First Half of Fiscal Year 2021 Financial
Highlights
- Total revenues were $324.8
million, an increase of 10.7% compared to the comparable
prior year period.
- Non-GAAP gross margin was at 36.1%, compared to 36.9%
for the comparable prior year period.
- Non-GAAP net income attributable to Hollysys was
$53.0 million, a decrease of 17.1%
compared to the comparable prior year period.
- Non-GAAP diluted EPS was $0.87, a decrease of 17.9% compared to the
comparable prior year period.
- Net cash provided by operating activities was
$55.0 million for the current
period.
- DSO of 163 days, compared to 168 days for the comparable
prior year period.
- Inventory turnover days of 41 days, compared to 42 days
for the comparable prior year period.
Second Quarter of Fiscal Year 2021 Financial
Highlights
- Total revenues were $195.3
million, an increase of 14.8% compared to the comparable
prior year period.
- Non-GAAP gross margin was at 37.7%, compared to 36.3%
for the comparable prior year period.
- Non-GAAP net income attributable to Hollysys was
$32.2 million, a decrease of 5.7%
compared to the comparable prior year period.
- Non-GAAP diluted EPS were at $0.53, a decrease of 5.4% compared to the
comparable prior year period.
- Net cash provided by operating activities was
$33.4 million for the current
quarter.
- DSO of 142 days, compared to 137 days for the comparable
prior year period.
- Inventory turnover days of 40 days, compared to 39 days
for the comparable prior year period.
BEIJING, March 4, 2021 /PRNewswire/ -- Hollysys
Automation Technologies Ltd. (NASDAQ: HOLI) ("Hollysys" or the
"Company"), a leading provider of automation and control
technologies and applications in China, today announced its unaudited financial
results for the second quarter and first half of fiscal year 2021
ended December 31, 2020 (see attached
tables). The management of Hollysys, stated:
The Industrial Automation ("IA") business finished the second
quarter with revenue and new contracts at $92.9 million and $71.4
million, achieving 34.1% and 2.7% YOY growth, respectively.
For the first half of the fiscal year, IA revenue and contract grew
30.5% and 18.1% YOY, respectively.
- In power sector, we maintained our market position. Highlights
of the quarter include:
-
- Won a bid for 1*600MW power units DCS replacement project, and
the bid for 2*600MW power units DCS replacement project for two
high profile clients. Both clients are switching from an overseas
solution to a domestic solution for these two projects, and we
expect these recent wins to be indications of further cooperation
of this kind in the future
- In chemical and petro-chemical sector, we continued penetrating
into different verticals by winning key projects and solid
execution. In addition, we are building our extensive capacity
through our R&D efforts and collaboration with external parties
along the value chain. With our consistent high-quality project
delivery, we are recognized as a market leader by our clients and
continued to enhance our reputation within the industry.
- Sector highlights of the past quarter include:
-
- Launching our new versatile I/O solution, specifically designed
for clients in the chemical and petro-chemical sector with sizable
production sites. Our solution aims to optimize the signal
transmission section of the entire control solution in the field,
and will lead to increased transmission reliability, as well as a
substantial reduction in cable consumption and the space required
for equipment cabinet layout. Petro-chemical clients will gain
increased delivery efficiency and benefit from reduced project
costs. We expect our solution to drive further penetration in the
sector
- Won the bid for DCS+ESD (emergency shutdown device) solution
for a gas field platform project. The largest platform project for
the Company to date in terms of contract value and SIS control
points, demonstrating meaningful progress for Hollysys in this
vertical.
- Signed a comprehensive control solution contract with a client
on its phenolic resin project. The contract covers both basic and
advanced control solutions and the first time the Company has
applied its solution to this specific chemical process, marking
another breakthrough for the Company in the fine chemical
vertical
- Successfully delivered our DCS+GDS+SIS solution for a client on
its oil refining capacity expansion project. The client's
production capacity is expected to increase to 10 million tons/year
level and it is the first time this client has adopted a domestic
control solution for an oil refining project with this level of
production capacity
- Successfully delivered an APC solution for a client on its
organosilicone project. The value provided by our solution was
greatly appreciated by the client. Our client has seen distinct
improvement in terms of increase in the equipment self-control
level, decrease in input consumption (steam, electricity, etc.) and
an increase in production capacity, creating a substantial economic
benefit
- In aftersales service, we continued to leverage on our national
service network to capture market opportunities from our existing
client base, responding to various services and replacement demands
in order to safeguard their production. Our consistent high-quality
delivery continues to be well regarded. We successfully completed a
DCS replacement and upgrade project for an existing client for its
5 million tons per year oil refining capacity. The project
encompassed software/hardware upgrades, information security
deployment, etc., delivering improved system performance and
reliability.
