Q4 Financial Highlights -- Revenues of $56.4 million, representing an increase of 25.9% compared to $44.8 million year-over-year -- Gross margin at 33.9%, as compared to 33.5% year-over-year -- Non-GAAP net income of $10.7 million, as compared to $6.3 million and a 69.2% increase year-over-year -- Record-breaking backlog balance at $252.9 million as of June 30, 2010, a 33.8% increase compared to $188.9 million year-over-year -- Operating cash inflow of $1.8 million -- Quarterly DSO of 116 days, as compared to 124 days year-over-year and 192 days quarter-over-quarter Fiscal Year 2010 Financial Highlights -- Revenues of $174.1 million, an increase of 10.5% compared to 157.5 million year-over-year -- Non-GAAP net income attributable to Hollysys of $30.7 million, a 19.4% increase compared to $25.7 million for fiscal year 2009 -- $30.1 million cash generated from operations for the fiscal year 2010; cash and cash equivalents of $119.5 million as of the year end -- DSO of 140 days, as compared 147 days year-over-year -- Inventory turnover of 73 days, versus 79 days year-over-year
Dr.
"In the industrial automation segment, we achieved accelerated growth in both revenue and backlog this quarter, attributable to our solid execution, increased efforts in research and development. The quarterly segment revenue increased by 27.8% and backlog balance increased by 31.5% year-over-year. "
"In the high-speed rail segment, the contract win of US
In our subway segment, we were awarded a contract to supply our SCADA
System to the Phase II of Beijing Subway Line 8, valued at approximately
Dr. Wang continued, "In the nuclear segment, we commenced supplying our
proprietary conventional island automation and control products to #1 and #2
reactors of Yangjiang Nuclear Power Station, pursuant to the first batch of
purchase orders from our JV with China Guangdong Nuclear Power Corp. The
Yangjiang Nuclear Power Station in
The Fourth Quarter and Fiscal Year 2010 Unaudited Financial Results Summary
To facilitate a clear understanding of Hollysys operational result, a summary of unaudited non-GAAP financial results is shown as below:
In USD thousands, except share numbers and EPS Three Months ended June 30, June 30, % Change 2010 2009 Revenues $ 56,371 44,772 25.9% Integrated Contract $ 53,016 41,791 26.9% Revenue Products Sales $ 3,355 2,981 12.5% Cost of Revenues $ 37,246 29,779 25.1% Gross Profit $ 19,125 14,993 27.6% Total Operating Expenses $ 9,287 6,394 45.3% Selling $ 3,113 2,327 33.8% General and Administrative $ 4,514 2,752 64.0% Research and Development $ 3,859 3,593 7.4% VAT refunds and government subsidy $ (2,199) (2,278) -3.5% Income from Operations $ 9,838 8,599 14.4% Others $ 3,039 (242) -1,354.6% Income Tax Expenses $ 2,097 841 149.3% Non-GAAP Net income attributable to non- controlling interest $ 47 1,174 -96.0% Non-GAAP Net Income attributable to Hollysys Automation Technologies Ltd. $ 10,733 6,342 69.2% Basic Non-GAAP EPS $ 0.20 0.14 43.1% Diluted Non-GAAP EPS $ 0.20 0.14 42.3% Stock-based Compensation Cost for Options $ 131 131 0.0% Stock-based Compensation Cost for Incentive Shares $ -- 22,240 Net income attributable to Hollysys Automation Technologies Ltd.(GAAP) $ 10,602 (16,029) -166.1% Basic GAAP EPS $ 0.19 (0.35) -155.9% Diluted GAAP EPS $ 0.19 (0.35) -155.6% Basic Weighted Average Common Shares Outstanding 54,385,044 45,986,570 18.3% Diluted Weighted Average Common Shares Outstanding 54,984,420 46,233,857 18.9% Fiscal year ended June 30, June 30, % Change 2010 2009 Revenues $ 174,089 157,502 10.5% Integrated Contract $ 164,118 149,303 9.9% Revenue Products Sales $ 9,971 8,199 21.6% Cost of Revenues $ 113,937 102,924 10.7% Gross Profit $ 60,152 54,578 10.2% Total Operating Expenses $ 27,080 20,569 31.7% Selling $ 12,152 10,022 21.3% General and Administrative $ 13,390 9,422 42.1% Research and Development $ 13,071 8,829 48.0% VAT refunds and government subsidy $ (11,533) (7,704) 49.7% Income from Operations $ 33,072 34,009 -2.8% Others $ 2,671 (53) -5,173.9% Income Tax Expenses $ 3,209 3,061 4.8% Non-GAAP Net income attributable to non- controlling interest $ 1,851 5,187 -64.3% Non-GAAP Net Income attributable to Hollysys Automation Technologies Ltd. $ 30,683 25,708 19.4% Basic Non-GAAP EPS $ 0.60 0.57 4.7% Diluted Non-GAAP EPS $ 0.59 0.57 3.5% Stock-based Compensation Cost for Options $ 524 319 64.3% Stock-based Compensation Cost for Incentive Shares $ -- 39,240 -100.0% Net income attributable to Hollysys Automation Technologies Ltd.(GAAP) $ 30,159 (13,851) -317.7% Basic GAAP EPS $ 0.59 (0.31) -289.5% Diluted GAAP EPS $ 0.58 (0.31) -288.8% Basic Weighted Average Common Shares Outstanding 51,243,667 44,950,833 14.0% Diluted Weighted Average Common Shares Outstanding 51,838,294 44,950,833 15.3%
Operational Results Analysis for the three months ended
For the three months ended
-- $24.0 million, or 45.3%, related to Industrial Automation & Control, representing a 27.8% segment revenue growth year-over-year; -- Rail and Subway was $26.5 million, or 50.0%, representing a 16.3% increase year over year; of which $8.9 million, or 16.9%, was from Rail Signaling and Control projects, and $17.6 million, or 33.1%, was from Subway Automation and Control; and -- $2.5 million, or 4.7%, related to Nuclear Plant Control projects and miscellaneous, compared to $0.2 million year-over-year.
