First Nine Months of Fiscal Year 2024 Financial Highlights Total revenues were $597.1 million, an increase of 2.5% compared to the comparable prior year period. Gross margin was 31.0%, compared to 33.4% for the comparable prior year period. Non-GAAP gross margin was 31.2%, compared to 33.6% for the comparable prior year period. Net income attributable to Hollysys was $49.7 million, a decrease of 38.8% compared to the comparable prior year period. Non-GAAP net income attributable to Hollysys was $51.0 million, a decrease of 40.1% compared to the comparable prior year period.  Diluted earnings per share was $0.80, a decrease of 38.9% compared to the comparable prior year period. Non-GAAP diluted earnings per share was $0.82, a decrease of 40.1% compared to the comparable prior year period. Net cash provided by operating activities was $50.9 million. Days sales outstanding ("DSO") was 151 days, compared to 151 days for the comparable prior year period. Inventory turnover days were 79 days, compared to 78 days for the comparable prior year period. Third Quarter of Fiscal Year 2024 Financial Highlights Total revenues were $173.5 million, an increase of 3.5% compared to the comparable prior year period. Gross margin was 28.9%, compared to 26.8% for the comparable prior year period. Non-GAAP gross margin was 29.1%, compared to 27.0% for the comparable prior year period. Net income attributable to Hollysys was $3.9 million, a decrease of 66.2% compared to the comparable prior year period. Non-GAAP net income attributable to Hollysys was $4.2 million, a decrease of 66.6% compared to the comparable prior year period. Diluted earnings per share was $0.06, a decrease of 68.4% compared to the comparable prior year period. Non-GAAP diluted earnings per share was $0.07, a decrease of 65.0% compared to the comparable prior year period. Net cash used in operating activities was $37.4 million. DSO was 183 days, compared to 176 days for the comparable prior year period. Inventory turnover days were 84 days, compared to 87 days for the comparable prior year period. See the section entitled "Non-GAAP Measures" for more information about non-GAAP gross margin, non-GAAP net income attributable to Hollysys and non-GAAP diluted earnings per share. BEIJING, May 16, 2024 /PRNewswire/ -- Hollysys Automation Technologies Ltd. (NASDAQ:HOLI) ("Hollysys," the "Company" or "we"), a leading provider of automation and control technologies and applications in China, today announced its unaudited financial results for the third quarter and the first nine months of fiscal year 2024 ended March 31, 2024. In this fiscal quarter, Hollysys overcame numerous challenges and achieved remarkable breakthroughs. Leveraging its years of technological strength, the Company was recognized as one of the Top 50 Brands in China's Automation and Digitalization Industry for 2024. Additionally, the Company was successfully named in the first batch in the classification and grading assessment for intelligent manufacturing system solution providers, receiving AAA-level rating for integrated implementation. The Company was also honored with the titles of "Enterprise of the Year 2023 in China's Automation Field" and "2023 Beijing Benchmark Enterprise for Digital Empowerment." Furthermore, the Company secured national high-tech enterprise accreditation for the sixth consecutive times in this quarter, which demonstrates its innovation capabilities. In the Industrial Automation segment, the Company successfully collaborated with a subsidiary of Ansteel Group to carry out the retrofit and upgrade of a 2*2.4 million tons coal pelletizing DCS/IODS project, providing multiple products including the MACS V6 series DCS controller. This project achieved independent control and intelligent transformation of the pelletizing production process control in the iron and steel industry. Meanwhile, the Company successfully supported the grid-connected power generation project of a 300-megawatt compressed air energy storage power station in China, which was designated as a national pilot demonstration for new energy storage. In this project, the Company utilized its key product K-series hardware for the core expander control system and designed Automatic Power Plant Startup and Shutdown System with outstanding advantages such as simple operation, high reliability, strong safety, and convenient start-stop, to accommodate frequent startup and shutdown conditions. This project innovatively integrated Hollysys' diverse range of superior products, showcasing the exceptional compatibility and operability between Hollysys products. The Company also successfully signed a contract within