- In the smart factory business, we continue to actively engage
potential clients through various marketing events, gaining an
in-depth understanding of market demand. Hollysys continues to
develop and improve its value creating solutions driving economic
benefit and improved operational safety. Highlights of the past
quarter include:
-
- Established a cooperative relationship with a client from the
chemical sector which the Company and the client aim to
collaboratively promote future smart factory upgrades for other
clients in the region
- Won a smart factory contract for a client from the chemical
sector for its organosilicone project. The project covers a
comprehensive DCS + SIS + GDS + AMS + ODS control solution as well
as the construction of an integrated data platform as the
foundation for further digital upgrade initiatives.
- Won a smart factory contract of an existing client from the
power sector on its 2*1000MW power units. The project will cover
control level solution such as smart control, equipment diagnosis,
smart alarm, etc. and production management level solution.
Rail business finished the quarter with revenue and contract at
$81.3 million and $99.9 million, recording 3.1% YOY growth and 4.2%
YOY decrease, respectively. For the first half of the fiscal year,
Rail revenue and contract achieved 10.9% and 0.6% YOY decrease,
respectively.
- In high-speed rail ("HSR") sector, with the rail-road
construction progress, we continued to sign new contracts, deliver
on existing projects, maintaining our position in existing product
lines and exploring opportunities in new market lines. We have also
been devoting consistent R&D resources to key technologies with
the intention of expanding our solution capabilities and to drive
our future performance. Highlights of the quarter include:
-
- Won the bid for 50 sets (out of the total package of 166 sets)
of ATP for C3 (350km) China Standard
High-speed train during the quarter
- Completed the delivery of several projects where the Company
provided on-ground solutions such as TCC (Train Control Center),
RBC (Radio Block Center) and TSRS (Temporary Speed Restriction),
etc., and our high quality engineering continues to be recognized
by our clients. Some of the completed projects include
Weifang-laixi high-speed railway, Taiyuan-Jiaozuo session of
Zhengzhou-Taiyuan high-speed railway and Shaanxi session of the Xi 'an-Yinchuan
high-speed railway, etc
- Signed a regular speed track circuit contract for the
Xingguo-Quanzhou railway Ninghua-Quanzhou session, the railway
connects Jiangxi Province and
Fujian Province. The contract
marks another step forward for the Company in the regular speed
track circuit market.
- In subway sector, the Company provided several lines to which
SCADA solution was put into operation in the quarter, including
Phase 3 of Shenzhen Subway line 2, Phase 1 of Shenzhen Subway line
8 and line 2 of Hohhot Subway. Our role in those projects covered
product provision, system integration and debugging, and our
delivery quality continued to be trusted by our clients.
- In aftersales business, we continued to strengthen local
service network, to expand service solution and to develop
technology-and-service-centered service for better differentiation.
In HSR sector, we continued to respond to demand including advanced
maintenance, system and software upgrade and part component sales,
as well as total replacement. Our service capability continued to
be highly recognized by our clients.
- Following the breakthrough contract of smart highway solution
in the previous quarter, we continued to get actively involved in
marketing events for further market opportunities. Meanwhile, as an
experienced and responsible player in the railway industry, we took
part in the national initiatives on industry-education integration,
and we jointly established Hollysys Institute of Railway Industry
with a local vocational technical institute from Nanjing city this quarter. We expect to join
hands with more railway transit schools in the future and,
leveraging on our market experience, we hope to contribute more to
the talent raising of the industry as well as deeper
industry-education collaboration.
Mechanical and Electrical Solutions ("M&E") business
finished the quarter with revenue and contract at $21.2 million and $22.3
million, recording 3.8% YOY decrease and 86.7% YOY increase
respectively. For the first half of the fiscal year, M&E
revenue and contract achieved 11.1% YOY growth and 23.9% YOY
decrease, respectively.
COVID-19 remains a challenge to M&E and overseas business.
We will keep monitoring the impact on this sector and risk control
remains to be the key focus.
