Hollysys Automation Technologies (HOLI) 6-K Hollysys Automation Technologies Reports Unaudited

Exhibit 99.1

FOR IMMEDIATE RELEASE

Hollysys Automation Technologies Reports Unaudited

Financial Results for the Second Quarter and the First Half Year Ended December 31, 2021

First Half of Fiscal Year 2022 Financial Highlights

• Total revenues were $369.6 million, an increase of 13.8% compared to the comparable prior year period.

• Gross margin was 35.3%, compared to 36.1% for the comparable prior year period. Non-GAAP gross margin was 35.4%, compared to 36.1% for the comparable prior year period.

• Net income attributable to Hollysys was $44.3 million, a decrease of 14.6% compared to the comparable prior year period. Non-GAAP net income attributable to Hollysys was $51.3 million, a decrease of 3.3% compared to the comparable prior year period.

• Diluted earnings per share was $0.72, a decrease of 16.3% compared to the comparable prior year period. Non-GAAP diluted earnings per share was $0.83, a decrease of 4.6% compared to the comparable prior year period.

• Net cash provided by operating activities was $51.1 million.

• Days sales outstanding (“DSO”) of 173 days, compared to 163 days for the comparable prior year period.

• Inventory turnover days of 48 days, compared to 41 days for the comparable prior year period.

Second Quarter of Fiscal Year 2022 Financial Highlights

• Total revenues were $216.3 million, an increase of 10.7% compared to the comparable prior year period.

• Gross margin was 36.1%, compared to 37.7% for the comparable prior year period. Non-GAAP gross margin was 36.2%, compared to 37.7% for the comparable prior year period.

• Net income attributable to Hollysys was $30.1 million, a decrease of 4.1% compared to the comparable prior year period. Non-GAAP net income attributable to Hollysys was $33.1 million, an increase of 2.9% compared to the comparable prior year period.

• Diluted earnings per share was $0.49, a decrease of 3.9% compared to the comparable prior year period. Non-GAAP diluted earnings per share was $0.54, an increase of 1.9% compared to the comparable prior year period.

• Net cash provided by operating activities was $29.3 million.

• DSO of 147 days, compared to 142 days for the comparable prior year period.

• Inventory turnover days of 50 days, compared to 40 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.

Hollysys Automation Technologies Ltd. March 15, 2022 Page 2

Beijing, China – March 15, 2022 – 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 second quarter and first half of fiscal year 2022 ended December 31, 2021. Dr. Changli Wang, the CEO and director of Hollysys, stated:

“We are very delighted to report another fiscal quarter with solid financial and operational performance against all external and internal odds. Amid a disturbing and unfavorable environment, Hollysys never forgot our vision of bringing people better lives, showed great solidarity, confidence and strength to all, especially when wrapped in sandpaper, and lived up to our mission and honor. Today, in a seemingly mundane moment, fate requires me to be here shouldering the responsibility of leading Hollysys to a widely shared expectation of a promising future. We will continue to demonstrate the classic Hollysys spirit, building up and adding value to the Company through larger market shares and penetration on pillar business units of industrial automation (“IA”) and rail transportation automation (“RTA”) and potential drives on possible new business segments like new energy, among others. There was a decrease in net income for the reporting period compared to that for the comparable prior year period, primary due to an increase in operating expenses, especially research and development expenses and general and administration expenses. However, we believe such investment in operating expenses will give more knowledge and insights for the Company to optimize its existing operation and achieve greater economies of scale in a long run.

Here I would like to take the opportunity to discuss the current situation of the Company and address a brief development strategy.

The Company is of high growing potential. After over a month’s discussion with colleagues from different levels and business units, a fact found is that Hollysys embraced various expertise from our competitors and our senior technicians have grown into capable specialists or managers with clear minds, distinct directions and glowing motivations over years. In addition, our research and development capability has been enhanced significantly. Furthermore, the current incentive plan and performance appraisal system are effective and encouraging. Externally, China is facing the challenges of an aging population tendency and achieving carbon peaking and carbon neutrality goals, which provides Hollysys with great developing opportunities and directions.

