First Nine Months of Fiscal Year 2023 Financial
Highlights
- Total revenues were $582.4
million, an increase of 10.9% compared to the comparable
prior year period.
- Gross margin was 33.4%, compared to 33.9% for the
comparable prior year period. Non-GAAP gross margin was
33.6%, compared to 34.1% for the comparable prior year period.
- Net income attributable to Hollysys was $81.2 million, an increase of 35.0% compared to
the comparable prior year period. Non-GAAP net income
attributable to Hollysys was $85.1
million, an increase of 22.3% compared to the comparable
prior year period.
- Diluted earnings per share was $1.31, an increase of 33.7% compared to the
comparable prior year period. Non-GAAP diluted earnings per
share was $1.37, an increase of
21.2% compared to the comparable prior year period.
- Net cash provided by operating activities was
$3.2 million.
- Days sales outstanding ("DSO") was 151 days, compared to
183 days for the comparable prior year period.
- Inventory turnover days were 78 days, compared to 58
days for the comparable prior year period.
Third Quarter of Fiscal Year 2023 Financial
Highlights
- Total revenues were $167.6
million, an increase of 7.7% compared to the comparable
prior year period.
- Gross margin was 26.8%, compared to 30.6% for the
comparable prior year period. Non-GAAP gross margin was
27.0%, compared to 30.8% for the comparable prior year period.
- Net income attributable to Hollysys was $11.6 million, a decrease of 26.9% compared to
the comparable prior year period. Non-GAAP net income
attributable to Hollysys was $12.6
million, a decrease of 31.2% compared to the comparable
prior year period.
- Diluted earnings per share was $0.19, a decrease of 26.9% compared to the
comparable prior year period. Non-GAAP diluted earnings per
share was $0.20, a decrease of
33.3% compared to the comparable prior year period.
- Net cash used in operating activities was $13.3 million.
- DSO was 176 days, compared to 215 days for the
comparable prior year period.
- Inventory turnover days were 87 days, compared to 69
days for the comparable prior year period.
See the section entitled "Non-GAAP Measures" for more
information about non-GAAP gross margin, non-GAAP net income
attributable to Hollysys and non-GAAP diluted earnings per
share.
BEIJING, May 16, 2023 /PRNewswire/ -- Hollysys Automation
Technologies Ltd. (NASDAQ: HOLI) ("Hollysys," the "Company" or
"we"), a leading provider of automation and control technologies
and applications in China, today
announced its unaudited financial results for the third quarter and
the first nine months of fiscal year 2023 ended March 31, 2023.
The Industrial Automation segment continued its growth
momentum.
In the chemical and petrochemical field, Hollysys continued to
provide strong support for green and low-carbon transformation and
maintained our cooperation with key customers. In terms of project
delivery, we successfully assisted in the full operation of a
100,000-ton green low-carbon methanol factory. We offered
integrated solutions of the Distributed Control System, Safety
Instrumented System, Coordination Control System, Asset Management
System, Operating Data System, Gas Detection System and information
security system, which can reduce carbon dioxide emissions
significantly. This represents another step forward in our efforts
to support the national goals of carbon peaking and carbon
neutrality in China. Additionally,
we reinforced the Hia Advanced Process Control ("Hia APC") platform
in one of our petrochemical customers to optimize the iso-octane
unit. This has led to an improvement in the overall automation
level of the system, helping to achieve the ultimate goals of
energy conservation and emission reduction, while enhancing quality
and efficiency and providing a strong basis for the follow-up
digital transformation of the petrochemical industry. Moreover, the
Sinopec Power Center Simulation Project was successfully put into
operation this quarter. This project covers the entire range and
the whole process of the Sinopec thermal power plant. The
simulation system has overcome the limitations of traditional
simulation systems, providing a diversified application platform
for new employee training and control strategy verification.
In the electricity field, we provided control systems for
stabilizing isolated grids. These systems are suitable for various
enterprise-level grid systems and were successfully put into
operation at a thermal power company in this quarter. We provided
strong technical support and solved the power outage problem
encountered by thermal power companies. This successful operation
sets an example of multi-party cooperation and network-related
cooperation for future isolated grid stability control system
projects.
In the smart factory field, we successfully signed a
whole-process APC control project for calcium carbide production.
This project utilizes Hollysys' whole-process APC optimization
control technology to accurately control various process parameters
and ensure the safe and reliable operation of calcium carbide
production, achieving the goals of energy conservation and cost
reduction. This project represents a breakthrough in the APC
control field of calcium carbide furnaces for Hollysys, laying a
solid foundation for our market development in this area and even
the entire submerged arc furnace industry.
In Rail Transportation segment, Hollysys continues to expand its
technology innovation skills and expedite the modernization of
railway construction. Our ZPW-2000S communication coding track
circuit product, which has been widely deployed on numerous
domestic lines, was certified by the Safety Integrity Level 4 and
the China Railway Product Certification Center. Meanwhile, our
technological achievements have been recognized by the industry.
Hollysys won "the First Prize of Science and Technology Award of
China Railway Society of 2022" with three scientific and
technological accomplishments projects.
The Mechanical and Electrical Solution segment also manifested a
stable performance with smooth executions on various projects.
With our continuous dedication to the industry and the support
of experienced and passionate experts, we believe that we will
continue to create more value for our clients and shareholders.
