| FY2010-Q4-Ended June 30, 2010: Hollysys Automation Technologies Reports Unaudited Financial Results for the Fiscal Year 2010 Fourth Quarter | | Print | |
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Hollysys Automation Technologies, Ltd. Hollysys Automation Technologies Reports Unaudited Financial Results for the Fourth Quarter and Fiscal Year 2010 Ended June 30, 2010BEIJING, Aug 11 /PRNewswire-Asia-FirstCall/ -- 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 its fiscal fourth quarter and the fiscal year 2010 ended June 30, 2010 (see attached tables). Q4 FY 2010 Highlights-- Revenues of $56.4 million, representing an increase of 25.9% compared Fiscal Year 2010 Financial Highlights-- Revenues of $174.1 million, an increase of 10.5% compared to 157.5 Dr. Changli Wang, Hollysys' Chairman of the Board and CEO, stated, "We are very pleased to report a solid fiscal 2010 annual result, culminated by the fourth quarter of strong financial and operational results, amid some of the difficulties we overcame during the year. Our financials demonstrated the continuous trend of revenues and earnings growth on a year-over-year basis, and our record-breaking backlog balance and strong sales pipeline indicated our strong operational status going into the new fiscal year. Most important of all, Hollysys is becoming a stronger and better company, not only from the market competitiveness perspective, but also from the corporate management perspective. I would like to discuss some of the key events that took place during this quarter." "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 $12.4 million Tai-Zhong-Yin Line in July 2010 is the result of our hard work and persistent efforts in the previous quarters. We were contracted to provide our ground based high-speed rail signaling system to the Phase I of Tai-Zhong-Yin Railway Line with 460 km in length and designed to travel at a speed of 200km/h. With the winning of this contract, it is not only a strong validation of Hollysys' state-of-the-art high-speed rail signaling system, most importantly, it marks our successful penetration into China's northwest region's high-speed rail market. With China's high-speed rail build-out expedites its pace towards 2012, Hollysys has successfully laid a solid foundation to capture its fair share in this unprecedented high-speed rail build-out. "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 Guangdong province is designed to have six one-gigawatt (GW) pressurized water reactors using CGNPC's proprietary CPR-1000 technology. With China's accelerated nuclear build-out in the coming years and our strategic alliance with the most leading nuclear station builder in China, our nuclear segment will contribute more to our margin and profit going forward." 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 Operational Results Analysis for the three months ended June 30, 2010For the three months ended June 30, 2010, total revenues increased by 25.9% to $56.4 million, from $44.8 million in the comparable prior fiscal year period. Of the total revenues, revenue from integrated contracts increased by 26.9% to $53.0 million, compared to $41.8 million for the same period of the prior year. The Company's integrated contract revenue by segment was as followings: -- $24.0 million, or 45.3%, related to Industrial Automation & Control,
For the three months ended June 30, 2010, selling expenses were $3.1 million, compared to $2.3 million year over year, and was increased by $0.8 million, or 33.8%, which was mainly due to the Company's increased marketing activities. As a percentage of total revenues, selling expenses were 5.5% and 5.2% for the three months ended June 30, 2010 and 2009, respectively. General and administrative expenses, excluding non-cash stock-based compensation expense, were $4.5 million for the fourth quarter, representing an increase of $1.7 million, or 64.0%, compared to $2.8 million for the same period of last year. The increase is consisted of $1.3 million in bad debt allowance and $0.7 million in provision for fixed assets. Including the non-cash stock compensation cost recorded on a GAAP basis, G&A expenses were $4.6 million and $25.1 million for three months ended June 30, 2010 and 2009, respectively. Research and development expenses were $3.9 million for the three months ended June 30, 2010, compared to $3.6 million for the same period of last year. As a percentage of total revenue, R&D expenses were 6.8% and 8.0% for three months ended June 30, 2010 and 2009, respectively. For the fourth quarter ended June 30, 2010, the share of net gains of equity investees amounted to $3.3 million, of which $3.2 million was contributed by Beijing Techenergy Ltd., the 50/50 joint venture between Hollysys and China Guangdong Nuclear Power Corp. (CGNPC) that mainly engages in providing automation and control products and services to China's nuclear industry. For the three months ended June 30, 2010, non-GAAP net income attributable to Hollysys, excluding non-cash stock compensation cost, was $10.7 million, or $0.20 per diluted share based on 55 million shares outstanding. This represents an increase of $4.4 million, or 69.2%, over the $6.3 million, or $0.14 per share based on 46 million shares outstanding, reported in the prior year period. On a GAAP basis, net income attributable to Hollysys was $10.6 million, or $0.19 per diluted share based on 55 million shares outstanding, compared to net loss attributable to Hollysys of $16.0 million, or $(0.35) per diluted share based on 46 million shares outstanding, for the same period of the prior year. Operational Results Analysis for the fiscal year ended June 30, 201For the fiscal year 2010, total revenues increased by 10.5% to $174.1 million, from $157.5 million