Second Quarter and First Half Year Ended
December 31, 2020 Unaudited
Financial Results Summary
|
(In USD thousands,
except for number of shares and per share data)
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
December 31,
2020
|
December 31,
2019
|
%
Change
|
|
December 31,
2020
|
December 31,
2019
|
%
Change
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
195,328
|
170,109
|
14.8%
|
$
|
324,795
|
293,338
|
10.7%
|
Integrated solutions contracts revenue
|
$
|
142,468
|
129,675
|
9.9%
|
$
|
248,174
|
234,141
|
6.0%
|
Products sales
|
$
|
8,458
|
6,539
|
29.3%
|
$
|
15,026
|
12,661
|
18.7%
|
Service rendered
|
$
|
44,402
|
33,895
|
31.0%
|
$
|
61,595
|
46,536
|
32.4%
|
Cost of
revenues
|
$
|
121,630
|
108,278
|
12.3%
|
$
|
207,520
|
185,049
|
12.1%
|
Gross
profit
|
$
|
73,698
|
61,831
|
19.2%
|
$
|
117,275
|
108,289
|
8.3%
|
Total operating
expenses
|
$
|
39,409
|
28,511
|
38.2%
|
$
|
61,964
|
51,803
|
19.6%
|
Selling
|
$
|
10,260
|
10,392
|
(1.3)%
|
$
|
18,435
|
17,670
|
4.3%
|
General and administrative
|
$
|
13,641
|
10,591
|
28.8%
|
$
|
23,819
|
21,184
|
12.4%
|
Research and development
|
$
|
18,620
|
13,806
|
34.9%
|
$
|
28,601
|
22,748
|
25.7%
|
VAT refunds and government subsidies
|
$
|
(3,112)
|
(6,278)
|
(50.4)%
|
$
|
(8,890)
|
(9,799)
|
(9.3)%
|
Income from
operations
|
$
|
34,289
|
33,320
|
2.9%
|
$
|
55,311
|
56,486
|
(2.1)%
|
Other income,
net
|
$
|
1,545
|
1,301
|
18.8%
|
$
|
2,774
|
3,327
|
(16.6)%
|
Foreign exchange
(loss) gain
|
$
|
(3,345)
|
(59)
|
5981.8%
|
$
|
(5,668)
|
545
|
(1140.0)%
|
Gains on disposal of
investments in an
equity
investee
|
$
|
-
|
-
|
-
|
$
|
-
|
5,763
|
(100)%
|
Share of net income
of equity investees
|
$
|
2,768
|
1,997
|
38.6%
|
$
|
4,659
|
3,538
|
31.7%
|
Dividend income from
equity security investments
|
$
|
3
|
1,145
|
(99.7)%
|
$
|
3
|
1,145
|
(99.7)%
|
Interest
income
|
$
|
2,922
|
3,099
|
(5.7)%
|
$
|
6,720
|
6,128
|
(9.7)%
|
Interest
expenses
|
$
|
(141)
|
(6)
|
2250.0%
|
$
|
(277)
|
(119)
|
132.8%
|
Income tax
expenses
|
$
|
5,906
|
6,792
|
(13.0)%
|
$
|
10,666
|
13,001
|
(18.0)%
|
Net loss attributable
to non-controlling interests
|
$
|
(71)
|
(151)
|
(53.0)%
|
$
|
(151)
|
(125)
|
20.8%
|
Non-GAAP net income
attributable to Hollysys Automation Technologies Ltd.
|
$
|
32,206
|
34,156
|
(5.7)%
|
$
|
53,006
|
63,937
|
(17.1)%
|
Non-GAAP basic
EPS
|
$
|
0.53
|
0.56
|
(5.4)%
|
$
|
0.88
|
1.06
|
(17.0)%
|
Non-GAAP diluted
EPS
|
$
|
0.53
|
0.56
|
(5.4)%
|
$
|
0.87
|
1.06
|
(17.9)%
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
$
|
763
|
15
|
4986.7%
|
$
|
938
|
40
|
2247.5%
|
Amortization of
acquired intangible assets
|
$
|
79
|
75
|
5.3%
|
$
|
155
|
151
|
2.6%
|
GAAP Net income
attributable to Hollysys Automation Technologies Ltd.
|
$
|
31,364
|
34,066
|
(7.9)%
|
$
|
51,913
|
63,746
|
(18.6)%
|
GAAP basic
EPS
|
$
|
0.52
|
0.56
|
(7.1)%
|
$
|
0.86
|
1.05
|
(18.1)%
|
GAAP diluted
EPS
|
$
|
0.51
|
0.56
|
(8.9)%
|
$
|
0.86
|
1.05
|
(18.1)%
|
|
|
|
|
|
|
|
|
|
Basic weighted
average common shares outstanding
|
|
60,500,387
|
60,538,111
|
(0.1)%
|
|
60,498,431
|
60,504,151
|
0.0%
|
Diluted weighted
average common shares outstanding
|
|
60,933,785
|
60,552,527
|
0.6%
|
|
60,693,633
|
60,517,798
|
0.3%
|
Operational Results Analysis for the Second Quarter Ended
December 31, 2020
Compared to the second quarter of the prior fiscal year, the
total revenues for the three months ended December 31, 2020 increased from $170.1 million to $195.3
million, represented an increase of 14.8%. Broken down by
revenue type, integrated contracts revenue increased by 9.9% to
$142.5 million, products sales
revenue increased by 29.3% to $8.5
million, and services revenue increased by 31.0% to
$44.4 million.
