
(29,828)
|
|
(22,890)
|
Total operating
expenses
|
|
34,428
|
|
26,585
|
|
80,201
|
|
85,143
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
19,150
|
|
32,139
|
|
60,270
|
|
120,583
|
|
|
|
|
|
|
|
|
|
Other income
(expenses), net
|
|
(109)
|
|
933
|
|
1,722
|
|
4,061
|
Foreign exchange
losses
|
|
(267)
|
|
(1,027)
|
|
(135)
|
|
(299)
|
Share of net income
of equity investees
|
|
(1,063)
|
|
1,347
|
|
3,607
|
|
7,834
|
Gains on dilution and
divestment of the Company's interests in HollyCon
|
8,085
|
|
-
|
|
14,514
|
|
|
Gains on disposal of
a subsidiary
|
|
628
|
|
-
|
|
628
|
|
-
|
Dividend income from
cost investees
|
|
(450)
|
|
1,109
|
|
-
|
|
1,109
|
Interest
income
|
|
1,256
|
|
1,807
|
|
3,687
|
|
5,858
|
Interest
expenses
|
|
(144)
|
|
(490)
|
|
(938)
|
|
(1,404)
|
Income before
income taxes
|
|
27,086
|
|
35,818
|
|
83,355
|
|
137,742
|
|
|
|
|
|
|
|
|
|
Income taxes
expenses
|
|
5,383
|
|
1,100
|
|
14,386
|
|
14,238
|
Net
income
|
|
21,703
|
|
34,718
|
|
68,969
|
|
123,504
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
42
|
|
1,305
|
|
25
|
|
5,033
|
Net income
attributable to Hollysys Automation Technologies
Ltd.
|
$
|
21,661
|
$
|
33,413
|
$
|
68,944
|
$
|
118,471
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss), net of tax of nil
|
|
|
|
|
|
|
|
Translation
adjustments
|
|
11,659
|
|
(17,973)
|
|
(22,925)
|
|
(48,840)
|
Comprehensive
income
|
|
33,362
|
|
16,745
|
|
46,044
|
|
74,664
|
|
|
|
|
|
|
|
|
|
Less: comprehensive
income (loss) attributable to noncontrolling interests
|
44
|
|
(1,260)
|
|
(8,508)
|
|
2,245
|
Comprehensive
income attributable to Hollysys Automation Technologies
Ltd.
|
$
|
33,318
|
$
|
18,005
|
$
|
54,552
|
$
|
72,419
|
|
|
|
|
|
|
|
|
|
Net income per
ordinary share:
|
|
|
|
|
|
|
|
|
Basic
|
|
0.36
|
|
0.56
|
|
1.15
|
|
2.00
|
Diluted
|
|
0.36
|
|
0.55
|
|
1.14
|
|
1.97
|
Shares used in
income per share computation:
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary shares
|
60,420,004
|
|
59,511,267
|
|
60,190,780
|
|
59,170,050
|
Weighted average
number of diluted ordinary shares
|
61,268,999
|
|
60,675,636
|
|
61,013,386
|
|
60,611,456
|
|
HOLLYSYS AUTOMATION TECHNOLOGIES
LTD. CONSOLIDATED BALANCE SHEETS
(In USD thousands except for number of
shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Jun
30,
|
|
Mar
31,
|
|
|
|
|
2017
|
|
2017
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
197,640
|
$
|
182,478
|
|
|
Time deposits with
original maturities over three months
|
|
96,214
|
|
86,352
|
|
|
Restricted
cash
|
|
39,534
|
|
44,940
|
|
|
Accounts receivable,
net of allowance for doubtful accounts of $48,089 and $45,509 as of
June 30,2017 and March 31, 2017, respectively
|
|
246,552
|
|
223,494
|
|
|
Costs and estimated
earnings in excess of billings, net of allowance for doubtful
accounts of $8,659 and $5,515 as of June 30, 2017 and March 31,
2017, respectively
|
|
162,096
|
|
147,737
|
|
|
Other receivables,