the food and pharmaceutical sectors to undertake the integrated intelligent management and control project for an ampicillin workshop. The Company will provide its HiaPlant intelligent factory solution, which encompassed an integrated intelligent management and control system including instrumentation, Distributed Control System (DCS), Intelligent Operating Data System (IODS), Operator Training Simulator (OTS), among others, aiming to achieve the overall intelligence of the project. Additionally, the Company will also adopt the Industrial Optical Bus Control System (OCS) based on the actual situation of the client, which is expected to effectively save total cost, significantly reduce the cabinet space, and ensure the safety and reliability of the production process. In the Rail Transportation Automation segment, the Company continued to promote the innovation and integration of new technologies and industries, and foster diverse cooperation mechanisms to promote the high-quality development of the rail transit industry. Meanwhile, the Company's technological strength gained recognition in the industry. In this fiscal quarter, Hollysys was certified with International Railway Industry Standard (IRIS) silver level. Notably, the scientific and technological achievements of "ZPW-2000S Track Circuit contactless key technology research and high-altitude engineering application" won the First Prize of the Science and Technology Progress Award. Additionally, the "research and demonstration application of key technologies of urban rail transit cloud edge computing platform" was awarded the Second Prize of 2023 Urban Rail Transit Science and Technology Progress Award. In the high-speed rail sector, the Company signed the contract for the train control project of the new-build Xiangyang-Jingmen high-speed railway, providing Train Control Center (TCC), Lineside Electronic Unit (LEU), and safety data network for the project. The project presents great significance for the Company in terms of sustainable development, enabling it to introduce other projects for expansion and renovation in the future. In addition, the full site testing of the first station of the Ziyang Rail Transit Line, in which the Company participated, achieved phased results. The Company provided Integrated Supervisory Control System (ISCS), Building Automation System (BAS), Supervisor Control and Data Acquisition (SCADA), communication systems and so forth for the project. In the mechanical and electrical solutions ("M&E") segment, the Company achieved stable performance with smooth executions on various projects. With the Company's continuous dedication to the industry and the support of experienced and passionate experts, Hollysys believes that it will continue to create greater value for clients and shareholders. Third Quarter and the First Nine months Ended March 31, 2024 Unaudited Financial Results Summary   (In USD thousands, except for %, number of shares and per share data) Three months ended March 31, Nine months ended March 31, 2024 2023 % Change 2024 2023 % Change Revenues $ 173,466 167,636 3.5 % $ 597,090 582,410 2.5 %     Integrated solutions contracts $ 138,455 139,149 (0.5) % $ 468,674 471,204 (0.5) %     Products sales $ 16,474 10,386 58.6 % $ 40,195 34,174 17.6 %     Service rendered $ 18,537 18,101 2.4 % $ 88,221 77,032 14.5 % Cost of revenues $ 123,343 122,641 0.6 % $ 411,779 387,727 6.2 % Gross profit $ 50,123 44,995 11.4 % $ 185,311 194,683 (4.8) % Total operating expenses $ 47,404 33,973 39.5 % $ 134,569 119,269 12.8 %     Selling $ 15,470 14,577 6.1 % $ 51,524 43,615 18.1 %     General and administrative $ 22,771 11,921 91.0 % $ 47,165 44,394 6.2 %     Research and development $ 19,287 15,662 23.1 % $ 65,912 53,452 23.3 %     VAT refunds and government subsidies $ (10,124) (8,187) 23.7 % $ (30,032) (22,192) 35.3 % Income from operations $ 2,719 11,022 (75.3) % $ 50,742 75,414 (32.7) % Other income, net $ 1,139 1,626 (30.0) % $ 836 2,748 (69.6) % Foreign exchange gain (loss) $ 207 (1,244) (116.6) % $ (847) 2,280 (137.1) % Impairment loss of investments in securities $ - - - $ (69) - - Share of net (loss) income of equity     investees $ (912) 690 (232.2) % $ (614) 2,355 (126.1) % Gains on disposal of an investment in     securities $ - - - $ - 845 (100.0) % Interest income $ 3,675 2,941 25.0 % $ 10,343 9,020 14.7 % Interest expenses $ (704) (252) 179.4 % $ (1,435) (621) 131.1 % Income tax expenses $ 2,320 3,188 (27.2) % $ 9,444 10,694 (11.7) % Net (loss) income attributable to non-    controlling interests $ (105) 27 (488.9) % $ (177) 136 (230.1) % Net income attributable to Hollysys     Automation Technologies Ltd. $ 3,909 11,568 (66.2) % $ 49,689 81,211 (38.8) % Basic earnings per share $ 0.06 0.19 (68.4) % $ 0.80 1.32 (39.4) % Diluted earnings per share $ 0.06 0.19 (68.4) % $ 0.80 1.31 (38.9) % Share-based compensation expenses $ - 672 (100.0) % $ 348 2,849 (87.8) % Amortization of acquired intangible assets $ 290 340 (14.7) % $ 937 1,017 (7.9) % Non-GAAP net income attributable to     Hollysys Automation Technologies Ltd.