As a percentage of total revenues, overall gross margin was 33.9% for the
three months ended
For the three months ended
General and administrative expenses, excluding non-cash stock-based
compensation expense, were
Research and development expenses were
For the fourth quarter ended
For the three months ended
Operational Results Analysis for the fiscal year ended
For the fiscal year 2010, total revenues increased by 10.5% to
-- $94.2 million, or 57.4%, related to Industrial Automation & Control, representing a 15.6% increase year over year; -- Rail and Subway was $60.0 million, or 36.5%, representing a 0.4% increase year over year; of which $28.8 million, or 17.5%, was from Rail Signaling and Control projects, and $31.2 million, or 19.0%, was from Subway Automation and Control; and -- $9.9 million, or 6.0%, related to Nuclear Automation and Control and miscellaneous, representing a 23.2% increase.
For the fiscal year 2010, as a percentage of total revenues, overall gross margin was 34.6%, as compared to 34.7% for the prior year. The gross margin for integrated contracts was 32.8% for fiscal 2010, compared to 33.4% for the prior year, mainly due to the decrease of high-margin high-speed rail revenue in both absolute dollar value and its percentage of total revenue.
For fiscal 2010, selling expenses were
General and administrative expenses, excluding non-cash stock-based
compensation expense, were
Research and development expenses were
The share of net gains of equity investees amounted to
For the fiscal year 2010, the non-GAAP net income excluding non-cash stock
compensation cost was
Backlog Highlights
Hollysys' backlog as of
(In USD million) Quarter-over-Quarter Year-over-Year Analysis Analysis 2010-6-30 2010-3-31 2009-6-30 % to % to % % to % $ Total $ Total Change $ Total Change Backlog Backlog Backlog Industrial Automation & Control 86.0 34.0% 62.7 25.9% 36.9% 65.3 34.6% 31.5% Rail Automation & Control 50.5 20.0% 53.8 22.2% -6.0% 58.1 30.7% -13.0% Subway Automation & Control 106.2 42.0% 115.0 47.4% -7.6% 60.1 31.8% 76.8% Nuclear automation and control and miscellaneous 10.2 4.0% 10.9 4.5% -6.0% 5.5 2.9% 87.3% Total 252.9 100.0% 242.3 100.0% 4.3% 188.9 100.0% 33.8%
Cash Flow Highlights
Hollysys generated operating cash flow of
Balance Sheet Highlights
As of
Outlook for FY 2011
Dr. Wang concluded, "Given the backlog balance and strong pipeline across
all of our business segments, we believe our revenue and net income growth
will accelerate to approximate 35% and 25% respectively in our fiscal 2011. At
the same time, the company has decided to grow our industrial automation sales
team by an exponential rate and increase the investment in corporate research
and development initiatives to further establish Hollysys as a dominant leader
in automation and control field, across industrial, rail, and subway
industries in
Based on our operating results for fiscal 2010, we project our fiscal 2011
revenues to be in the range of
Conference Call
Management will discuss the current status of the Company's operations
during a conference call at
1-866-519-4004 (USA) 800-930-346 (HK) 800-819-0121 (China Landline) 400-620-8038 (China Mobile) +65-67239281 (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/pubdown/180809.zip
About Hollysys Automation Technologies, Ltd.
