Highway Holdings (NASDAQ:HIHO) reported a steep decline in revenue and profitability for the second quarter of fiscal 2026 as customer disruptions and product transitions weighed on results, pushing the company into a quarterly loss.
Net sales fell to $1.18 million, down from $2.11 million a year earlier, while the company posted a net loss of $0.37 million, or $0.08 per diluted share, reversing last year’s $0.23 million profit.
Management attributed the downturn primarily to an OEM customer’s plant reorganization, which reduced electric motor revenue, coupled with an early production ramp for a next-generation motor product.
Profitability was also pressured by lower margins.
Gross profit dropped to $0.30 million, representing 25.5% of sales, compared with $0.83 million, or 39.4%, in the prior-year quarter.
For the first six months of fiscal 2026, gross profit totaled $0.83 million (30.4%), down from $1.50 million (37.4%).
Operating expenses rose as SG&A climbed to $0.84 million in the quarter, further constraining results.
Despite the earnings decline, Highway Holdings ended the period with more than $5.6 million in cash and cash equivalents, equal to roughly $1.21 per diluted share.
Total assets were $8.37 million, and shareholders’ equity stood at $6 million, or about $1.30 per diluted share.
Management said a recently returning gaming customer placed orders that should benefit future quarters, while workforce reductions at its Myanmar facility were implemented to control costs.
The company also highlighted ongoing efforts in M&A exploration and diversification away from the China market, signaling a strategic push to stabilize long-term revenue streams.
Highway Holdings manufactures a range of mechanical and electromechanical components for global OEMs.