Hollysys Automation Technologies Reports Unaudited Financial Results for the Fiscal Year and the Fourth Quarter Ended June 30, 2017

BEIJING, Aug 14, 2017

Fiscal Year 2017 Financial Highlights

• Non-GAAP net income attributable to Hollysys was $70.1 million, a decrease of 42.3% compared to the comparable prior year period.
• Total revenues were $431.9 million, a decrease of 20.6% compared to the comparable prior year period.
• Non-GAAP gross margin was at 32.7%, compared to 37.9% for the comparable prior year period.
• Non-GAAP diluted EPS were at $1.16, a decrease of 42.6% compared to the comparable prior year period.
• Net cash provided by operating activities was $69.8 million for the current year.
• DSO of 201 days, compared to 162 days for the comparable prior year period.
• Inventory turnover days of 51 days, compared to 38 days for the comparable prior year period.

Fourth Quarter of Fiscal Year 2017 Financial Highlights

• Non-GAAP net income attributable to Hollysys was $22.6 million, a decrease of 34.0% compared to the comparable prior year period.
• Total revenues were $138.0 million, a decrease of 6.6% compared to the comparable prior year period.
• Non-GAAP gross margin was at 39.1%, compared to 39.9% for the comparable prior year period.
• Non-GAAP diluted EPS were at $0.37, a decrease of 35.1% compared to the comparable prior year period.
• Net cash provided by operating activities was $23.8 million for the current quarter.
• DSO of 153 days, compared to 146 days for the comparable prior year period.
• Inventory turnover days of 50 days, compared to 37 days for the comparable prior year period.

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 the fiscal year 2017 and the fourth quarter ended on June 30, 2017 (see attached tables). The management of Hollysys, stated:

Industrial automation presented signal of stabilization starting from the second half of the fiscal year. Our third quarter revenue achieved year-on-year growth for the first time in the last two years, recorded at 0.1%, The growth went further up to 6.5% in the fourth quarter, driving fiscal year revenue decline down to single digit while new contracts was recovering. Performance in power remained prominent. We signed contracts to provide products for large power units, including Sichuan Jiangyou 2X1000MW power units, Xinjiang East Hope 4X660MW power units, Guohua Yongzhou 2X1000MW power units, and Datang Pingluo 2X660MW power units. In chemical, several major contracts we signed include DCS and SIS contract for the polysilicon of Xinjiang East Hope Company, DCS and Batch contract for ASIA CUANON in its Waterborne Coatings Project and DCS, AMS and SIS contract for Bosheng Clean Energy Company. In nuclear, we continued to provide products for Tianwan, Fangchenggang and Hongyanhe Nuclear Stations.

In Factory automation, under the transition from an equipment provider to be a total solution provider, we are developing demonstration projects whose practice and model can be transferrable for future application in related industries. We are currently running testing projects for some renowned domestic enterprises, including an automation-and-intelligence boosting project for Haier's Tianjin-based and Qingdao-based wash machine factories, and another project for Hai Di Lao, the famous hot pot chain, to improve efficiency in hot pot base material making.

In high-speed railway, a flat fourth quarter performance was not enough to offset the 48% decline accumulated in the first three quarters. Weakness persisted throughout the year. Limited completion of newly planned railway infrastructure in the early years of the 13^th five-year-plan coupled with change in customer procurement timeline present unfavorable short-term outlook and rendered uncertainties and volatilities in the performance of ATP contracts. For ground-based control, we signed contracts to provide TCC to Jinan-Qingdao Line, Haerbin-Jiamusi Line and Jiujingqu Line. For subway, we adhered to the expansion strategy, winning new SCADA contracts in more cities, such as Wuhan Line 21 and Dalian intercity line (from Jinzhou to Pulandianwan).Even with short-term uncertainty, however, outlook for our rail business in the long run remains positive. National mid and long term plan for the high-speed railway describes a sizable market, while we are paying adequate attention to after sale and replacement demand and expanding our products range.