Hollysys Automation Technologies is a leading provider of automation and
control technologies and applications in
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.
http://www.hollysys.com
Jennifer Zhang
Investor Relations
Tel: +86-10-5898-1386
Email: investors@hollysys.com
Ling Zhang
Investor Relations
Tel: +1-646-593-8125
Email: investors@hollysys.com
HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In US Dollars)
Three months ended June 30, Fiscal year ended June 30,
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited)
Revenues
Integrated contract
revenue $ 53,016,254 $ 41,791,402 $ 164,118,183 $ 149,303,309
Products sales 3,354,531 2,980,910 9,971,013 8,198,758
Total revenues 56,370,785 44,772,312 174,089,196 157,502,067
Cost of integrated
contracts 35,629,054 28,065,525 110,268,475 99,423,487
Cost of products
sold 1,616,890 1,713,861 3,668,899 3,500,471
Gross profit 19,124,841 14,992,926 60,151,822 54,578,109
Operating expenses
Selling 3,113,064 2,326,647 12,152,019 10,021,832
General and
administrative 4,644,693 25,122,689 13,914,091 48,981,078
Research and
development 3,859,217 3,592,739 13,071,318 8,829,402
VAT refunds and
government subsidy (2,198,523) (2,278,303) (11,533,006) (7,703,724)
Total operating
expenses 9,418,451 28,763,772 27,604,422 60,128,588
Income (loss) from
operations 9,706,390 (13,770,846) 32,547,400 (5,550,479)
Other income
(expense), net (151,160) (60,291) (215,277) 723,269
Share of net gains
of equity investees 3,313,781 45,619 3,958,073 178,167
Interest expense,
net (123,201) (227,587) (1,070,772) (954,078)
Income (loss) before
income taxes 12,745,810 (14,013,105) 35,219,424 (5,603,121)
Income taxes
expenses 2,097,450 841,276 3,209,034 3,061,141
Net income (loss) 10,648,360 (14,854,381) 32,010,390 (8,664,262)
Less: Net income
attributable to
non-controlling
interest 46,523 1,174,409 1,851,453 5,186,802
Net income (loss)
attributable to
Hollysys Automation
Technologies Ltd. $ 10,601,837 $ (16,028,790) $ 30,158,937 $(13,851,064)
Weighted average
number of common
shares 54,385,044 45,986,570 51,243,667 44,950,833
Weighted average
number of diluted
common shares 54,984,420 46,233,857 51,838,294 44,950,833
Basic earnings
(loss) per share
attributable to
Hollysys Automation
Technologies Ltd. 0.19 (0.35) 0.59 (0.31)
Diluted earnings
(loss) per share
attributable to
Hollysys Automation
Technologies Ltd. 0.19 (0.35) 0.58 (0.31)
Other comprehensive
income (loss)
Net income (loss) 10,648,360 (14,854,381) 32,010,390 (8,664,262)
Translation
adjustments 1,089,939 119,328 1,239,750 605,582
Comprehensive
income (loss) 11,738,299 (14,735,053) 33,250,140 (8,058,680)
Less: Comprehensive
income attributable
to non-controlling
interest 50,699 1,186,774 1,876,297 5,254,351
Comprehensive
income (loss)
attributable
to Hollysys
Automation
Technologies Ltd. $ 11,687,600 $ (15,921,827 )$ 31,373,843 $(13,313,031)
HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
CONSOLIDATED BALANCE SHEETS
(In US Dollars)
June 30, March 31,
2010 2010
(Unaudited) (Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 119,501,945 $ 119,930,627
Contract commitment deposit
in banks 4,383,684 4,237,057
Accounts receivable, net of
allowance for doubtful
accounts of $8,408,318 and
7,321,655 64,384,519 64,902,638
Cost and estimated earnings
in excess of billings, net
of allowance for doubtful
accounts of $1,102,016 and
$688,158 60,928,056 44,234,355
Other receivables, net of
allowance for doubtful
accounts of $214,789 and
$182,000 4,102,136 4,551,142
Advances to suppliers 10,676,175 13,185,758
Amount due from related
parties 10,764,828 10,536,598
Inventories, net of
provision of $2,393,546 and
$1,444,708 23,554,331 21,267,445
Prepaid expenses 1,022,803 1,124,323
Income tax recoverable 1,083,640 1,004,314
Deferred tax assets 956,969 1,667,283
Deposit for acquisition of
equity interest from non-
controlling interest -- 6,206,237
Total current assets 301,359,086 292,847,777
Property, plant and equipment,
net 65,345,618 47,969,800
Long term investments 17,348,159 14,169,174
Goodwill -- 285,124
Deferred tax assets 677,388 688,119
Total assets 384,730,251 355,959,994
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Short-term bank loans 1,472,559 1,464,922
Current portion of long-
term loans 1,472,559 732,461
Bonds payable 11,780,471 11,719,379
Accounts payable 41,479,662 35,120,711
Deferred revenue 33,552,968 37,227,125
Accrued payroll and related
expense 4,386,681 3,623,791
Income tax payable 1,496,796 1,449,243
Warranty liabilities 1,916,654 2,075,347
Other tax payables 10,632,611 8,115,604
Accrued liabilities 8,078,783 7,764,485
Amounts due to related
parties 2,610,599 2,560,252
Deferred tax liabilities -- 79,654
Construction cost payable 12,562,565 2,749,923
Total current liabilities 131,442,908 114,682,897
Long-term bank loans 35,341,413 35,890,600
Long-term bonds payable -- --
Total liabilities 166,784,321 150,573,497
Commitments and contingencies
Stockholder's equity
Common stock, par value
$0.001 per share,
100,000,000 shares
authorized, 54,449,129 and
54,356,562 shares issued
and outstanding 54,450 54,357
Additional paid-in capital 138,751,162 140,909,078
Appropriated earnings 17,396,777 15,135,442
Retained earnings 43,391,191 32,789,354
Accumulated comprehensive
income - translation
adjustments 17,577,485 16,491,722
Total Hollysys Automation
Technologies Ltd.