Based on the situations stated above, Hollysys mapped out developing strategy below. On IA business, we are initiating steps to extend aggressively by grasping the chance of market reshuffle with advantages of our exceptional and reliable solutions, sophisticated engineering work, competent personnel and national service network. Additionally, we are extending product lines down stream to hardware and upper stream to comprehensive integrated control platforms. On RTA business, we will sustain and fortify our market share in high speed rail, enrich product lines constantly, foster subway signaling for a further breakthrough, and promote application of new products of urban transportation. In new business segments, we intend to launch new energy related products and services after proper investigation and evaluation.

Hollysys Automation Technologies Ltd. March 15, 2022 Page 3

Then I would like to share some highlights and breakthrough the Company made in the first half of fiscal year 2022:

IA business continued its strong growth momentum with larger market shares. The Company keeps investment in research and development, aiming at users’ challenges, carries out technological innovation, and strives to meet the needs of users. In the first half of fiscal year 2022, for example, Hollysys launched a new product—Industrial Optical Bus Control System (“OCS”), and achieved a number of contract breakthroughs. The application of the technology can help customers greatly reduce project cost, cut construction period and improve maintenance efficiency. This not only created huge economic benefits for customers, but also saved lots of non-ferrous copper for the society and fulfilled goals of energy saving and emission reduction. The smooth implementation of the projects also creates conditions for the full promotion of OCS in 2022. At the same time, Hollysys launched a fully self-controllable Distributed Control System (“DCS”) to meet the increasing requirements of customers on reliability and security. In the first half of fiscal year 2022, such updated DCS system has been applied successfully in the project of 600MW power unit, the pipage of refined oil product, etc.

In the field of chemical and petrochemical industry, the Company has maintained its fast pace, which proves that its strategy of “vigorously developing chemical and petrochemical industry” is effective. In the first half of the fiscal year 2022, we gained a number of breakthrough projects, including signing a large scale oil refining project in Hainan. In addition, as of December 31, 2021, the Company has accumulated 38 offshore platform project orders, ranking first among domestic suppliers.

In our RTA business, we are excited about winning some key contracts. For example, we signed contracts to provide Automatic Train Protection (“ATP”) with automatic train operation function to the Pearl River Delta region and the contract to provide Supervisory Control and Data Acquisition (“SCADA”) system to Chengdu rail transit Line 30 Phase I. At the same time, the Company continues to offer various after-sales services, including software upgrading, spare parts sales, and maintenance and replacement services for high speed rail. Especially, in Hong Kong, we successfully entered into the second three-year maintenance contract with Mass Transit Railway Corporation Limited. In project delivery, several lines that we participated in went into operation, such as our track circuit which officially went into service, representing the first application of Hollysys track circuit on C2 high speed rail. Also, the first application of Hollysys subway signaling system in Kunming Changshui Airport Express went into full operation smoothly. In addition to boosting and exploring diversified development opportunities, the Company is also continuously promoting the incubation of innovative businesses. In the first half of the fiscal year 2022, both highway business and vocational education business have made remarkable progress. For example, in the field of vocational education, a comprehensive project of high-speed railway operation control drill field was signed with a railway vocational and technical college. In the field of highway, we signed the intelligent platform project of tunnel inspection and highway operation decision.

For overseas business, Thomson Line II in Singapore that the Company provided SCADA has been successfully put into operation. Under the threat of COVID-19, Hollysys project team worked unitedly to achieve the successful delivery of the project while ensuring personal safety and health, and won a very challenging and valuable award of the “Engineering Safety Excellence Award” 2021 from the Land Transport Authority of Singapore. Overall speaking, COVID-19 remains a challenge to the business unit of mechanical and electrical solutions and other overseas business. We will keep monitoring the impact of COVID-19, and risk control remains our key focus.

With our clear strategies, contentious dedication and experienced loyal expertise, we believe that we will continue to create greater value for our clients and shareholders.”