The Company's total revenues can also be presented in
segments as shown in the following chart:
(In USD
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Six months ended
December 31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
$
|
% to Total
Revenue
|
|
$
|
% to Total
Revenue
|
|
$
|
% to Total
Revenue
|
|
$
|
% to Total
Revenue
|
|
Industrial
Automation
|
|
92,889
|
47.6%
|
|
69,291
|
40.7%
|
|
174,819
|
53.8%
|
|
133,927
|
45.6%
|
|
Rail Transportation
Automation
|
|
81,269
|
41.6%
|
|
78,823
|
46.3%
|
|
109,965
|
33.9%
|
|
123,399
|
42.1%
|
|
Mechanical and
Electrical Solution
|
|
21,170
|
10.8%
|
|
21,995
|
13.0%
|
|
40,011
|
12.3%
|
|
36,012
|
12.3%
|
|
Total
|
|
195,328
|
100.0%
|
|
170,109
|
100.0%
|
|
324,795
|
100.0%
|
|
293,338
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall gross margin excluding
non-cash amortization of acquired intangibles (non-GAAP
gross margin) was 37.7% for the three months
ended December 31, 2020, as compared to 36.3% for the same
period of the prior year. The non-GAAP gross
margin for integrated contracts, product sales, and services
rendered were 28.0%, 85.6% and 59.8% for the three months
ended December 31, 2020, as compared to 28.0%, 66.4% and
62.6% for the same period of the
prior year, respectively. The gross margin fluctuated
mainly due to the different revenue mix with different margins.
The GAAP overall gross margin which
includes non-cash amortization of acquired intangibles was
37.7% for the three months ended December 31, 2020, as
compared to 36.3% for the same period of the prior
year. The GAAP gross margin for integrated
contracts, product sales, and service
rendered was 27.9%, 85.6% and 59.8% for the three
months ended December 31, 2020, as compared to 27.9%,
66.4% and 62.6% for the same period of the
prior year, respectively.
Selling expenses were $10.3 million for the three months ended
December 31, 2020, represented a
decrease of $0.1 million or 1.3%
compared to $10.4 million for the
same quarter of the prior year. Presented as a percentage of total
revenues, selling expenses were 5.3% and 6.1% for
the three months ended December 31, 2020, and 2019,
respectively.
General and
administrative expenses, excluding
non-cash share-based compensation expenses (non-GAAP G&A
expenses), were $13.6 million for the quarter
ended December 31, 2020, represented
an increase of $3.1 million or 28.8%
compared to $10.6 million for the
same quarter of the prior year. Presented as a percentage
of total revenues, non-GAAP G&A expenses were 7.0%
and 6.2% for quarters ended December 31, 2020 and 2019,
respectively. The GAAP G&A expenses which include
the non-cash share-based compensation expenses were $14.4 million and $10.6
million for the three months ended December 31, 2020 and 2019, respectively.
Research and development expenses were $18.6
million for the three months ended December 31, 2020, represented an increase of
$4.8 million or 34.9% compared to
$13.8 million for the same quarter of
the prior year, mainly due to increased research and development
activities. Presented as a percentage of total revenues,
R&D expenses were 9.5% and 8.1% for the
quarter ended December 31, 2020 and
2019, respectively.
The VAT refunds and government subsidies were
$3.1 million for three months ended
December 31, 2020, as compared to
$6.3 million for the same period in
the prior year, represented a $3.2
million or 50.4% decrease, which was primarily due to
decrease of the VAT refunds.
The income tax expenses and the effective tax
rate were $5.9 million and
15.9% for the three months ended December
31, 2020, respectively, as compared to $6.8 million and 16.7% for comparable prior year
period, respectively. The effective tax rate fluctuated mainly due
to the different pre-tax income mix with different tax rates, as
the Company's subsidiaries are subject to different tax rates in
various jurisdictions.
The non-GAAP net income attributable to
Hollysys, which excludes the non-cash share-based
compensation expenses calculated based on the grant-date fair value
of shares or options granted, amortization of acquired intangible
assets, and fair value adjustments of a bifurcated derivative, was
$32.2 million or $0.53 per diluted share based on 60.9 million
diluted weighted average ordinary shares outstanding for the three
months ended December 31, 2020. This
represents a 5.7% decrease from $34.2
million or $0.56 per share
based on 60.6 million diluted weighted average ordinary shares
outstanding reported in the comparable prior year period. On a
GAAP basis, net income attributable to Hollysys was
$31.4 million or
$0.51 per diluted
share represented a decrease of 7.9% from
$34.1 million or $0.56 per diluted share reported in
the comparable prior year period.