net of allowance for doubtful accounts of $1,448 and $1,534 as of
June 30, 2017 and March 31, 2017, respectively
|
|
20,000
|
|
15,026
|
|
|
Advances to
suppliers
|
|
11,537
|
|
9,463
|
|
|
Amounts due from
related parties
|
|
34,178
|
|
44,868
|
|
|
Inventories
|
|
45,660
|
|
45,802
|
|
|
Prepaid
expenses
|
|
619
|
|
562
|
|
|
Income tax
recoverable
|
|
5,169
|
|
6,531
|
|
|
Deferred tax
assets
|
|
8,828
|
|
7,586
|
|
Total current
assets
|
|
868,027
|
|
814,839
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Restricted
cash
|
|
522
|
|
2,318
|
|
|
Prepaid
expenses
|
|
-
|
|
13
|
|
|
Property, plant and
equipment, net
|
|
81,607
|
|
79,871
|
|
|
Prepaid land
leases
|
|
10,206
|
|
10,145
|
|
|
Acquired intangible
assets, net
|
|
850
|
|
407
|
|
|
Investments in equity
investees
|
|
47,242
|
|
23,924
|
|
|
Investments in cost
investees
|
|
4,024
|
|
3,961
|
|
|
Goodwill
|
|
47,326
|
|
57,758
|
|
|
Deferred tax
assets
|
|
23
|
|
1,758
|
|
Total non-current
assets
|
|
191,800
|
|
180,155
|
|
|
|
|
|
|
|
Total
assets
|
|
1,059,827
|
|
994,994
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term bank
loans
|
|
8,121
|
|
2,979
|
|
|
Current portion of
long-term loans
|
|
420
|
|
5,260
|
|
|
Accounts
payable
|
|
124,670
|
|
101,598
|
|
|
Deferred
revenue
|
|
107,407
|
|
105,145
|
|
|
Accrued payroll and
related expenses
|
|
13,600
|
|
9,455
|
|
|
Income tax
payable
|
|
3,371
|
|
6,362
|
|
|
Warranty
liabilities
|
|
5,386
|
|
6,137
|
|
|
Other tax
payables
|
|
10,488
|
|
4,833
|
|
|
Accrued
liabilities
|
|
24,437
|
|
30,768
|
|
|
Amounts due to
related parties
|
|
2,301
|
|
2,244
|
|
|
Deferred tax
liabilities
|
|
4,350
|
|
5,842
|
|
Total current
liabilities
|
|
304,551
|
|
280,623
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Accrued
liabilities
|
|
2,220
|
|
-
|
|
|
Long-term
loans
|
|
20,581
|
|
20,682
|
|
|
Deferred tax
liabilities
|
|
6,689
|
|
816
|
|
|
Warranty
liabilities
|
|
2,246
|
|
3,227
|
|
Total non-current
liabilities
|
|
31,736
|
|
24,725
|
|
|
|
|
|
|
|
Total
liabilities
|
|
336,287
|
|
305,348
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Ordinary shares, par
value $0.001 per share, 100,000,000 shares authorized; 60,342,099
and 60,319,599 shares issued and outstanding as of June 30, 2017
and March 31, 2017, respectively
|
|
60
|
|
60
|
|
|
Additional paid-in
capital
|
|
222,189
|
|
221,656
|
|
|
Statutory
reserves
|
|
41,526
|
|
41,500
|
|
|
Retained
earnings
|
|
482,603
|
|
460,969
|
|
|
Accumulated other
comprehensive income
|
|
(22,859)
|
|
(34,517)
|
|
Total Hollysys
Automation Technologies Ltd. stockholder's equity
|
|
723,519
|
|
689,668
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
21
|
|
(22)
|
|
Total
equity
|
|
723,540
|
|
689,646
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
$
|
1,059,827
|
$
|
994,994
|
HOLLYSYS AUTOMATION
TECHNOLOGIES LTD.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In USD
thousands)
|
|
|