Hollysys Automation Technologies Ltd. March 15, 2022 Page 4

Second Quarter and First Half Year Ended December 31, 2021 Unaudited Financial Results Summary

(In USD thousands, except for %, number of shares and per share data)
	Three months ended December 31,									Six months ended December 31,
,	2021			2020			% Change			2021			2020			% Change
Revenues	$	216,251			195,328			10.7	%	$	369,636			324,795			13.8	%
Integrated solutions contracts revenue	$	166,505			142,468			16.9	%	$	291,068			248,174			17.3	%
Products sales	$	9,871			8,458			16.7	%	$	19,517			15,026			29.9	%
Service rendered	$	39,875			44,402			(10.2	)%	$	59,051			61,595			(4.1	)%
Cost of revenues	$	138,264			121,709			13.6	%	$	239,254			207,675			15.2	%
Gross profit	$	77,987			73,619			5.9	%	$	130,382			117,120			11.3	%
Total operating expenses	$	54,268			40,172			35.1	%	$	91,947			62,903			46.2	%
Selling	$	13,620			10,260			32.7	%	$	23,029			18,435			24.9	%
General and administrative	$	25,965			14,404			80.3	%	$	43,040			24,757			73.8	%
Research and development	$	20,611			18,620			10.7	%	$	36,660			28,601			28.2	%
VAT refunds and government subsidies	$	(5,928	)		(3,112	)		90.5	%	$	(10,782	)		(8,890	)		21.3	%
Income from operations	$	23,719			33,447			(29.1	)%	$	38,435			54,217			(29.1	)%
Other (expense) income, net	$	(9	)		1,545			(100.6	)%	$	959			2,774			(65.4	)%
Foreign exchange loss	$	(1,288	)		(3,345	)		(61.5	)%	$	(1,714	)		(5,668	)		(69.8	)%
Gains on disposal of investments in an equity investee	$	7,995			—			100.0	%	$	7,995			—			100.0	%
Share of net income of equity investees	$	774			2,768			(72.0	)%	$	986			4,659			(78.8	)%
Dividend income from equity investments	$	179			3			5866.7	%	$	179			3			5866.7	%
Interest income	$	3,323			2,922			13.7	%	$	6,183			6,720			(8.0	)%
Interest expenses	$	(22	)		(141	)		(84.4	)%	$	(366	)		(277	)		32.1	%
Income tax expenses	$	4,767			5,906			(19.3	)%	$	8,669			10,666			(18.7	)%
Net loss attributable to non-controlling interests	$	(167	)		(71	)		135.2	%	$	(341	)		(151	)		125.8	%
Net income attributable to Hollysys Automation Technologies Ltd.	$	30,071			31,364			(4.1	)%	$	44,329			51,913			(14.6	)%
Basic earnings per share	$	0.49			0.52			(5.8	)%	$	0.73			0.86			(15.1	)%
Diluted earnings per share	$	0.49			0.51			(3.9	)%	$	0.72			0.86			(16.3	)%
Share-based compensation expenses	$	2,713			763			255.6	%	$	6,306			938			572.3	%
Amortization of acquired intangible assets	$	353			79			346.8	%	$	632			155			307.7	%
Non-GAAP net income attributable to Hollysys Automation Technologies Ltd.(1)	$	33,137			32,206			2.9	%	$	51,267			53,006			(3.3	)%
Non-GAAP basic earnings per share(1)	$	0.54			0.53			1.9	%	$	0.84			0.88			(4.5	)%
Non-GAAP diluted earnings per share(1)	$	0.54			0.53			1.9	%	$	0.83			0.87			(4.6	)%
Basic weighted average number of ordinary shares outstanding		60,946,596			60,500,387			0.7	%		60,884,346			60,498,431			0.6	%
Diluted weighted average number of ordinary shares outstanding		61,682,393			60,933,785			1.2	%		61,556,602			60,693,633			1.4	%

(1) See the section entitled “Non-GAAP Measures” for more information about these non-GAAP measures.

Hollysys Automation Technologies Ltd. March 15, 2022 Page 5

Operational Results Analysis for the Second Quarter Ended December 31, 2021

Compared to the second quarter of the prior fiscal year, the total revenues for the three months ended December 31, 2021 increased from $195.3 million to $216.3 million, representing an increase of 10.7%. In terms of revenues by type, integrated contracts revenue increased by 16.9% to $166.5 million, products sales revenue increased by 16.7% to $9.9 million, and services revenue decreased by 10.2% to $39.9 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 December 31,								Six months ended December 31,
	2021				2020				2021				2020
	$		% of Total Revenue		$		% of Total Revenue		$		% of Total Revenue		$		% of Total Revenue
Industrial Automation		113,833		52.7		92,889		47.6		216,294		58.5		174,819		53.8
Rail Transportation Automation		79,411		36.7		81,269		41.6		115,346		31.2		109,965		33.9
Mechanical and Electrical Solution		23,007		10.6		21,170		10.8		37,996		10.3		40,011		12.3
Total		216,251		100.0		195,328		100.0		369,636		100.0		324,795		100.0