Contracts and Backlog Highlights
Hollysys achieved $193.6
million of new contracts for the three months ended
December 31, 2020. The
backlog as of December 31,
2020 was $601.3 million.
The detailed breakdown of new contracts and backlog by
segments is shown below:
|
New contracts
achieved
|
|
Backlog
|
|
for the three
months
ended
December 31, 2020
|
|
as of December 31,
2020
|
|
(In USD
thousands)
|
|
% to Total
Contract
|
|
(In USD
thousands)
|
% to Total
Backlog
|
Industrial
Automation
|
|
71,351
|
36.8%
|
|
234,213
|
39.0%
|
Rail
Transportation
|
|
99,879
|
51.7%
|
|
273,298
|
45.5%
|
Mechanical and
Electrical Solutions
|
|
22,345
|
11.5%
|
|
93,745
|
15.5%
|
Total
|
|
193,575
|
100.0%
|
|
601,256
|
100.0%
|
|
|
|
|
|
|
|
|
Cash Flow Highlights
For the three months ended December 31,
2020, the total net cash inflow was $33.6 million. The net cash provided
by operating activities was $33.4 million. The
net cash provided by investing activities was $0.4 million and mainly consisted of 2.8 million
purchases of property, plant and equipment, and $35.9 million purchases of short-term
investments, which were partially offset by $39.1 million of matured short-term investments
The net cash used in financing activities was $12.1 million and mainly consisted of
$12.1 million payment of
dividends.
Balance Sheet Highlights
The total amount of cash and cash equivalents
were $356.9 million, $321.6
million, and $403.9 million as
of December 31, 2020, September 30, 2020 and December 30, 2019, respectively.
For the three months ended December 31, 2020, DSO
was 142 days, as compared to 137 days for the comparable
prior year period and 185 days for the last quarter; and
inventory turnover was 40 days, as compared to 39 days
for the comparable prior year period and 58 days for the
last quarter.
Conference Call
The Company will host a conference call at 8:00
pm March 4, 2021 U.S. Eastern Time / 9:00 am March 5,
2021 Beijing Time, to discuss the financial results for
fiscal year 2021 second quarter ended December 31, 2020 and business outlook.
Joining the Conference Call:
1. Please register in advance of the conference using the link
provided below. Upon registering, you will be provided with
participant dial-in numbers, Direct Event passcode and unique
registrant ID.
2. In the 10 minutes prior to the call start time, you will need to
use the conference access information provided in the email
received at the point of registering.
Note: Due to regional restrictions some participants may receive
operator assistance when joining this conference call and will not
be automatically connected.
Helpful keypad commands:
*0 - Operator assistance
*6 - Self mute/unmute
Direct Event online registration:
http://apac.directeventreg.com/registration/event/8870789
Please use Conference ID 8870789 for entry if the link fails to
lead directly to the registration page.
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.
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
December 31,
|
|
Six months
ended
December 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Net
revenues
|
|
|
|
|
|
|
|
|
Integrated solutions
contracts revenue
|
$
|
142,468
|
$
|
129,675
|
$
|
248,174
|
$
|
234,141
|
Products
sales
|
|
8,458
|
|
6,539
|
|
15,026
|
|
12,661
|
Revenue from
services
|
|
44,402
|
|
33,895
|
|
61,595
|
|
46,536
|
Total net
revenues
|
|
195,328
|
|
170,109
|
|
324,795
|
|
293,338
|
|
|
|
|
|
|
|
|
|
Costs of integrated
solutions contracts
|
|
102,656
|
|
93,485
|
|
181,737
|
|
163,985
|
Cost of products
sold
|
|
1,218
|
|
2,199
|
|
2,947
|
|
3,430
|
Costs of services
rendered
|
|
17,835
|
|
12,669
|
|
22,991
|
|
17,785
|
Gross
profit
|
|
73,619
|
|
61,756
|
|
117,120
|
|
108,138
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Selling
|
|
10,260
|
|
10,392
|
|
18,435
|
|
17,670
|
General and
administrative
|
|
14,404
|
|
10,606
|
|
24,757
|
|
21,224
|
Research and
development
|
|
18,620
|
|
13,806
|
|
28,601
|
|
22,748
|
VAT refunds and
government subsidies
|
|
(3,112)
|
|
(6,278)
|
|
(8,890)
|
|
(9,799)
|
Total operating
expenses
|
|
40,172
|
|
28,526
|
|
62,903
|
|
51,843
|
Income from
operations
|
|
33,447
|
|
33,230
|
|
54,217
|
|
56,295
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
1,545
|
|
1,301
|
|
2,774
|
|
3,327
|
Foreign exchange
(loss) gain
|
|
(3,345)
|
|
(59)
|
|
(5,668)
|
|
545
|
Gains on disposal of
investments in an equity investee
|
|
-
|
|
-
|
|
-
|
|
5,763
|
Share of net income
of equity investees
|
|
2,768
|
|
1,997
|
|
4,659
|
|
3,538
|
Dividend income from
equity security investments
|
|
3
|
|
1,145
|
|
3
|
|
1,145
|
Interest
income
|
|
2,922
|
|
3,099
|
|
6,720
|
|
6,128
|
Interest
expenses
|
|
(141)
|
|
(6)
|
|
(277)
|
|
(119)
|
Income before
income taxes
|
|
37,199
|
|
40,707
|
|
62,428
|
|
76,622
|
|
|
|
|
|
|
|
|
|
Income taxes
expenses
|
|
5,906
|
|
6,792
|
|
10,666
|
|
13,001
|
Net
income
|
|
31,293
|
|
33,915
|
|
51,762
|
|
63,621
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to non-controlling interests
|
(71)
|
|
(151)
|
|
(151)
|
|
(125)
|
Net income
attributable to Hollysys Automation Technologies
Ltd.