|
|
Three months
ended
|
|
Fiscal year
ended
|
Jun 30,
2017
|
|
Jun 30,
2017
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
21,703
|
$
|
68,969
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
1,631
|
|
6,049
|
|
Amortization of
prepaid land leases
|
|
48
|
|
189
|
|
Amortization of
intangible assets
|
|
159
|
|
580
|
|
Allowance for
doubtful accounts
|
|
4,796
|
|
9,760
|
|
Loss on disposal of
property, plant and equipment
|
|
570
|
|
596
|
|
Impairment loss on
goodwill
|
|
11,211
|
|
11,211
|
|
Impairment loss on
property, plant and equipment
|
|
361
|
|
361
|
|
Share of net income
from equity investees
|
|
1,063
|
|
(3,607)
|
|
Gains on dilution and
divestment of the Company's interests in HollyCon
|
|
(8,085)
|
|
(14,514)
|
|
Gain on disposal of a
subsidiary
|
|
(628)
|
|
(628)
|
|
Share based
compensation expenses
|
|
533
|
|
464
|
|
Deferred income tax
expenses
|
|
4,950
|
|
2,015
|
|
Accretion of
convertible bond discount
|
|
270
|
|
661
|
|
Fair value
adjustments of a bifurcated derivative
|
|
89
|
|
89
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(20,314)
|
|
(23,441)
|
|
Costs and estimated
earnings in excess of billings
|
|
(14,710)
|
|
21,945
|
|
Inventories
|
|
875
|
|
(10,701)
|
|
Advances to
suppliers
|
|
(730)
|
|
881
|
|
Other
receivables
|
|
(4,166)
|
|
(6,767)
|
|
Deposits and other
assets
|
|
7,916
|
|
(12,698)
|
|
Due from related
parties
|
|
(1,447)
|
|
(6,819)
|
|
Accounts
payable
|
|
16,087
|
|
23,563
|
|
Deferred
revenue
|
|
615
|
|
28,168
|
|
Accruals and other
payable
|
|
(2,997)
|
|
(18,509)
|
|
Due to related
parties
|
|
21
|
|
801
|
|
Income tax
payable
|
|
(1,580)
|
|
(1,779)
|
|
Other tax
payables
|
|
5,567
|
|
(7,026)
|
|
Net cash provided
by operating activities
|
|
23,808
|
|
69,813
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Time deposits placed
with banks
|
|
(57,253)
|
|
(154,810)
|
|
Purchases of
property, plant and equipment
|
|
(335)
|
|
(3,711)
|
|
Proceeds from
disposal of property, plant and equipment
|
|
30
|
|
64
|
|
Maturity of time
deposits
|
|
48,787
|
|
89,262
|
|
Investment of an
equity investee
|
|
(2,654)
|
|
(2,654)
|
|
Proceeds received
from a cost method entity
|
|
-
|
|
88
|
|
Cash prepaid for
acquisition of a subsidiary
|
|
(1,652)
|
|
(1,652)
|
|
Cash reduced upon
deconsolidation of subsidiary
|
|
-
|
|
(16,681)
|
|
Disposal of a
subsidiary, net of cash received
|
|
-
|
|
541
|
|
Net cash used in
investing activities
|
|
(13,077)
|
|
(89,553)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
short-term bank loans
|
|
3,121
|
|
10,058
|
|
Repayments of
short-term bank loans
|
|
(844)
|
|
(4,932)
|
|
Proceeds from
long-term bank loans
|
|
-
|
|
461
|
|
Repayments of
long-term bank loans
|
|
(313)
|
|
(7,350)
|
|
Proceeds from
exercise of options
|
|
-
|
|
6,323
|
|
Payment of
Dividends
|
|
-
|
|
(11,973)
|
|
Net cash provided
by (used in) financing activities
|
|
1,964
|
|
(7,413)
|
|
|
|
|
|
|
