|FY2008-Q4-ended june 30, 2008: Hollysys Automation Technologies Reports Unaudited Fiscal 2008 Fourth Quarter and Year End Financial Results||| Print ||
FOR IMMEDIATE RELEASE
Hollysys Automation Technologies Reports Unaudited Fiscal 2008 Fourth Quarter and Year End Financial Results
Annual Guidance (based on current backlog and expected new business)
BEIJING, China--Sep 25, 2008--Hollysys Automation Technologies, Ltd. (NASDAQ: HOLI) ("Hollysys" or the "Company"), the leading domestic provider of automation control systems to China's nuclear, rail and industrial markets, today announced unaudited financial results for its fiscal fourth quarter and year ended June 30, 2008 (see attached tables).
Dr. Wang Changli, Hollysys' Chief Executive Officer, stated, "We were pleased with our results for FY 2008. We remain focused on growing all elements of our business, maintaining a streamlined cost infrastructure, expanding our vast portfolio of intellectual property, and pursuing additional markets where expansion fits our criteria. We feel fortunate to be well-positioned for long-term growth in a challenging global economy. Our target markets in industrial, rail, and nuclear automation are expected to be beneficially affected by China's growth in infrastructure and focus on clean energy.
Our industrial automation contracts continue to grow in average size and the need for our systems is trending toward the energy sector, more specifically, clean energy. Hollysys' proprietary automation control system for power plants makes power production from coal fired plants more efficient and cost-effective, increases the amount of power generated from each unit of coal, while simultaneously reducing emissions. We expect to see a larger number of projects stemming from growth in environmentally friendly markets, such as wind, automated emission control devices in manufacturing, garbage power generation, and straw combustion power. We are working towards enlarging our customer base, including extending and broadening the technological applications available to each individual customer, which we feel will widen our potential revenue stream and increase market share. In addition, our management will continue to analyze and improve our operational efficiency and enhance margin improvement.
Rail / Subway
We are very pleased with the growth of the new business pipeline in our rail business, specifically in potential high speed rail contracts, as we have signed two large contracts in the past two months. These 300 km/h rails will connect major cities throughout mainland China, and safety control is a major concern. We believe that the performance and quality provided in our rail and subway contracts will continue to lead to Hollysys being awarded a number of these larger, higher margin contracts in the near future.
We believe that our nuclear business remains in a highly competitive position to capitalize on China's nuclear growth. China's National Development and Reform Commission recently noted that the country's power capacity in nuclear is expected to reach 60GW by 2020. To put this in perspective, the country is currently at only 9GW supplied by 11 reactors. We continue to work with our JV partner, China Guangdong Nuclear Power Group, on the implementation of plant control systems for the Hongyanhe nuclear plant in Liaoning province. We expect this project to begin generating revenues in fiscal 2009. We are also hopeful to sign new contracts for additional reactors in the coming quarters.
Automation and Drive ("A&D")
There are a number of benefits to offering our factory automation customers and system integrators with one-stop shopping, from product design and development through manufacture and sales up to after-sales service. The A&D business combines motor and drive technologies with our existing control systems to offer customers a totally integrated solution. This segment provides a potential entry into a number of industries that fit our expansion criteria, where Hollysys can be the market leader and margins are in excess of 30%. While we are always dedicated to our core businesses, Hollysys will also continue to examine all areas with potential for long-term growth. We are excited at the potential in this segment and look forward to keeping you apprised of its progress."
Dr. Wang continued, "We remain in a very strong financial position, with no immediate capital needs and $63.5 million of cash and cash equivalents. Finally, we were very pleased to elevate our listing to the NASDAQ Global Select Market in August, which marked a very important milestone for our Company. We expect that trading on NASDAQ will continue to improve our visibility within the investment community."
Hollysys also announced that Dr. Ben Wang, the Company's Chief Financial Officer, will be leaving the Company, effective September 30, 2008. Hollysys would like to express its thanks to Dr. Wang for his service and support over the past year. Hollysys has appointed Ms. Herriet Qu as its Interim Chief Financial Officer. Ms. Qu has been serving as the Chief Financial Officer of Beijing HollySys Company Limited, one of the Company's operating subsidiaries, since October 2007. Prior to joining Hollysys, Ms. Qu served as the Chief Financial Officer for a financial advisory firm that also provided consultancy services to the Company.
Fiscal 2008 Year End Financial Highlights
The following table provides more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
Fiscal 2008 Fourth Quarter Highlights
Hollysys' backlog as of June 30, 2008 amounted to $178.5 million, representing an increase of 75.1% compared to $101.9 million as of June 30, 2007. The current breakdown for the backlog by segment:
Hollysys' backlog also increased 16.1% from March 31, 2008. It does not include a nuclear plant control system project of $97 million, which was announced in July 2007 and was signed by Hollysys' JV company Beijing Techenergy.
Balance Sheet Highlights
As of June 30, 2008, Hollysys' cash and cash equivalents were $63.5 million, compared to $11.7 million at June 30, 2007; with working capital of $143.9 million versus $27 million; and a current ratio of 3.0:1. Inventories increased as a result of a result of bulk purchases of raw materials and components in relation to the production of the Company's Distributed Control Systems (DCS) and Programmable Logic Controllers (PLC).
Outlook for FY 2009
Dr. Wang concluded, "We feel very confident in our financial position and our ability to grow the Company, both in 2009 and in the years ahead. In light of this confidence, we are providing investors with an annual estimate for FY 2009 of revenues between $150 million and $165 million and gross margins between 30% and 35%. We feel that our business is better judged annually as fluctuations in contract awards or events such as weather conditions, which we experienced in the first half of 2008, can affect the Company on a quarterly basis. We are also reiterating the $32 million incentive share earnings target for the calendar year ending December 31, 2008 (which is based on comprehensive income and excludes stock compensation expenses), and through the first six months of calendar 2008 have reported approximately $14.6 million in comprehensive income. Again, we look forward to continued growth and are very optimistic about Hollysys' long-term plans and success."
About Hollysys Automation Technologies
Hollysys Automation Technologies, based in Beijing, China, with 1,800 employees, is the leading domestic provider of automation control systems to China's surging nuclear, rail and industrial markets. Hollysys has developed a series of proprietary high quality, low cost control systems that meet or exceed international standards and is able to effectively compete against the world's leading automation control companies.
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.
|Last Updated ( Wednesday, 10 November 2010 14:07 )|