Third Quarter and
the First Nine months Ended March 31, 2023 Unaudited Financial
Results Summary
|
|
(In USD
thousands, except for %, number of shares and per share
data)
|
|
|
|
Three months
ended
March
31,
|
|
|
|
Nine months
ended
March
31,
|
|
|
|
|
2023
|
|
2022
|
|
%
Change
|
|
2023
|
|
2022
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
167,636
|
|
155,711
|
|
7.7 %
|
$
|
582,410
|
|
525,346
|
|
10.9 %
|
Integrated solutions contracts
|
$
|
139,149
|
|
133,206
|
|
4.5 %
|
$
|
471,204
|
|
424,274
|
|
11.1 %
|
Products sales
|
$
|
10,386
|
|
7,146
|
|
45.3 %
|
$
|
34,174
|
|
26,663
|
|
28.2 %
|
Service rendered
|
$
|
18,101
|
|
15,359
|
|
17.9 %
|
$
|
77,032
|
|
74,409
|
|
3.5 %
|
Cost of
revenues
|
$
|
122,641
|
|
108,070
|
|
13.5 %
|
$
|
387,727
|
|
347,324
|
|
11.6 %
|
Gross profit
|
$
|
44,995
|
|
47,641
|
|
(5.6) %
|
$
|
194,683
|
|
178,022
|
|
9.4 %
|
Total operating
expenses
|
$
|
33,973
|
|
30,651
|
|
10.8 %
|
$
|
119,269
|
|
122,599
|
|
(2.7) %
|
Selling
|
$
|
14,577
|
|
11,409
|
|
27.8 %
|
$
|
43,615
|
|
34,438
|
|
26.6 %
|
General and administrative
|
$
|
11,921
|
|
13,878
|
|
(14.1) %
|
$
|
44,394
|
|
56,918
|
|
(22.0) %
|
Research and development
|
$
|
15,662
|
|
16,291
|
|
(3.9) %
|
$
|
53,452
|
|
52,951
|
|
0.9 %
|
VAT
refunds and government subsidies
|
$
|
(8,187)
|
|
(10,927)
|
|
(25.1) %
|
$
|
(22,192)
|
|
(21,708)
|
|
2.2 %
|
Income from
operations
|
$
|
11,022
|
|
16,990
|
|
(35.1) %
|
$
|
75,414
|
|
55,423
|
|
36.1 %
|
Other income,
net
|
$
|
1,626
|
|
967
|
|
68.1 %
|
$
|
2,748
|
|
1,927
|
|
42.6 %
|
Foreign exchange (loss)
gain
|
$
|
(1,244)
|
|
(498)
|
|
149.8 %
|
$
|
2,280
|
|
(2,212)
|
|
(203.1) %
|
Gains on disposal of
investments in an
equity investee
|
$
|
-
|
|
-
|
|
-
|
$
|
-
|
|
7,995
|
|
(100.0) %
|
Share of net income
(loss) of equity
investees
|
$
|
690
|
|
(428)
|
|
(261.2) %
|
$
|
2,355
|
|
558
|
|
322.0 %
|
Gains (loss) on
disposal of an investment in
securities
|
$
|
-
|
|
(3)
|
|
(100.0) %
|
$
|
845
|
|
(3)
|
|
(100.0) %
|
Dividend (loss) income
from equity
investments
|
$
|
-
|
|
(93)
|
|
(100.0) %
|
$
|
-
|
|
86
|
|
(100.0) %
|
Interest
income
|
$
|
2,941
|
|
3,151
|
|
(6.7) %
|
$
|
9,020
|
|
9,335
|
|
(3.4) %
|
Interest
expenses
|
$
|
(252)
|
|
(224)
|
|
12.5 %
|
$
|
(621)
|
|
(590)
|
|
5.3 %
|
Income tax
expenses
|
$
|
3,188
|
|
4,038
|
|
(21.1) %
|
$
|
10,694
|
|
12,706
|
|
(15.8) %
|
Net income (loss)
attributable to non-
controlling interests
|
$
|
27
|
|
(3)
|
|
(100.0) %
|
$
|
136
|
|
(343)
|
|
(139.7) %
|
Net income attributable
to Hollysys
Automation Technologies Ltd.
|
$
|
11,568
|
|
15,827
|
|
(26.9) %
|
$
|
81,211
|
|
60,156
|
|
35.0 %
|
Basic earnings per
share
|
$
|
0.19
|
|
0.26
|
|
(26.9) %
|
$
|
1.32
|
|
0.99
|
|
33.3 %
|
Diluted earnings per
share
|
$
|
0.19
|
|
0.26
|
|
(26.9) %
|
$
|
1.31
|
|
0.98
|
|
33.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
$
|
672
|
|
2,076
|
|
(67.6) %
|
$
|
2,849
|
|
8,382
|
|
(66.0) %
|
Amortization of
acquired intangible assets
|
$
|
340
|
|
370
|
|
(8.1) %
|
$
|
1,017
|
|
1,002
|
|
1.5 %
|
Non-GAAP net income
attributable to
Hollysys Automation Technologies
Ltd.(1)
|
$
|
12,580
|
|
18,273
|
|
(31.2) %
|
$
|
85,077
|
|
69,540
|
|
22.3 %
|
Non-GAAP basic
earnings per share(1)
|
$
|
0.20
|
|
0.30
|
|
(33.3) %
|
$
|
1.38
|
|
1.14
|
|
21.1 %
|
Non-GAAP diluted
earnings per share(1)
|
$
|
0.20
|
|
0.30
|
|
(33.3) %
|
$
|
1.37
|
|
1.13
|
|
21.2 %
|
Basic weighted average
number of ordinary
shares outstanding
|
|
61,595,286
|
|
61,068,732
|
|
0.9 %
|
|
61,449,939
|
|
60,945,131
|
|
0.8 %
|
Diluted weighted
average number of
ordinary shares outstanding
|
|
62,127,557
|
|
61,644,902
|
|
0.8 %
|
|
62,015,929
|
|
61,560,896
|
|
0.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See the section
entitled "Non-GAAP Measures" for more information about these
non-GAAP measures.
