Hollysys, one of two Chinese automation companies to be known on the greater stage outside of China, has reported its financials.
In the bad old days, we used to divide sales, and sales goals, into US (or Europe) and ROW. ROW stood for “rest of world.” Automation companies based in the US (or in Europe) generally did roughly 80% of their business in the home country, and around 20% in ROW. Any automation company that is of any size that still does that revenue split is doomed, dying, or already dead.
We always said that if the ROW ever got any money to invest in automation, they’d be ripe pickings and all we had to do was to get over there and participate in the great shower of money that was sure to come over us.
Not.
What actually happened was, as most companies were waiting it out, some foresighted majors, like Emerson, Siemens, ABB, Endress+Hauser, Krohne, and Rockwell among others, moved in…only to find that there were, especially in China and India, homegrown automation companies that were making and selling products and doing quite well.
Hollysys is one of those companies. You can see from their results that they’ve done well, and managed to be competitive against the major global companies.
What Hollysys has not managed to do, mostly, is to find out how to sell outside Greater China and to some extent Brazil. When they do, the rest of the world (imagine how fast that particular worm turned!!) will find them a fierce competitor.
PRESS RELEASE
Feb. 17, 2014, 5:00 p.m. EST
Hollysys Automation Technologies Reports Unaudited Financial Results for Fiscal Year 2014 Second Quarter Ended on December 31, 2013
Hollysys Automation Technologies, Ltd. HOLI +9.50% (“Hollysys” or the “Company”), a leading provider of automation and control technologies and applications in China, today announced its unaudited financial results for the fiscal year 2014 second quarter ended on December 31, 2013 (see attached tables).
Q2 Financial Highlights
Quarterly revenues of $153.4 million, representing an increase of 75.9% compared to $87.2 million year over year, and an increase of 35.5% compared to $113.2 million quarter over quarter.
Gross margin at 31.0%, as compared to 32.1% year over year, and 35.7% quarter over quarter.
Non-GAAP net income attributable to Hollysys of $25.9 million, a 90.7% increase compared to $13.6 million year over year, and a 27.4% increase compared to $20.4 million quarter over quarter.
Non-GAAP Diluted EPS at $0.45 reported for the quarter, as compared to $0.24 year over year, and $0.35 quarter over quarter.
Backlog of $503.3 million as of December 31, 2013, a 40.0% increase compared to $359.6 million year over year, and 2.4% decrease compared to $515.9 million quarter over quarter.
Quarterly DSO of 156 days, as compared to 161 days year over year, and 175 days quarter over quarter.
Inventory turnover days of 27 days for the current quarter compared to 42 days year over year, and 43 days quarter over quarter.
The total amount of cash and cash equivalents and time deposits with original maturities over three months were $150.1 million as of the current quarter end.
The management of Hollysys stated: “We are very excited to report a solid financial and operational result for the second quarter of this fiscal year, here I would like to discuss some key events during this quarter:
“During this quarter, we insisted in executing our strategies to vertically penetrate in the high-end industrial automation market and improve our market share in mid to low end markets, and to horizontally explore the potentials of each customer to supply entire automation and control solutions and service leveraging our complete and mature products and platforms. Both new orders and revenue of industrial automation delivered strong growth, there were satisfied achievements in some particular industries, for instance, thermal power, chemical, petrol chemical, cement, metallurgy and etc. Going forward, we believe that we will increase our overall market share in the industrial automation, nurture and quickly take commanding height in our new businesses leveraging our advanced technologies, experienced professionals, profound industry expertise, and customization and innovation capability.
“In rail transportation, we have seen meaningful progress and consistent revenue contribution in high-speed rail signaling field. We are encouraged by the continuous contract wins to provide the Automatic Train Protection (ATP) equipment and system for 200-250km/h and 300-350km/h high-speed trains recently. Moreover, our proprietary ZPW-2000s Track Circuit was successfully applied in Beijing Xiaohongmen – Baiziwan trial railway line, and passed the trail operation examination by Beijing Railway Bureau. This will expand our products providing in the railway transportation market and will grow to be another revenue growth driver for Hollysys in the future. All in all, as a well-recognized rail signaling system provider, we are confident that with strong R&D capability, solid execution and reliable products, Hollysys will continue to penetrate China’s vast railway construction market and explore international opportunities.
“For the overseas industrial automation and rail transportation expansion, we are sending qualified and experienced engineers from China to overseas, and recruiting local engineers to expand our overseas team. With our proprietary technology, industry expertise and strong competitive advantages, together with our expanded local channels through Bond and Concord, we will continue to make exciting achievements in the international market in both industrial and rail transportation fields.”
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