|
$
|
31,364
|
$
|
34,066
|
$
|
51,913
|
$
|
63,746
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss), net of tax of nil
|
|
|
|
|
|
|
|
Translation
adjustments
|
|
44,703
|
|
20,921
|
|
83,652
|
|
(13,253)
|
Comprehensive
income
|
|
75,996
|
|
54,836
|
|
135,414
|
|
50,368
|
|
|
|
|
|
|
|
|
|
Less: comprehensive
(loss) income attributable to non-controlling interests
|
(28)
|
|
977
|
|
52
|
|
951
|
Comprehensive
income attributable to Hollysys Automation Technologies
Ltd.
|
$
|
76,024
|
$
|
53,859
|
$
|
135,362
|
$
|
49,417
|
|
|
|
|
|
|
|
|
|
Net income per
ordinary share:
|
|
|
|
|
|
|
|
|
Basic
|
|
0.52
|
|
0.56
|
|
0.86
|
|
1.05
|
Diluted
|
|
0.51
|
|
0.56
|
|
0.86
|
|
1.05
|
Shares used in net
income per share computation:
|
|
|
|
|
|
|
|
|
Basic
|
60,500,387
|
|
60,538,111
|
|
60,498,431
|
|
60,504,151
|
Diluted
|
60,933,785
|
|
60,552,527
|
|
60,693,633
|
|
60,517,798
|
|
|
|
|
|
|
|
|
HOLLYSYS AUTOMATION
TECHNOLOGIES LTD.
|
CONSOLIDATED
BALANCE SHEETS
|
(In USD thousands
except for number of shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Dec-
31,
|
|
Sep-
30,
|
|
|
|
|
2020
|
|
2020
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
356,904
|
$
|
321,641
|
|
|
Short-term
investments
|
|
340,904
|
|
330,432
|
|
|
Restricted
cash
|
|
9,210
|
|
11,827
|
|
|
Accounts receivable,
net of allowance for credit losses of $64,777 and $54,069
as
of December 31, 2020
and September 30, 2020, respectively
|
|
326,606
|
|
268,270
|
|
|
Costs and estimated
earnings in excess of billings, net of allowance for credit
losses
of $12,322 and $8,185
as of December 31, 2020 and September 30, 2020,
respectively
|
|
211,630
|
|
189,834
|
|
|
Accounts receivable
retention
|
|
4,521
|
|
5,227
|
|
|
Other receivables,
net of allowance for credit losses of $6,508 and $6,382 as of
December 31, 2020 and September 30, 2020, respectively
|
|
27,712
|
|
28,408
|
|
|
Advances to
suppliers
|
|
16,700
|
|
18,614
|
|
|
Amounts due from
related parties
|
|
24,498
|
|
22,222
|
|
|
Inventories
|
|
35,898
|
|
56,805
|
|
|
Prepaid
expenses
|
|
1,009
|
|
654
|
|
|
Income tax
recoverable
|
|
7
|
|
87
|
|
Total current
assets
|
|
1,355,599
|
|
1,254,021
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Restricted
cash
|
|
21,512
|
|
20,558
|
|
|
Costs and estimated
earnings in excess of billings
|
|
578
|
|
1,771
|
|
|
Accounts receivable
retention
|
|
5,135
|
|
5,559
|
|
|
Prepaid
expenses
|
|
1
|
|
8
|
|
|
Property, plant and
equipment, net
|
|
88,364
|
|
84,261
|
|
|
Prepaid land
leases
|
|
16,716
|
|
16,168
|
|
|
Intangible assets,
net
|
|
1,618
|
|
1,665
|
|
|
Investments in equity
investees
|
|
50,026
|
|
45,814
|
|
|
Investments
securities
|
|
5,018
|
|
4,816
|
|
|
Goodwill
|
|
1,580
|
|
1,516
|
|
|
Deferred tax
assets
|
|
15,237
|
|
10,738
|
|
|
Operating lease
right-of-use assets
|
|
7,483
|
|
6,496
|
|
Total non-current
assets
|
|
213,268
|
|
199,370
|
|
Total
assets
|
|
1,568,867
|
|
1,453,391
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Current portion of
long-term loans
|
|
326
|
|
334
|
|
|
Accounts
payable
|
|
139,701
|
|
129,336
|
|
|
Construction costs
payable
|
|
3,804
|
|
1,762
|
|
|
Deferred
revenue
|
|
185,418
|
|
161,692
|
|
|
Accrued payroll and
related expenses
|
|
30,305
|
|
21,766
|
|
|
Income tax
payable
|
|
11,090
|
|
7,021
|
|
|
Warranty
liabilities
|
|
7,474
|
|
6,074
|
|
|
Other tax
payables
|
|
13,306
|
|
4,129
|
|
|
Accrued
liabilities
|
|
36,081
|
|
36,738
|
|
|
Amounts due to
related parties
|
|
3,959
|
|
3,394
|
|
|