Gross margin was 36.1% for the three months ended December 31, 2021, as compared to 37.7% for the same period of the prior year. The gross margin fluctuated mainly due to product and service mix. Gross margin of integrated solutions contracts, product sales, and service rendered was 27.5%, 75.0% and 62.0% for the three months ended December 31, 2021, as compared to 27.9%, 85.6% and 59.8% for the same period of the prior year, respectively. Non-GAAP gross margin was 36.2% for the three months ended December 31, 2021, as compared to 37.7% for the same period of the prior year. Non-GAAP gross margin of integrated solutions contracts was 27.7% for the three months ended December 31, 2021, as compared to 28.0% for the same period of the prior 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 $13.6 million for the three months ended December 31, 2021, representing an increase of $3.3 million, or 32.7%, compared to $10.3 million for the same period of the prior year, which was primarily due to the significant increase of sales scale. Selling expenses as a percentage of total revenues were 6.3% and 5.3% for the three months ended December 31, 2021 and 2020, respectively.

General and administrative expenses were $26.0 million for the quarter ended December 31, 2021, representing an increase of $11.6 million or 80.3% compared to $14.4 million for the same quarter of the prior year, which was primarily due to a $7.3 million increase in credit losses and increased investments in strategic planning, internal management, compliance and corporate governance to improve the Company’s core competitiveness. Share-based compensation expenses were $2.7 million and $0.8 million for the three months ended December 31, 2021 and 2020, respectively. General and administrative expenses as a percentage of total revenues were 12.0% and 7.4% for the three months ended December 31, 2021 and 2020, respectively.

Hollysys Automation Technologies Ltd. March 15, 2022 Page 6

Research and development expenses were $20.6 million for the three months ended December 31, 2021, representing an increase of $2.0 million, or 10.7%, compared to $18.6 million for the same period of the prior year, which was primarily due to increased investments in R&D, including the upgrading of mainstream products and new products developed to meet the needs of the digital infrastructure market, such as the new generation DCS Macs V7, smart factory and smart city rail. Research and development expenses as a percentage of total revenues were 9.5% and 9.5% for the three months ended December 31, 2021 and 2020, respectively.

The VAT refunds and government subsidies were $5.9 million for three months ended December 31, 2021, as compared to $3.1 million for the same period in the prior year, representing a $2.8 million, or 90.5%, increase.

The income tax expenses and the effective tax rate were $4.8 million and 13.7% for the three months ended December 31, 2021, respectively, as compared to $5.9 million and 15.9% for comparable period in the prior 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 $30.1 million for the three months ended December 31, 2021, representing a decrease of 4.1% from $31.4 million reported in the comparable period in the prior year. Non-GAAP net income attributable to Hollysys, was $33.1 million or $0.54 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 $0.49 for the three months ended December 31, 2021, a decrease of 3.9% from $0.51 reported in the reported in the comparable period in the prior year. Non-GAAP diluted earnings per share was $0.54 for the three months ended December 31, 2021, an increase of 1.9% from $0.53 reported in the comparable period in the prior year. These were calculated based on 61.7 million and 60.9 million diluted weighted average ordinary shares outstanding for the three months ended December 31, 2021 and 2020. See the section entitled “Non-GAAP Measures” for more information about non-GAAP diluted earnings per share.

Contracts and Backlog Highlights

Hollysys achieved $278.8 million of value of new contracts for the three months ended December 31, 2021. Order backlog of contracts presents the amount of unrealized revenue to be earned from the contracts that Hollysys won. The backlog was $772.1 million as of December 31, 2021. The following table sets forth a breakdown of the value of new contracts achieved and backlog by segment.