|
Operational Results Analysis for the Third Quarter Ended
March 31, 2023
Total revenues for the three months ended
March 31, 2023 were $167.6 million, as compared to $155.7 millon for the same period of the prior
fiscal year, representing an increase of 7.7%. In terms of revenues
by type, integrated contracts revenue increased by 4.5% to
$139.1 million, products sales
revenue increased by 45.3% to $10.4
million, and services revenue increased by 17.9% to
$18.1 million. Unfavorable impact
from depreciation of Renminbi against the U.S. dollar has adversely
affected our revenues in the past three fiscal quarters. Based on
current expectations of Hollysys' management, such unfavorable
foreign exchange rate change is expected to adversely affect our
full-year revenue for fiscal year 2023; however, the actual results
may differ materially.
The following table sets forth the Company's total
revenues by segment for the periods indicated.
(In USD
thousands, except for %)
|
|
|
|
Three months ended
March 31,
|
|
Nine months ended
March 31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
$
|
% of Total
Revenues
|
|
$
|
% of Total
Revenues
|
|
$
|
% of Total
Revenues
|
|
$
|
% of Total
Revenues
|
|
Industrial
Automation
|
|
112,407
|
67.0
|
|
101,854
|
65.4
|
|
365,183
|
62.7
|
|
318,147
|
60.5
|
|
Rail
Transportation
|
|
36,197
|
21.6
|
|
34,224
|
22.0
|
|
153,265
|
26.3
|
|
149,570
|
28.5
|
|
Mechanical and
Electrical Solution
|
|
19,032
|
11.4
|
|
19,633
|
12.6
|
|
63,962
|
11.0
|
|
57,629
|
11.0
|
|
Total
|
|
167,636
|
100.0
|
|
155,711
|
100.0
|
|
582,410
|
100.0
|
|
525,346
|
100.0
|
|
Gross margin was 26.8% for the three months ended
March 31, 2023, as compared to 30.6%
for the same period of the prior fiscal year. The overall gross
margin fluctuated, as the gross margin for integrated solutions
contracts varied. Gross margin of integrated solutions
contracts, product sales, and service rendered was
18.3%, 69.5% and 68.3% for the three months ended
March 31, 2023, respectively, as compared to 25.4%, 65.9%
and 59.5% for the same period of the prior fiscal year.
Non-GAAP gross margin was 27.0% for the three months ended
March 31, 2023, as compared to 30.8%
for the same period of the prior fiscal year. Non-GAAP
gross margin of integrated solutions contracts was 18.5% for
the three months ended March 31,
2023, as compared to 25.7% for the same period of the prior
fiscal year. See the section entitled "Non-GAAP Measures" for more
information about non-GAAP gross margin and non-GAAP gross margin
of integrated solutions contracts.
Selling expenses were $14.6
million for the three months ended March 31, 2023, representing an increase of
$3.2 million, or 27.8%, compared to
$11.4 million for the same period of
the prior fiscal year. The increase in selling expenses was mainly
due to the increase in sales headcount, in line with the business
growth. Selling expenses as a percentage of total revenues were
8.7% and 7.3% for the three months ended March 31, 2023 and 2022, respectively.
General and
administrative expenses were $11.9 million for the quarter ended March 31, 2023, representing a decrease of
$2.0 million, or 14.1%, compared to
$13.9 million for the same period of
the prior fiscal year. The decrease was primarily attributable to a
$1.4 million decrease in share-based
compensation. Share-based compensation expenses were $0.7 million and $2.1
million for the three months ended March 31, 2023 and 2022, respectively. General
and administrative expenses as a percentage of total revenues were
7.1% and 8.9% for the three months ended March 31, 2023 and 2022, respectively.
Research and development expenses were $15.7 million for the three months ended
March 31, 2023, representing a
decrease of $0.6 million, or 3.9%,
compared to $16.3 million for the
same period of the prior fiscal year. Research and development
expenses as a percentage of total revenues were 9.3% and 10.5% for
the three months ended March 31, 2023
and 2022, respectively.
The VAT refunds and government subsidies were
$8.2 million for three months ended
March 31, 2023, as compared to
$10.9 million for the same period of
the prior fiscal year, representing a $2.7
million, or 25.1%, decrease.
The income tax expenses and the effective tax rate were
$3.2 million and 21.6% for the three
months ended March 31, 2023,
respectively, as compared to $4.0
million and 20.3% for comparable period in the prior fiscal
year, respectively. The effective tax rate fluctuates, as the
Company's subsidiaries contributed different pre-tax income at
different tax rates.