(1) $ 4,199 12,580 (66.6) % $ 50,974 85,077 (40.1) % Non-GAAP basic earnings per share(1) $ 0.07 0.20 (65.0) % $ 0.82 1.38 (40.6) % Non-GAAP diluted earnings per share(1) $ 0.07 0.20 (65.0) % $ 0.82 1.37 (40.1) % Basic weighted average number of ordinary     shares outstanding 62,127,607 61,595,286 0.9 % 61,987,252 61,449,939 0.9 % Diluted weighted average number of     ordinary shares outstanding 62,426,784 62,127,557 0.5 % 62,312,957 62,015,929 0.5 % (1) See the section entitled "Non-GAAP Measures" for more information about these non-GAAP measures.   Operational Results Analysis for the Third Quarter Ended March 31, 2024 Total revenues for the three months ended March 31, 2024 were $173.5 million, as compared to $167.6 million for the same period of the prior fiscal year, representing an increase of 3.5%. In terms of revenues by type, integrated contracts revenue decreased by 0.5% to $138.5 million, products sales revenue increased by 58.6% to $16.5 million, and services revenue increased by 2.4% to $18.5 million. The following table sets forth the Company's total revenues by segment for the periods indicated.   (In USD thousands, except for %) Three months ended March 31, Nine months ended March 31, 2024 2023 2024 2023 $ % of Total Revenues $ % of Total Revenues $ % of Total Revenues $ % of Total Revenues Industrial Automation 117,361 67.6 112,407 67.0 369,764 61.9 365,183 62.7 Rail Transportation 39,998 23.1 36,197 21.6 164,333 27.5 153,265 26.3 Mechanical and Electrical Solution 16,107 9.3 19,032 11.4 62,993 10.6 63,962 11.0 Total 173,466 100.0 167,636 100.0 597,090 100.0 582,410 100.0   Gross margin was 28.9% for the three months ended March 31, 2024, as compared to 26.8% for the same period of the prior fiscal year. The overall gross margin fluctuated, as the gross margin for integrated solutions contracts varied. Gross margin of integrated solutions contracts, product sales, and service rendered was 18.9%, 75.3% and 62.4% for the three months ended March 31, 2024, respectively, as compared to 18.3%, 69.5% and 68.3% for the same period of the prior fiscal year. Non-GAAP gross margin was 29.1% for the three months ended March 31, 2024, as compared to 27.0% for the same period of the prior fiscal year. Non-GAAP gross margin of integrated solutions contracts was 19.1% for the three months ended March 31, 2024, as compared to 18.5% for the same period of the prior fiscal year. See the section entitled "Non-GAAP Measures" for more information about non-GAAP gross margin and non-GAAP gross margin of integrated solutions contracts. Selling expenses were $15.5 million for the three months ended March 31, 2024, representing an increase of $0.9 million, or 6.1%, compared to $14.6 million for the same period of the prior fiscal year. Selling expenses as a percentage of total revenues were 8.9% and 8.7% for the three months ended March 31, 2024 and 2023, respectively. General and administrative expenses were $22.8 million for the quarter ended March 31, 2024, representing an increase of $10.9 million, or 91.0%, compared to $11.9 million for the same period of the prior fiscal year. The increase was primarily attributable to a $6.9 million increase in third-party consulting fees and a $2.6 million increase in credit losses. General and administrative expenses as a percentage of total revenues were 13.1% and 7.1% for the three months ended March 31, 2024 and 2023, respectively.  Research and development expenses were $19.3 million for the three months ended March 31, 2024, representing an increase of $3.6 million, or 23.1%, compared to $15.7 million for the same period of the prior fiscal year, which was primarily due to a $3.7 million increase in labor cost for the increase in research and development staff for strategic technological innovation. Research and development expenses as a percentage of total revenues were 11.1% and 9.3% for the three months ended March 31, 2024 and 2023, respectively. The VAT refunds and government subsidies were $10.1 million for three months ended March 31, 2024, as compared to $8.2 million for the same period of the prior fiscal year, representing a $1.9 million, or 23.7%, increase. The income tax expenses and the effective tax rate were $2.3 million and 37.9% for