Hollysys Automation Technologies Ltd. March 15, 2022 Page 7

(In USD thousands, except for %)
	Value of new contracts achieved for the three months ended December 31, 2021				Backlog as of December 31, 2021
	$		% of Total Contract Value		$		% of Total Backlog
Industrial Automation		92,989		33.3		308,882		40.0
Rail Transportation Automation		169,501		60.9		352,785		45.7
Mechanical and Electrical Solutions		16,294		5.8		110,418		14.3
Total		278,784		100.0		772,085		100.0

Cash Flow Highlights

For the three months ended December 31, 2021, the total net cash inflow was $11.4 million. The net cash provided by operating activities was $29.3 million. The net cash used in investing activities was $27.8 million, mainly consisting of $23.1 million purchases of short-term investments, $7.9 million purchases of property, plant and equipment, and $6.5 million acquisition of a subsidiary, partially offset by $9.5 million of receipts from collection of advances to equity investees.

Balance Sheet Highlights

The total amount of cash and cash equivalents were $715.5 million, $704.9 million, and $356.9 million as of December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

For the three months ended December 31, 2021, DSO was 147 days, as compared to 142 days for the comparable period in the prior year and 198 days for the last fiscal quarter; inventory turnover days were 50 days, as compared to 40 days for the comparable period in the prior year and 55 days for the last fiscal quarter.

Financial Performance Guidance

Based on information available as of the date of this press release, Hollysys provides the following financial performance guidance for the full fiscal year 2022:

• The total value of new contracts signed is expected to be between $770 million and $870 million, with a year-on-year increase of 5% to 18%.

• Revenue is expected to be between $625 million and $695 million, with a year-on-year increase of 5% to 17%.

Hollysys Automation Technologies Ltd. March 15, 2022 Page 8

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, 2021, Hollysys had cumulatively carried out more than 35,000 projects for approximately 20,000 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 business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “target,” “confident,” or similar expressions, involve known and unknown risks and uncertainties. Such forward-looking statements, based upon the current beliefs and expectations of Hollysys’ management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

For further information, please contact:

Hollysys Automation Technologies Ltd.

www.hollysys.com

+8610-58981386

investors@hollysys.com

Hollysys Automation Technologies Ltd. March 15, 2022 Page 9

HOLLYSYS AUTOMATION TECHNOLOGIES LTD.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In USD thousands except for number of shares and per share data)

	Three months ended December 31,						Six months ended December 31,
	2021			2020			2021			2020
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net revenues
Integrated solutions contracts revenue	$	166,505		$	142,468		$	291,068		$	248,174
Products sales		9,871			8,458			19,517			15,026
Revenue from services		39,875			44,402			59,051			61,595
Total net revenues		216,251			195,328			369,636			324,795
Costs of integrated solutions contracts		120,654			102,656			213,963			181,737
Cost of products sold		2,469			1,218			4,898			2,947
Costs of services rendered		15,141			17,835			20,393			22,991
Gross profit		77,987			73,619			130,382			117,120
Operating expenses
Selling		13,620			10,260			23,029			18,435
General and administrative		25,965			14,404			43,040			24,757
Research and development		20,611			18,620			36,660			28,601
VAT refunds and government subsidies		(5,928	)		(3,112	)		(10,782	)		(8,890	)
Total operating expenses		54,268			40,172			91,947			62,903
Income from operations		23,719			33,447			38,435			54,217
Other (expense) income, net		(9	)		1,545			959			2,774
Foreign exchange loss		(1,288	)		(3,345	)		(1,714	)		(5,668	)
Gains on disposal of an investment in an equity investee		7,995			—			7,995			—
Share of net income of equity investees		774			2,768			986			4,659
Dividend income from equity investments		179			3			179			3
Interest income		3,323			2,922			6,183			6,720
Interest expenses		(22	)		(141	)		(366	)		(277	)
Income before income taxes		34,671			37,199			52,657			62,428
Income taxes expenses		4,767			5,906			8,669			10,666
Net income		29,904			31,293			43,988			51,762
Net loss attributable to non-controlling interests		(167	)		(71	)		(341	)		(151	)
Net income attributable to Hollysys Automation Technologies Ltd.	$	30,071		$	31,364		$	44,329		$	51,913
Other comprehensive income, net of tax of nil
Translation adjustments		17,456			44,703			16,559			83,653
Comprehensive income		47,360			75,996			60,547			135,415
Less: comprehensive (loss) income attributable to non-controlling interests		(58	)		(28	)		(175	)		53
Comprehensive income attributable to Hollysys Automation Technologies Ltd.	$	47,418		$	76,024		$	60,722		$	135,362
Net income per ordinary share:
Basic		0.49			0.52			0.73			0.86
Diluted		0.49			0.51			0.72			0.86
Shares used in net income per share computation:
Basic		60,946,596			60,500,387			60,884,346			60,498,431
Diluted		61,682,393			60,933,785			61,556,602			60,693,633

Hollysys Automation Technologies Ltd. March 15, 2022 Page 10

HOLLYSYS AUTOMATION TECHNOLOGIES LTD.