Net income attributable to Hollysys was
$11.6 million, representing a
decrease of 26.9% from $15.8
million reported in the comparable period in the prior
fiscal year. Non-GAAP net income attributable to Hollysys was $12.6
million or $0.20 per
diluted share. See the section entitled "Non-GAAP Measures" for
more information about non-GAAP net income attributable to
Hollysys.
Diluted earnings per share was $0.19 for the three months ended March 31, 2023, a decrease of 26.9% from
$0.26 reported in the comparable
period in the prior fiscal year. Non-GAAP diluted
earnings per share was $0.20 for
the three months ended March 31,
2023, a decrease of 33.3% from $0.30 reported in the comparable period in the
prior fiscal year. These were calculated based on 62.1 million and
61.6 million diluted weighted average ordinary shares outstanding
for the three months ended March 31,
2023 and 2022, respectively. See the section entitled
"Non-GAAP Measures" for more information about non-GAAP diluted
earnings per share.
Contracts and Backlog Highlights
Hollysys achieved $216.4 million
of value of new contracts for the three months ended March 31, 2023. Order backlog of contracts
presents the amount of unrealized revenue to be earned from the
contracts that Hollysys won. The backlog was $906.0 million as of March
31, 2023. The following table sets forth a breakdown of the
value of new contracts achieved and backlog by segment.
(In USD
thousands, except for %)
|
|
|
Value of new
contracts achieved
|
|
Backlog
|
|
for the three
months
ended March
31, 2023
|
|
as of March 31,
2023
|
|
$
|
% of Total
Contract
Value
|
|
$
|
% of Total
Backlog
|
Industrial
Automation
|
170,853
|
78.9
|
|
403,172
|
44.5
|
Rail
Transportation
|
12,961
|
6.0
|
|
306,707
|
33.9
|
Mechanical and
Electrical Solutions
|
32,634
|
15.1
|
|
196,079
|
21.6
|
Total
|
216,448
|
100.0
|
|
905,958
|
100.0
|
Cash Flow Highlights
For the three months ended March 31,
2023, the total net cash inflow was $13.4 million. The net cash used in
operating activities was $13.3
million. The net cash provided by investing
activities was $3.1 million,
mainly consisting of $30.2 million of
maturity of short-term investments, partially offset by
$14.8 million purchases of short-term
investments and $12.4 million
purchases of property, plant and equipment. The net cash
provided by financing activities was $12.8 million, mainly consisting of $13.2 million proceeds from long-term bank
loans.
Balance Sheet Highlights
The total amount of cash and cash equivalents were
$640.2 million, $627.6 million, and $669.8
million as of March 31, 2023,
December 31, 2022, and March 31, 2022, respectively.
For the three months ended March 31,
2023, DSO was 176 days, as compared to 215 days for the
comparable period of prior fiscal year and 119 days for the last
fiscal quarter; inventory turnover days were 87 days, as compared
to 69 days for the comparable period of prior fiscal year and 72
days for the last fiscal quarter.
About Hollysys Automation Technologies Ltd.
Hollysys is a leading automation control system solutions
provider in China, with overseas
operations in eight other countries and regions throughout
Asia. Leveraging its proprietary
technology and deep industry know-how, Hollysys empowers
its customers with enhanced operational safety, reliability,
efficiency, and intelligence which are critical to their
businesses. Hollysys derives its revenues mainly from providing
integrated solutions for industrial automation and rail
transportation automation. In industrial automation, Hollysys
delivers the full spectrum of automation hardware, software, and
services spanning field devices, control systems, enterprise
manufacturing management and cloud-based applications. In rail
transportation automation, Hollysys provides advanced signaling
control and SCADA (Supervisory Control and Data Acquisition)
systems for high-speed rail and urban rail (including subways).
Founded in 1993, with technical expertise and innovation, Hollysys
has grown from a research team specializing in automation control
in the power industry into a group providing integrated automation
control system solutions for customers in diverse industry
verticals. As of June 30, 2022,
Hollysys had cumulatively carried out more than
40,000 projects for approximately 22,000 customers in various
sectors including power, petrochemical, high-speed rail, and urban
rail, in which Hollysys has established leading market
positions.