stockholder's equity 217,171,065 205,379,953
Non-controlling interest 774,865 6,544
Total equity 217,945,930 205,386,497
Total liabilities and equity $ 384,730,251 $ 355,959,994
HOLLYSYS AUTOMATION TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In US Dollars)
Three months ended Fiscal year ended
June 30, June 30,
2010 2010
(Unaudited) (Unaudited)
Cash flows from operating
activities:
Net income $ 10,648,360 $ 32,010,390
Adjustments to reconcile net
income to net cash provided
by (used in) operating
activities:
Depreciation and amortization 297,833 2,683,042
Allowance for doubtful
accounts 1,788,580 2,790,078
Provision for inventories 948,838 1,279,406
Loss on disposal of property,
plant and equipment (188,909) 14,112
Impairment loss for long-term
assets 1,154,588 1,154,588
Share of net losses from
equity investees (3,313,781) (3,958,073)
Amortization of expenses
accrued for bond payable 15,371 61,281
Stock-based compensation 131,019 524,076
Deferred tax
assets/liabilities, net 641,391 (885,014)
Changes in operating assets and
liabilities:
Accounts receivable (723,726) (10,131,840)
Cost and estimated earnings in
excess of billings (17,107,559) (10,191,299)
Inventories (3,235,723) (5,996,365)
Advance to suppliers 2,509,816 (2,598,327)
Other receivables 316,045 (93,051)
Deposits and other assets 944,058 1,497,584
Due from related parties (159,399) (3,143,615)
Accounts payable 8,171,184 5,032,941
Deferred revenue (3,674,157) 12,480,428
Accruals and other payable 1,064,987 5,953,753
Due to related parties 50,347 1,145,916
Tax payable 1,480,920 495,864
Net cash provided by operating
activities 1,760,083 30,125,875
Cash flows from investing
activities:
Purchase of property, plant
and equipment (9,942,041) (20,918,968)
Proceeds from disposing 275 9,251
property, plant and equipment
Receipt from related parties -- 653,325
Acquisition of long term
investments -- (1,001,569)
Dividends from equity
investees -- 58,640
Acquisition of a subsidiary,
net of cash acquired (147,939) (279,120)
Acquisition of equity interest
from non-controlling interest -- (10,373,600)
Refund of deposit for
acquisition of equity interest
from non-controlling interest 6,203,874 --
Net cash used in investing
activities (3,885,831) (31,852,041)
Cash flows from financing
activities:
Repayments of short-term bank
loans -- (4,397,989)
Repayments of long-term bank
loans -- (5,130,987)
Capital injection from non-
controlling interest 718,338 718,338
Net cash used in financing
activities 718,338 (8,810,638)
Effect of foreign exchange
rate changes 978,728 1,156,083
Net decrease in cash and cash
equivalents $ (428,682) $ (9,380,721)
Cash and cash equivalents,
beginning of period $ 119,930,627 $ 128,882,666
Cash and cash equivalents, end
of period 119,501,945 119,501,945
Reconcile GAAP Net Income (Loss) to Non-GAAP Net Income
The following table provides more details on the reconciliations between
GAAP financial measures that are most directly comparable to non-GAAP
financial measures.
Three months ended June 30, Fiscal year ended June 30,
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net income (loss)
attributable to
Hollysys $ 10,601,837 $(16,028,790) $ 30,158,937 $(13,851,064)
Automation
Technologies Ltd.
Adjustments:
Stock-based
compensation
cost for
options 131,019 131,019 524,076 319,026
Stock-based
compensation
cost for
incentive
shares -- 22,240,000 -- 39,240,000
Non-GAAP Net
Income
attributable
to Hollysys
Automation
Technologies
Ltd. $ 10,732,856 $ 6,342,229 $ 30,683,013 $ 25,707,962
SOURCE Hollysys Automation Technologies, Ltd.