Hollysys(HOLI) - 2024 Q3 - Quarterly Report

Financial Performance - Total revenues for the first half of fiscal year 2024 were $423.6 million, an increase of 2.1% compared to the prior year period[1]. - Gross margin for the first half was 31.9%, down from 36.1% in the prior year period[2]. - Net income attributable to Hollysys for the first half was$ 45.8 million, a decrease of 34.3% compared to the prior year period[2]. - Total revenues for the second quarter were $223.7 million, a decrease of 8.6% compared to the prior year period[3]. - Net income attributable to Hollysys for the second quarter was$ 14.1 million, a decrease of 70.7% compared to the prior year period[4]. - Total revenues for the six months ended December 31, 2023, were $423.6 million, a 2.0% increase from$ 414.8 million in the same period of the prior fiscal year[16]. - Gross margin decreased to 31.9% for the six months ended December 31, 2023, down from 36.1% in the same period of the prior fiscal year[16]. - Net income attributable to Hollysys was $45.8 million for the six months ended December 31, 2023, a decrease of 34.3% from$ 69.6 million in the same period of the prior fiscal year[20]. - Total net revenues for the three months ended December 31, 2023, were $223.723 million, a decrease of 8.3% compared to$ 244.731 million for the same period in 2022[38]. - Net income attributable to Hollysys Automation Technologies Ltd. for the three months ended December 31, 2023, was $14.139 million, down from$ 48.243 million in the prior year, a decline of 70.7%[38]. - The company reported a basic net income per share of $0.23 for the three months ended December 31, 2023, compared to$ 0.79 for the same period in 2022[38]. - Diluted earnings per share decreased to $0.74 for the six months ended December 31, 2023, down from$ 1.12 in the same period of the prior fiscal year[21]. Revenue Breakdown - Integrated solutions contracts revenue for the first half decreased by 0.6% to $330.2 million[15]. - Service revenue for the first half increased by 18.2% to$ 69.7 million[15]. - Revenue from integrated solutions contracts was $180.518 million, down from$ 188.929 million year-over-year[38]. - Revenue from services decreased to $33.803 million from$ 43.788 million, reflecting a decline of 22.8%[38]. - Gross profit from integrated solutions contracts for the three months ended December 2023 was $38,131 thousand, down from$ 58,178 thousand in the same period of 2022, a decrease of 34.5%[53]. - Non-GAAP gross profit from integrated solutions contracts for the three months ended December 2023 was $38,457 thousand, compared to$ 58,515 thousand in the same period of 2022, a decline of 34.2%[53]. Expenses - Selling expenses increased by $7.0 million, or 24.2%, to$ 36.1 million for the six months ended December 31, 2023, compared to $29.0 million for the same period of the prior fiscal year[17]. - General and administrative expenses decreased by$ 8.1 million, or 24.9%, to $24.4 million for the six months ended December 31, 2023[18]. - Research and development expenses increased by$ 8.8 million, or 23.4%, to $46.6 million for the six months ended December 31, 2023[19]. - Research and development expenses increased to$ 28.270 million from $20.431 million, reflecting a rise of 38.5% year-over-year[38]. - Total operating expenses for the three months ended December 31, 2023, were$ 52.241 million, compared to $48.993 million in the same period last year, an increase of 2.5%[38]. Cash Flow and Assets - Total net cash inflow for the six months ended December 31, 2023, was$ 135.3 million, with net cash provided by operating activities at $88.3 million[32]. - Total current assets increased to$ 1,561,350 thousand as of December 31, 2023, up from $1,500,001 thousand as of September 30, 2023, representing a growth of approximately 4.3%[42]. - Cash and cash equivalents increased to$ 747,507 thousand as of December 31, 2023, from $650,413 thousand as of September 30, 2023, reflecting a growth of approximately 14.9%[42]. - Total liabilities rose to$ 605,465 thousand as of December 31, 2023, compared to $565,761 thousand as of September 30, 2023, indicating an increase of about 7%[43]. - Total stockholder's equity reached$ 1,242,466 thousand as of December 31, 2023, up from $1,199,767 thousand as of September 30, 2023, representing an increase of approximately 3.6%[44]. - The company’s total assets increased to$ 1,848,900 thousand as of December 31, 2023, from $1,766,488 thousand as of September 30, 2023, indicating a growth of approximately 4.6%[44]. - Accounts receivable, net of allowance for credit losses, increased to$ 352,399 thousand as of December 31, 2023, from $308,788 thousand as of September 30, 2023, reflecting a growth of about 14.1%[42]. Contracts and Projects - Hollysys signed a contract for a 60,000-ton energy grade titanium material intelligent manufacturing control platform project[9]. - The company won the bid for the power supply system project of Jurong Regional Line in Singapore[12]. - The company has cumulatively completed over 45,000 projects for approximately 23,000 customers across various sectors as of June 30, 2023[35]. - Hollysys continues to focus on enhancing operational safety and efficiency through its proprietary technology and integrated automation solutions[35]. Non-GAAP Measures - The company utilized non-GAAP financial measures to provide additional insights into its operating performance, which include non-GAAP net income and gross profit metrics[47]. - Non-GAAP gross margin for the three months ended December 2023 was 29.7%, compared to 39.7% for the same period in 2022, reflecting a decline of 10 percentage points[51]. - Non-GAAP net income attributable to Hollysys for the three months ended December 2023 was$ 14,551 thousand, down from $49,520 thousand in the same period of 2022, a decline of 70.7%[55]. - Non-GAAP basic earnings per share for the three months ended December 2023 was$ 0.23, down from $0.81 in the same period of 2022, a decline of 71.6%[57].