SAFE HARBOR STATEMENTS
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
"will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates," "target," "confident," 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
March 31,
|
|
Nine months
ended
March 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Net
revenues
|
|
|
|
|
|
|
|
|
Integrated solutions
contracts
|
$
|
139,149
|
$
|
133,206
|
$
|
471,204
|
$
|
424,274
|
Products
sales
|
|
10,386
|
|
7,146
|
|
34,174
|
|
26,663
|
Revenue from
services
|
|
18,101
|
|
15,359
|
|
77,032
|
|
74,409
|
Total net
revenues
|
|
167,636
|
|
155,711
|
|
582,410
|
|
525,346
|
|
|
|
|
|
|
|
|
|
Costs of integrated
solutions contracts
|
|
113,732
|
|
99,406
|
|
351,879
|
|
313,369
|
Cost of products
sold
|
|
3,170
|
|
2,436
|
|
8,410
|
|
7,334
|
Costs of services
rendered
|
|
5,739
|
|
6,228
|
|
27,438
|
|
26,621
|
Gross
profit
|
|
44,995
|
|
47,641
|
|
194,683
|
|
178,022
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Selling
|
|
14,577
|
|
11,409
|
|
43,615
|
|
34,438
|
General and
administrative
|
|
11,921
|
|
13,878
|
|
44,394
|
|
56,918
|
Research and
development
|
|
15,662
|
|
16,291
|
|
53,452
|
|
52,951
|
VAT refunds and
government subsidies
|
|
(8,187)
|
|
(10,927)
|
|
(22,192)
|
|
(21,708)
|
Total operating
expenses
|
|
33,973
|
|
30,651
|
|
119,269
|
|
122,599
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
11,022
|
|
16,990
|
|
75,414
|
|
55,423
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
1,626
|
|
967
|
|
2,748
|
|
1,927
|
Foreign exchange (loss)
gain
|
|
(1,244)
|
|
(498)
|
|
2,280
|
|
(2,212)
|
Gains on disposal of an
investment in an equity investee
|
|
-
|
|
-
|
|
-
|
|
7,995
|
Gains (loss) on
disposal of an investment in securities
|
|
-
|
|
(3)
|
|
845
|
|
(3)
|
Share of net income
(loss) of equity investees
|
|
690
|
|
(428)
|
|
2,355
|
|
558
|
Dividend (loss) income
from equity investments
|
|
-
|
|
(93)
|
|
-
|
|
86
|
Interest
income
|
|
2,941
|
|
3,151
|
|
9,020
|
|
9,335
|
Interest
expenses
|
|
(252)
|
|
(224)
|
|
(621)
|
|
(590)
|
Income before income
taxes
|
|
14,783
|
|
19,862
|
|
92,041
|
|
72,519
|
|
|
|
|
|
|
|
|
|
Income taxes
expenses
|
|
3,188
|
|
4,038
|
|
10,694
|
|
12,706
|
Net
income
|
|
11,595
|
|
15,824
|
|
81,347
|
|
59,813
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to non-controlling interests
|
27
|
|
(3)
|
|
136
|
|
(343)
|
Net income
attributable to Hollysys Automation
Technologies Ltd.
|
$
|
11,568
|
$
|
15,827
|
$
|
81,211
|
$
|
60,156
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income, net of tax of nil
|
|
|
|
|
|
|
|
Translation
adjustments
|
|
20,805
|
|
3,954
|
|
(29,577)
|
|
20,513
|
Comprehensive
income
|
|
32,400
|
|
19,778
|
|
51,770
|
|
80,326
|
|
|
|
|
|
|
|
|
|
Less: comprehensive
income (loss) attributable to non-
controlling interests
|
345
|
|
(1,199)
|
|
536
|
|
(1,374)
|
Comprehensive income
attributable to Hollysys
Automation Technologies Ltd.
|
$
|
32,055
|
$
|
20,977
|
$
|
51,234
|
$
|
81,700
|
|
|
|
|
|
|
|
|
|
Net income per
ordinary share:
|
|
|
|
|
|
|
|
|
Basic
|
|
0.19
|
|
0.26
|
|
1.32
|
|
0.99
|
Diluted
|
|
0.19
|
|
0.26
|
|
1.31
|
|
0.98
|
Shares used in net
income per share computation:
|
|
|
|
|
|
|
|
|
Basic
|
61,595,286
|
|
61,068,732
|
|
61,449,939
|
|
60,945,131
|
Diluted
|
62,127,557
|
|
61,644,902
|
|
62,015,929
|
|
61,560,896
|
HOLLYSYS AUTOMATION
TECHNOLOGIES LTD.
|
CONSOLIDATED BALANCE
SHEETS
|
(In USD thousands
except for number of shares and per share data)
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
640,249
|
$
|
627,589
|
|
|
Short-term
investments
|
|
23,519
|
|
38,569
|
|
|
Restricted
cash
|
|
26,381
|
|
39,926
|
|
|
Accounts receivable,
net of allowance for credit losses of $73,283 and $72,800 as
of March 31, 2023 and December 31, 2022,
respectively
|
|
308,212
|
|
318,341
|
|
|
Costs and estimated
earnings in excess of billings, net of allowance for credit
losses
of $14,505 and $13,646 as of March 31, 2023 and
December 31, 2022,
respectively
|
|
259,778
|
|
252,630
|
|
|
Accounts receivable
retention
|
|
7,729
|
|
7,010
|
|
|
Other receivables,
net of allowance for credit losses of $12,379 and $12,489 as of
March 31, 2023 and December 31, 2022,
respectively
|
|
21,719
|
|
20,103
|
|
|
Advances to
suppliers
|
|
29,321
|
|
35,618
|
|
|
Amounts due from
related parties
|
|
23,968
|
|
23,630
|
|
|
Inventories
|
|
117,452
|
|
108,910
|
|
|
Prepaid
expenses
|
|
888
|
|
997
|
|
|
Income tax
recoverable
|
|
282
|
|
341
|
|
Total current
assets
|
|
1,459,498
|
|
1,473,664
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Restricted
cash
|
|
14,259
|
|
-
|
|
|
Costs and estimated
earnings in excess of billings
|
|
1,988
|
|
2,405