|
Effect of foreign
exchange rate changes
|
|
2,467
|
|
(4,302)
|
|
Net increase
(decrease) in cash and cash equivalents
|
$
|
15,162
|
$
|
(31,455)
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
$
|
182,478
|
$
|
229,095
|
|
Cash and cash
equivalents, end of period
|
|
197,640
|
|
197,640
|
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, fair value adjustments
of acquisition-related consideration, 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
|
|
Fiscal year
ended
|
|
|
|
Jun
30,
|
|
Jun
30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Cost of integrated
contracts
|
$
|
80,540
|
$
|
83,275
|
$
|
277,476
|
$
|
310,545
|
Less: Amortization of
acquired intangible assets
|
|
318
|
|
165
|
|
581
|
|
818
|
Non-GAAP cost of
integrated contracts
|
$
|
80,222
|
$
|
83,110
|
$
|
276,895
|
$
|
309,727
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
$
|
15,120
|
$
|
14,129
|
$
|
44,297
|
$
|
45,832
|
Less: Share-based
compensation expenses
|
|
534
|
|
594
|
|
464
|
|
3,860
|
Non-GAAP general
and administrative expenses
|
$
|
14,586
|
$
|
13,535
|
$
|
43,833
|
$
|
41,972
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
$
|
(109)
|
$
|
933
|
$
|
1,722
|
$
|
4,061
|
Add:
acquisition-related incentive share contingent consideration fair
value adjustment
|
|
-
|
|
-
|
|
-
|
|
(1,745)
|
Non-GAAP other
income, net
|
$
|
(109)
|
$
|
933
|
$
|
1,722
|
$
|
2,316
|
|
|
|
|
|
|
|
|
|
|
Interest
expenses
|
$
|
(144)
|
$
|
(490)
|
$
|
(938)
|
$
|
(1,404)
|
Add:
|
|
|
|
|
|
|
|
|
convertible bond
related fair value adjustment
|
|
89
|
|
93
|
|
89
|
|
93
|
Non-GAAP interest
expenses
|
$
|
(55)
|
$
|
(397)
|
$
|
(849)
|
$
|
(1,311)
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Hollysys Automation Technologies
Ltd.
|
$
|
21,661
|
$
|
33,413
|
$
|
68,944
|
$
|
118,471
|
Add:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
|
534
|
|
594
|
|
464
|
|
3,860
|
|
Amortization of
acquired intangible assets
|
|
318
|
|
165
|
|
581
|
|
818
|
|
Acquisition-related
consideration adjustment
|
|
-
|
|
-
|
|
-
|
|
(1,745)
|
|
Convertible bond
related Fair value adjustments
|
|
89
|
|
93
|
|
89
|
|
93
|
Non-GAAP net
income attributable to Hollysys Automation Technologies
Ltd.
|
$
|
22,602
|
$
|
34,265
|
$
|
70,078
|
$
|
121,497
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of basic ordinary shares
|
60,420,004
|
|
59,511,267
|
|
60,190,780
|
|
59,170,050
|
|
Weighted average
number of diluted ordinary shares
|
61,268,999
|
|
60,675,636
|
|
61,013,386
|
|
60,611,456
|
Non-GAAP basic
earnings per share
|
$
|
0.37
|
$
|
0.58
|
$
|
1.16
|
$
|
2.05
|
Non-GAAP diluted
earnings per share
|
$
|
0.37
|
$
|
0.57
|
$
|
1.16
|
$
|
2.02
|
|
|
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/hollysys-automation-technologies-reports-unaudited-financial-results-for-the-fiscal-year-and-the-fourth-quarter-ended-june-30-2017-300503905.html
SOURCE Hollysys Automation Technologies, Ltd