Operating lease
liabilities
|
|
2,896
|
|
2,211
|
|
Total current
liabilities
|
|
434,360
|
|
374,457
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Accrued
liabilities
|
|
3,966
|
|
3,000
|
|
|
Long-term
loans
|
|
15,773
|
|
15,885
|
|
|
Accounts
payable
|
|
1,854
|
|
3,221
|
|
|
Deferred tax
liabilities
|
|
14,892
|
|
14,307
|
|
|
Warranty
liabilities
|
|
3,003
|
|
1,847
|
|
|
Operating lease
liabilities
|
|
4,227
|
|
3,901
|
|
Total non-current
liabilities
|
|
43,715
|
|
42,161
|
|
Total
liabilities
|
|
478,075
|
|
416,618
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Ordinary shares, par
value $0.001 per share, 100,000,000 shares authorized; 60,855,099
shares and 60,537,099 shares issued and outstanding as of December
31, 2020 and September 30, 2020
|
|
61
|
|
61
|
|
|
Additional paid-in
capital
|
|
224,981
|
|
224,218
|
|
|
Statutory
reserves
|
|
58,954
|
|
49,423
|
|
|
Retained
earnings*
|
|
782,408
|
|
783,315
|
|
|
Accumulated other
comprehensive income (loss)
|
|
19,932
|
|
(24,728)
|
|
Total Hollysys
Automation Technologies Ltd. stockholder's equity
|
|
1,086,336
|
|
1,032,289
|
|
|
Non-controlling
interests
|
|
4,456
|
|
4,484
|
|
Total
equity
|
|
1,090,792
|
|
1,036,773
|
|
Total liabilities
and equity
|
$
|
1,568,867
|
$
|
1,453,391
|
* ASC 326 was adopted on July 1,
2020 and resulted in $22,338
adjustment to opening retained earnings
HOLLYSYS
AUTOMATION TECHNOLOGIES LTD
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In USD
thousands).
|
|
|
|
Three months
ended
|
|
Six months
ended
|
December 31,
2020
|
|
December 31,
2020
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
31,293
|
$
|
51,762
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
2,159
|
|
4,707
|
|
Amortization of
prepaid land leases
|
|
108
|
|
209
|
|
Amortization of
intangible assets
|
|
79
|
|
155
|
|
Allowance for
doubtful accounts
|
|
528
|
|
1,480
|
|
Loss on disposal of
property, plant and equipment
|
|
(29)
|
|
(39)
|
|
Share of net income
of equity investees
|
|
(2,768)
|
|
(4,659)
|
|
Share-based
compensation expenses
|
|
763
|
|
938
|
|
Deferred income tax
expenses
|
|
(3,648)
|
|
(5,011)
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
and retention
|
|
(51,951)
|
|
(77,900)
|
|
Costs and estimated
earnings in excess of billings
|
|
(12,052)
|
|
(7,656)
|
|
Inventories
|
|
22,237
|
|
15,597
|
|
Advances to
suppliers
|
|
2,570
|
|
1,868
|
|
Other
receivables
|
|
1,716
|
|
2,337
|
|
Deposits and other
assets
|
|
(336)
|
|
(337)
|
|
Due from related
parties
|
|
(853)
|
|
(2,002)
|
|
Accounts
payable
|
|
5,546
|
|
13,448
|
|
Deferred
revenue
|
|
16,660
|
|
33,623
|
|
Accruals and other
payables
|
|
8,205
|
|
8,359
|
|
Due to related
parties
|
|
565
|
|
383
|
|
Income tax
payable
|
|
3,801
|
|
8,301
|
|
Other tax
payables
|
|
8,666
|
|
9,377
|
|
Operating lease
right-of-use assets
|
|
(709)
|
|
(1,015)
|
|
Operating lease
liabilities
|
|
861
|
|
1,082
|
|
Net cash provided
by operating activities
|
|
33,411
|
|
55,007
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchases of
Short-term investments
|
|
(35,948)
|
|
(144,705)
|
|
Purchases of
property, plant and equipment
|
|
(2,848)
|
|
(6,202)
|
|
Proceeds from
disposal of property, plant and equipment
|
|
176
|
|
241
|
|
Maturity of
short-term investments
|
|
39,054
|
|
153,651
|
|
Net cash provided
by investing activities
|
|
434
|
|
2,985
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
short-term bank loans
|
|
237
|
|
274
|
|
Repayments of
short-term bank loans
|
|