|
|
|
Accounts receivable
retention
|
|
7,069
|
|
6,944
|
|
|
Prepaid
expenses
|
|
3
|
|
-
|
|
|
Property, plant and
equipment, net
|
|
137,434
|
|
128,066
|
|
|
Prepaid land
leases
|
|
12,135
|
|
12,037
|
|
|
Intangible assets,
net
|
|
9,343
|
|
9,555
|
|
|
Investments in equity
investees
|
|
47,774
|
|
46,293
|
|
|
Investments
securities
|
|
1,651
|
|
1,623
|
|
|
Goodwill
|
|
20,020
|
|
19,683
|
|
|
Deferred tax
assets
|
|
9,589
|
|
6,429
|
|
|
Operating lease
right-of-use assets
|
|
3,154
|
|
3,283
|
|
Total non-current
assets
|
|
264,419
|
|
236,318
|
|
Total
assets
|
|
1,723,917
|
|
1,709,982
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term bank
loans
|
|
-
|
|
48
|
|
|
Current portion of
long-term loans
|
|
262
|
|
255
|
|
|
Accounts
payable
|
|
167,070
|
|
171,040
|
|
|
Construction costs
payable
|
|
11,384
|
|
12,665
|
|
|
Deferred
revenue
|
|
185,564
|
|
198,302
|
|
|
Accrued payroll and
related expenses
|
|
18,537
|
|
32,610
|
|
|
Income tax
payable
|
|
4,422
|
|
5,017
|
|
|
Warranty
liabilities
|
|
4,573
|
|
4,556
|
|
|
Other tax
payables
|
|
7,430
|
|
13,187
|
|
|
Accrued
liabilities
|
|
38,326
|
|
36,136
|
|
|
Amounts due to
related parties
|
|
6,181
|
|
6,379
|
|
|
Operating lease
liabilities
|
|
1,510
|
|
1,870
|
|
Total current
liabilities
|
|
445,259
|
|
482,065
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Accrued
liabilities
|
|
5,513
|
|
3,045
|
|
|
Long-term
loans
|
|
32,740
|
|
19,613
|
|
|
Accounts
payable
|
|
2,717
|
|
2,782
|
|
|
Deferred tax
liabilities
|
|
13,335
|
|
11,200
|
|
|
Warranty
liabilities
|
|
2,557
|
|
2,642
|
|
|
Operating lease
liabilities
|
|
1,343
|
|
1,200
|
|
|
Other
liability
|
|
68
|
|
60
|
|
Total non-current
liabilities
|
|
58,273
|
|
40,542
|
|
Total
liabilities
|
|
503,532
|
|
522,607
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Ordinary shares, par
value $0.001 per share, 100,000,000 shares authorized;
62,020,441 shares and 61,972,317 shares issued and
outstanding as of March
31, 2023 and December 31, 2022.
|
|
62
|
|
62
|
|
|
Additional paid-in
capital
|
|
261,378
|
|
245,654
|
|
|
Statutory
reserves
|
|
68,874
|
|
78,932
|
|
|
Retained
earnings
|
|
931,625
|
|
925,114
|
|
|
Accumulated other
comprehensive income
|
|
(42,631)
|
|
(63,118)
|
|
Total Hollysys
Automation Technologies Ltd. stockholder's equity
|
|
1,219,308
|
|
1,186,644
|
|
|
Non-controlling
interests
|
|
1,077
|
|
731
|
|
Total
equity
|
|
1,220,385
|
|
1,187,375
|
|
Total liabilities
and equity
|
$
|
1,723,917
|
$
|
1,709,982
|
|
HOLLYSYS AUTOMATION
TECHNOLOGIES LTD.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(In USD
thousands)
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
March 31,
2023
|
|
March 31,
2023
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
11,595
|
$
|
81,347
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
2,169
|
|
6,692
|
|
Amortization of prepaid
land leases
|
|
87
|
|
254
|
|
Amortization of
intangible assets
|
|
340
|
|
1,017
|
|
Allowance for credit
losses
|
|
276
|
|
2,849
|
|
Loss (gain) on disposal
of property, plant and equipment
|
|
(52)
|
|
42
|
|
Share of net income
(loss) of equity investees
|
|
(690)
|
|
(2,355)
|
|
Share-based
compensation expenses
|
|
672
|
|
2,849
|
|
Deferred income tax
expenses
|
|
(1,708)
|
|
(5,269)
|
|
Gains on disposal of an
investment in securities
|
|
-
|
|
(845)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts receivable and
retention
|
|
15,643
|
|
(4,730)
|
|
Costs and estimated
earnings in excess of billings
|
|
(2,452)
|
|
(34,192)
|
|
Inventories
|
|
(6,686)
|
|
(28,337)
|
|
Advances to
suppliers
|
|
6,860
|
|
3,720
|
|
Other
receivables
|
|
(1,260)
|
|
(348)
|
|
Prepaid
expenses
|
|
108
|
|
(212)
|
|
Due from related
parties
|
|
71
|
|
2,683
|
|
Accounts
payable
|
|
(6,789)
|
|
(4,198)
|
|
Deferred
revenue
|
|
(15,989)
|
|
(15,982)
|
|
Accruals and other
payables
|
|
(8,702)
|
|
2,198
|
|
Due to related
parties
|
|
(198)
|
|
(118)
|
|
Income tax
payable
|
|
(612)
|
|
5
|
|
Other tax
payables
|
|
(5,943)
|
|
(3,858)
|
|
Net cash (used in)
provided by operating activities
|
|
(13,260)
|
|
3,212
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchases of short-term
investments
|
|
(14,750)
|
|
(100,629)
|
|
Purchases of property,
plant and equipment
|
|
(12,379)
|
|
(36,811)
|
|
Proceeds from disposal
of a subsidiary
|
|
-
|
|
4,175
|
|
Proceeds from disposal
of property, plant and equipment
|
|
79
|
|
162
|
|
Maturity of short-term
investments
|
|
30,181
|
|
89,499
|
|
Proceeds received from
disposal of investment in securities
|
|
-
|
|
845
|
|
Acquisition of a
subsidiary, net of cash acquired
|
|
(73)
|
|
(73)
|
|
Net cash provided by
(used in) investing activities