the three months ended March 31, 2024, respectively, as compared to $3.2 million and 21.6% for comparable period in the prior fiscal year, respectively. The effective tax rate fluctuates, as the Company's subsidiaries contributed different pre-tax income at different tax rates. Net income attributable to Hollysys was $3.9 million, representing a decrease of 66.2% from $11.6 million reported in the comparable period in the prior fiscal year. Non-GAAP net income attributable to Hollysys, was $4.2 million or $0.07 per diluted share. See the section entitled "Non-GAAP Measures" for more information about non-GAAP net income attributable to Hollysys. Diluted earnings per share was $0.06 for the three months ended March 31, 2024, a decrease of 68.4% from $0.19 reported in the comparable period in the prior fiscal year. Non-GAAP diluted earnings per share was $0.07 for the three months ended March 31, 2024, a decrease of 65.0% from $0.20 reported in the comparable period in the prior fiscal year. These were calculated based on 62.4 million and 62.1 million diluted weighted average ordinary shares outstanding for the three months ended March 31, 2024 and 2023, respectively. See the section entitled "Non-GAAP Measures" for more information about non-GAAP diluted earnings per share. Contracts and Backlog Highlights Hollysys achieved $240.4 million of value of new contracts for the three months ended March 31, 2024. Order backlog of contracts presents the amount of unrealized revenue to be earned from the contracts that Hollysys won. The backlog was $992.2 million as of March 31, 2024. The following table sets forth a breakdown of the value of new contracts achieved and backlog by segment.   (In USD thousands, except for %) Value of new contracts achieved Backlog for the three months  ended March 31, 2024 as of March 31, 2024 $ % of Total Contract Value $ % of Total Backlog Industrial Automation 183,941 76.5 412,094 41.5 Rail Transportation 34,158 14.2 393,073 39.6 Mechanical and Electrical Solutions 22,328 9.3 187,053 18.9 Total 240,427 100.0 992,220 100.0   Cash Flow Highlights For the three months ended March 31, 2024, the total net cash outflow was $50.0 million. The net cash used in operating activities was $37.4 million. The net cash used in investing activities was $6.5 million, mainly consisting of $1.5 million purchases of short-term investments and $4.9 million purchases of property, plant and equipment. The net cash provided by financing activities was $2.2 million, mainly consisting of $2.3 million proceeds from long-term bank loans. Balance Sheet Highlights The total amount of cash and cash equivalents were $697.9 million, $747.5 million, and $640.2 million as of March 31, 2024, December 31, 2023, and March 31, 2023, respectively. For the three months ended March 31, 2024, DSO was 183 days, as compared to 176 days for the comparable period of prior fiscal year and 138 days for the last fiscal quarter; inventory turnover days were 84 days, as compared to 87 days for the comparable period of prior fiscal year and 68 days for the last fiscal quarter. About Hollysys Automation Technologies Ltd. Hollysys is a leading automation control system solutions provider in China, with overseas operations in eight other countries and regions throughout Asia. Leveraging its proprietary technology and deep industry know-how, Hollysys empowers its customers with enhanced operational safety, reliability, efficiency, and intelligence which are critical to their businesses. Hollysys derives its revenues mainly from providing integrated solutions for industrial automation and rail transportation automation. In industrial automation, Hollysys delivers the full spectrum of automation hardware, software, and services spanning field devices, control systems, enterprise manufacturing management and cloud-based applications. In rail transportation automation, Hollysys provides advanced signaling control and SCADA (Supervisory Control and Data Acquisition) systems for high-speed rail and urban rail (including subways). Founded in 1993, with technical expertise and innovation, Hollysys has grown from a research team specializing in automation control in the power industry into a group providing integrated automation control system solutions for customers in diverse industry verticals. As of June 30, 2023, Hollysys had cumulatively carried out more than 45,000 projects for approximately 23,000 customers in various sectors including power, petrochemical, high-speed rail, and urban rail, in which Hollysys has established leading market positions. SAFE HARBOR STATEMENTS 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 ...