(213)
|
|
(407)
|
|
Payment of
dividends
|
|
(12,107)
|
|
(12,107)
|
|
Net cash used in
financing activities
|
|
(12,083)
|
|
(12,240)
|
|
|
|
|
|
|
|
Effect of foreign
exchange rate changes
|
|
11,838
|
|
22,777
|
|
Net increase in
cash, cash equivalents and restricted cash
|
$
|
33,600
|
|
68,529
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
$
|
354,026
|
|
319,097
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
387,626
|
|
387,626
|
Non-GAAP Measures
In evaluating our results, the non-GAAP measures of "Non-GAAP
cost of integrated contracts", "Non-GAAP general and administrative
expenses", "Non-GAAP net income attributable to Hollysys Automation
Technologies Ltd. stockholders", "Non-GAAP basic earnings per
share", and "Non-GAAP diluted earnings per share" serve
as additional indicators of our operating performance and not as a
replacement for other measures in accordance with U.S. GAAP. We
believe these non-GAAP measures are useful to investors, as they
exclude the non-cash share-based compensation expenses,
which is calculated based on the number of shares or
options granted and the fair value as of the grant date,
amortization of acquired intangible assets, and fair value
adjustments of a bifurcated derivative. They will not result in any
cash inflows or outflows. We believe that using non-GAAP measures
help our shareholders to have a better understanding of our
operating results and growth prospects. In addition, given the
business nature of the Company, it has been a common practice for
investors to use such non-GAAP measures to evaluate the
Company.
The following table provides a reconciliation of the
non-GAAP measures with the most directly comparable U.S. GAAP
measures for the periods indicated:
(In USD
thousands, except for number of shares and per share
data)
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Cost of integrated
solutions contracts
|
$
|
102,656
|
$
|
93,485
|
$
|
181,737
|
$
|
163,985
|
Less: Amortization of
acquired intangible assets
|
|
79
|
|
75
|
|
155
|
|
151
|
Non-GAAP cost of
integrated solutions contracts
|
$
|
102,577
|
$
|
93,410
|
$
|
181,582
|
$
|
163,834
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
$
|
14,404
|
$
|
10,606
|
$
|
24,757
|
$
|
21,224
|
Less: Share-based
compensation expenses
|
|
763
|
|
15
|
|
938
|
|
40
|
Non-GAAP general
and administrative expenses
|
$
|
13,641
|
$
|
10,591
|
$
|
23,819
|
$
|
21,184
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Hollysys Automation Technologies
Ltd.
|
$
|
31,364
|
$
|
34,066
|
$
|
51,913
|
$
|
63,746
|
Add:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
|
763
|
|
15
|
|
938
|
|
40
|
|
Amortization of
acquired intangible assets
|
|
79
|
|
75
|
|
155
|
|
151
|
Non-GAAP net income
attributable to Hollysys Automation Technologies
Ltd.
|
$
|
32,206
|
$
|
34,156
|
$
|
53,006
|
$
|
63,937
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of basic ordinary shares
|
60,500,387
|
|
60,538,111
|
|
60,498,431
|
|
60,504,151
|
|
Weighted average
number of diluted ordinary shares
|
60,933,785
|
|
60,552,527
|
|
60,693,633
|
|
60,517,798
|
Non-GAAP basic
earnings per share
|
$
|
0.53
|
$
|
0.56
|
$
|
0.88
|
$
|
1.06
|
Non-GAAP diluted
earnings per share
|
$
|
0.53
|
$
|
0.56
|
$
|
0.87
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/hollysys-automation-technologies-reports-unaudited-financial-results-for-the-second-quarter-and-the-first-half-year-ended-december-31-2020-301240824.html
SOURCE Hollysys Automation Technologies Ltd.