|
|
3,058
|
|
(42,832)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
short-term bank loans
|
|
1
|
|
295
|
|
Repayments of
short-term bank loans
|
|
(49)
|
|
(360)
|
|
Proceeds from long-term
bank loans
|
|
13,227
|
|
18,519
|
|
Repayments of long-term
bank loans
|
|
(413)
|
|
(679)
|
|
Net cash provided by
financing activities
|
|
12,766
|
|
17,775
|
|
|
|
|
|
|
|
Effect of foreign
exchange rate changes
|
|
10,810
|
|
(16,293)
|
|
Net increase in
(decrease) cash, cash equivalents and restricted
cash
|
$
|
13,374
|
|
(38,138)
|
|
|
|
|
|
|
|
Cash, cash equivalents
and restricted cash, beginning of period
|
$
|
667,515
|
|
719,027
|
|
Cash, cash equivalents
and restricted cash, end of period
|
|
680,889
|
|
680,889
|
Non-GAAP Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, in evaluating our
results, we use the following non-GAAP financial measures: non-GAAP
gross profit and non-GAAP gross margin, non-GAAP gross profit and
non-GAAP gross margin of integrated solutions contracts, non-GAAP
net income attributable to Hollysys Automation Technologies Ltd.,
as well as non-GAAP basic and diluted earnings per share.
These non-GAAP financial measures serve as additional
indicators of our operating performance and not as any replacement
for other measures in accordance with U.S. GAAP. We believe these
non-GAAP measures help identify underlying trends in the Company's
business that could otherwise be distorted by the effect of the
share-based compensation expenses, which are calculated based on
the number of shares or options granted and the fair value as of
the grant date, and amortization of acquired intangible assets.
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.
Non-GAAP gross profit and non-GAAP gross margin, non-GAAP gross
profit and non-GAAP gross margin of integrated solutions contracts,
non-GAAP net income attributable to Hollysys Automation
Technologies Ltd., as well as non-GAAP basic and diluted earnings
per share should not be considered in isolation or construed as an
alternative to gross profit and gross margin, gross profit and
gross margin of integrated solutions contracts, net income
attributable to Hollysys Automation Technologies Ltd., basic and
diluted earnings per share, or any other measure of performance, or
as an indicator of the Company's operating performance. Investors
are encouraged to review the historical non-GAAP financial measures
to the most directly comparable GAAP measures. Non-GAAP gross
profit and gross margin, non-GAAP gross profit and non-GAAP gross
margin of integrated solutions contracts, non-GAAP net income
attributable to Hollysys Automation Technologies Ltd., as well as
non-GAAP basic and diluted earnings per share presented here may
not be comparable to similarly titled measures presented by other
companies. Other companies may calculate similarly titled measures
differently, limiting their usefulness as comparative measures to
the Company's data. The Company encourages investors and others to
review the Company's financial information in its entirety and not
rely on a single financial measure.
We define non-GAAP gross profit and non-GAAP gross margin as
gross profit and gross margin, respectively, adjusted to exclude
non-cash amortization of acquired intangibles. The following table
provides a reconciliation of our gross profit and gross margin to
non-GAAP gross profit and non-GAAP gross margin for the periods
indicated.
(In USD
thousands, except for %)
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
March
31,
|
|
March
31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
44,995
|
$
|
47,641
|
$
|
194,683
|
$
|
178,022
|
Gross
margin(1)
|
|
26.8 %
|
|
30.6 %
|
|
33.4 %
|
|
33.9 %
|
Add:
|
|
|
|
|
|
|
|
|
Amortization
of acquired intangible assets
|
|
340
|
|
370
|
|
1,017
|
|
1,002
|
Non-GAAP gross
profit
|
$
|
45,335
|
$
|
48,011
|
$
|
195,700
|
$
|
179,024
|
Non-GAAP gross
margin(2)
|
|
27.0 %
|
|
30.8 %
|
|
33.6 %
|
|
34.1 %
|
|
(1)
Gross margin
represents gross profit for the period as a percentage of revenue
for such period.
|
(2)
Non-GAAP gross margin represents non-GAAP gross profit for the
period as a percentage of revenue for such period.
|
We define non-GAAP gross profit and non-GAAP gross margin of
integrated solutions contracts as gross profit and gross margin of
integrated solutions contracts, respectively, adjusted to exclude
non-cash amortization of acquired intangibles associated with
integrated solutions contracts. The following table provides a
reconciliation of the gross profit of integrated solutions
contracts to non-GAAP gross profit and non-GAAP gross margin of
integrated solutions contracts for the periods indicated.