of the prior year. Of the total revenues, revenue from integrated contracts increased by 9.9% to $164.1 million, from $149.3 million for the prior fiscal year. The Company's integrated contract revenue by segment was as followings: -- $94.2 million, or 57.4%, related to Industrial Automation & Control, 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 $12.2 million, which increased by $2.2 million, or 21.3%, as compared to $10.0 million for the prior year. The increase is mainly due to increased marketing activities. As a percentage to total revenues, selling expenses were 7.0% and 6.4% for year ended June 30, 2010 and 2009, respectively. General and administrative expenses, excluding non-cash stock-based compensation expense, were $13.4 million, as compared to $9.4 million for the prior year, representing an increase of $4.0 million, or 42.1%. The increase is mainly consisted of $1.6 million in bad debt allowance, the increase of $1.2 million in staff salaries and bonus, and $0.7 million in provision for fixed assets. Including the non-cash stock compensation recorded on a GAAP basis, G&A expenses were $13.9 million and $49.0 million for fiscal years 2010 and 2009, respectively. Research and development expenses were $13.1 million for fiscal 2010, compared to $8.8 million for the prior year, with an increase of $4.2million, or 48.0%, which was mainly due to the increase in R&D staff. As a percentage to total revenue, R&D expenses were 7.5% and 5.6% for year ended June 30, 2010 and 2009, respectively. The share of net gains of equity investees amounted to $4.0 million for fiscal 2010, of which $2.9 million was contributed by Beijing Techenergy Ltd. For the fiscal year 2010, the non-GAAP net income excluding non-cash stock compensation cost was $30.7 million, or $0.59 per diluted share based on 52 million shares outstanding. This represents an increase of $5.0 million, or 19.4%, over the $25.7 million, or $0.57 per share based on 45 million shares outstanding, reported for the prior year. On a GAAP basis, net income attributable to Hollysys was $30.2 million, or $0.58 per diluted share based on 52 million shares outstanding, compared to net loss attributable to Hollysys of $13.9 million, or $(0.31) per diluted share based on 45 million shares outstanding, for the prior year. Backlog HighlightsHollysys' backlog as of June 30, 2010 was $252.9 million, compared to $242.3 million on March 31, 2010, and $188.9 million on June 30, 2009. The detailed breakdown of the backlog by segment is as followings: (In USD million) Cash Flow HighlightsHollysys generated operating cash flow of $1.8 million and $30.1 million for the three months and the fiscal year ended June 30, 2010 respectively. Including investing and financing activities, the total net cash outflow for the three months ended June 30, 2010 was $0.4 million. For the fiscal year ended June 30, 2010, the total cash outflow was $9.4 million including investing and financing activities, mainly due to the usage of $9.7 million to acquire the 25.89% minority interests of Beijing Hollysys, in addition to the Company's cash inflow and outflow during the ordinary course of business. Balance Sheet HighlightsAs of June 30, 2010, Hollysys' cash and cash equivalents were $119.5 million, compared to $119.9 million on March 31, 2010, and $128.9 million on June 30, 2009. Days Sales Outstanding ("DSO") for fiscal 2010 is 140 days, reduced from 147 days for the prior year. Inventory turnover is 73 days for the year ended June 30 2010, as compared to 79 days the prior year. Outlook for FY 2011Dr. 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 China." Based on our operating results for fiscal 2010, we project our fiscal 2011 revenues to be in the range of USD 233M to USD 237M. We expect our fiscal 2011 non-GAAP net income to be in the range of USD 38M to USD 39M, which will translate into net income per share of USD 0.69 to USD 0.71, based on expected 55 million shares outstanding. Conference CallManagement will discuss the current status of the Company's operations during a conference call at 9:00 AM ET/9:00 PM Beijing time on Thursday, August 12, 2010. Interested parties may participate in the call by dialing the following numbers approximately 10 minutes before the call is scheduled to begin and ask to be connected to the Hollysys Automation Technologies conference call. The conference call identification number is 90847140. 1-866-519-4004 (USA) 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/120810.zip About Hollysys Automation Technologies, Ltd.Hollysys Automation Technologies is a leading provider of automation and control technologies and applications in China that enables its diversified industry and utility customers to improve operating safety, reliability, and efficiency. Founded in 1993, Hollysys has approximately 2,300 employees with 9 sales centers and 13 service centers in 21 cities in China and serves over 1700 customers in the industrial, railway, subway & nuclear industries. Its proprietary technologies are applied in product lines including Distributed Control System (DCS) and Programmable Logic Controller (PLC) for industrial sector, high-speed railway signaling system of TCC (Train Control Center) and ATP (Automatic Train Protection), subway supervisory and control platform (SCADA), and nuclear conventional island automation and control system. For further information, please contact: Hollysys Automation Technologies, Ltd. Jennifer Zhang Or Ling Zhang You can also fill in this enquiry form and our personnel will contact you as soon. HOLLYSYS AUTOMATION TECHNOLOGIES LTD. 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. |
| Last Updated ( Wednesday, 10 November 2010 14:45 ) |
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