(In USD
thousands, except for %)
|
|
|
|
Three months ended
March 31,
|
|
Nine months ended
March 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Gross profit of
integrated
|
|
|
|
|
|
|
|
|
solutions contracts
|
$
|
25,417
|
$
|
33,800
|
$
|
119,325
|
$
|
110,905
|
Gross margin of
integrated
|
|
|
|
|
|
|
|
|
solutions contracts(1)
|
|
18.3 %
|
|
25.4 %
|
|
25.3 %
|
|
26.1 %
|
|
|
|
|
|
|
|
|
|
Add:
Amortization of acquired intangible
|
|
|
|
|
|
|
|
|
assets
|
|
340
|
|
370
|
|
1,017
|
|
1,002
|
Non-GAAP gross
profit of
|
|
|
|
|
|
|
|
|
integrated solutions contracts
|
$
|
25,757
|
$
|
34,170
|
$
|
120,342
|
$
|
111,907
|
Non-GAAP gross
margin of
|
|
|
|
|
|
|
|
|
integrated solutions contracts(2)
|
|
18.5 %
|
|
25.7 %
|
|
25.5 %
|
|
26.4 %
|
|
(1)
Gross margin
of integrated solutions contracts represents gross profit of
integrated solutions contracts for the period as a
percentage of integrated solutions contracts revenue for such
period.
|
(2)
Non-GAAP gross margin of integrated solutions contracts represents
non-GAAP gross profit of integrated solutions contracts
for the period as a percentage of integrated solutions contracts
revenue for such period.
|
We define non-GAAP net income attributable to Hollysys as net
income attributable to Hollysys adjusted to exclude the share-based
compensation expenses and non-cash amortization of acquired
intangible assets. The following table provides a reconciliation of
net income attributable to Hollysys to non-GAAP net income
attributable to Hollysys for the periods indicated.
(In USD
thousands)
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
March
31,
|
|
March
31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Hollysys Automation
Technologies Ltd.
|
$
|
11,568
|
$
|
15,827
|
$
|
81,211
|
$
|
60,156
|
Add:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
|
672
|
|
2,076
|
|
2,849
|
|
8,382
|
|
Amortization of
acquired intangible assets
|
|
340
|
|
370
|
|
1,017
|
|
1,002
|
Non-GAAP net income
attributable to Hollysys
Automation Technologies Ltd.
|
$
|
12,580
|
$
|
18,273
|
$
|
85,077
|
$
|
69,540
|
Non-GAAP basic (or diluted) earnings per share represents
non-GAAP net income attributable to Hollysys divided by the
weighted average number of ordinary shares outstanding during the
periods (or on a diluted basis). The following table provides a
reconciliation of our basic (or diluted) earnings per share to
non-GAAP basic (or diluted) earnings per share for the periods
indicated.
(In USD
thousands, except for number of shares and per share
data)
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
March
31,
|
|
March
31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Hollysys Automation
Technologies Ltd.
|
$
|
11,568
|
$
|
15,827
|
$
|
81,211
|
$
|
60,156
|
Add:
|
|
|
|
|
|
|
|
|
Share-based compensation expenses
|
|
672
|
|
2,076
|
|
2,849
|
|
8,382
|
Amortization of acquired intangible assets
|
|
340
|
|
370
|
|
1,017
|
|
1,002
|
Non-GAAP net income
attributable to
Hollysys Automation Technologies Ltd.
|
$
|
12,580
|
$
|
18,273
|
$
|
85,077
|
$
|
69,540
|
|
|
|
|
|
|
|
|
|
Weighted average number
of basic ordinary
shares
|
|
61,595,286
|
|
61,068,732
|
|
61,449,939
|
|
60,945,131
|
Weighted average number
of diluted ordinary
shares
|
|
62,127,557
|
|
61,644,902
|
|
62,015,929
|
|
61,560,896
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share(1)
|
|
0.19
|
|
0.26
|
|
1.32
|
|
0.99
|
Add:
Non-GAAP adjustments to net income per
share(2)
|
|
0.01
|
|
0.04
|
|
0.06
|
|
0.15
|
Non-GAAP basic
earnings per share(3)
|
$
|
0.20
|
$
|
0.30
|
$
|
1.38
|
$
|
1.14
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share(1)
|
|
0.19
|
|
0.26
|
|
1.31
|
|
0.98
|
Add:
Non-GAAP adjustments to net income per
share(2)
|
|
0.01
|
|
0.04
|
|
0.06
|
|
0.15
|
Non-GAAP diluted
earnings per share(3)
|
$
|
0.20
|
$
|
0.30
|
$
|
1.37
|
$
|
1.13
|
|
(1)
Basic (or
diluted) earnings per share is derived from net income attributable
to Hollysys Automation Technologies Ltd. for
computing basic (or diluted) earnings per share divided by weighted
average number of shares (or on a diluted basis).
|
(2)
Non-GAAP adjustments to net income per share is derived from
non-GAAP adjustments to net income divided by weighted
average number of shares (or on a diluted basis).
|
(3)
Non-GAAP basic (or diluted) earnings per share is derived from
non-GAAP net income attributable to Hollysys Automation
Technologies Ltd. for computing non-GAAP basic (or diluted)
earnings per share divided by weighted average number of shares (or
on
a diluted basis).
|
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content:https://www.prnewswire.com/news-releases/hollysys-automation-technologies-reports-unaudited-financial-results-for-the-third-quarter-and-the-first-nine-months-ended-march-31-2023-301825573.html
SOURCE Hollysys Automation Technologies Ltd