CONSOLIDATED BALANCE SHEETS

(In USD thousands except for number of shares and per share data)

	Dec- 31, 2021		Sep- 30, 2021
	(Unaudited)		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	715,537	$	704,870
Short-term investments		34,769		11,578
Restricted cash		37,998		37,366
Accounts receivable, net of allowance for credit losses of $74,331 and $67,535 as of December 31, 2021 and September 30, 2021, respectively		359,816		326,264
Costs and estimated earnings in excess of billings, net of allowance for credit losses of $11,747 and $12,526 as of December 31, 2021 and September 30, 2021, respectively		222,480		211,892
Accounts receivable retention		6,219		5,670
Other receivables, net of allowance for credit losses of $16,335 and $16,287 as of December 31, 2021 and September 30, 2021, respectively		16,318		18,037
Advances to suppliers		29,171		27,356
Amounts due from related parties		28,310		16,612
Inventories		67,656		68,380
Prepaid expenses		779		878
Income tax recoverable		393		1,278
Total current assets		1,519,446		1,430,181
Non-current assets
Restricted cash		6,015		5,928
Costs and estimated earnings in excess of billings		2,482		1,066
Accounts receivable retention		4,558		4,401
Prepaid expenses		2		1
Property, plant and equipment, net		109,297		97,515
Prepaid land leases		18,120		16,409
Intangible assets, net		12,152		13,031
Investments in equity investees		46,920		61,824
Investments securities		2,659		2,621
Goodwill		22,527		21,568
Deferred tax assets		13,635		11,865
Operating lease right-of-use assets		5,221		5,983
Total non-current assets		243,588		242,212
Total assets		1,763,034		1,672,393
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term bank loans		12		—
Current portion of long-term loans		15,371		15,223
Accounts payable		180,653		158,040
Construction costs payable		3,540		917
Deferred revenue		208,173		194,164
Accrued payroll and related expenses		33,263		24,694
Income tax payable		6,054		4,819
Warranty liabilities		6,474		6,239

Hollysys Automation Technologies Ltd. March 15, 2022 Page 11

Other tax payables		16,138		9,596
Accrued liabilities		47,653		53,947
Amounts due to related parties		8,544		15,038
Other liability		3		3
Operating lease liabilities		378		598
Total current liabilities		526,256		483,278
Non-current liabilities
Accrued liabilities		4,535		4,831
Long-term loans		568		581
Accounts payable		994		1,035
Deferred tax liabilities		13,617		14,914
Warranty liabilities		3,038		3,293
Operating lease liabilities		4,432		4,945
Other liability		78		78
Total non-current liabilities		27,262		29,677
Total liabilities		553,518		512,955
Commitments and contingencies		—		—
Stockholders’ equity:
Ordinary shares, par value $0.001 per share, 100,000,000 shares authorized; 61,961,324 shares and 61,960,524 shares issued and outstanding as of December 31, 2021 and September 30, 2021		62		62
Additional paid-in capital		240,073		237,361
Statutory reserves		76,829		64,449
Retained earnings		838,547		820,860
Accumulated other comprehensive income		49,207		31,860
Total Hollysys Automation Technologies Ltd. stockholder’s equity		1,204,718		1,154,592
Non-controlling interests		4,798		4,846
Total equity		1,209,516		1,159,438
Total liabilities and equity	$	1,763,034	$	1,672,393

Hollysys Automation Technologies Ltd. March 15, 2022 Page 12

HOLLYSYS AUTOMATION TECHNOLOGIES LTD

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In USD thousands).

	Three months ended			Six months ended
	December 31, 2021			December 31, 2021
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	29,904		$	43,988
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment		2,586			5,084
Amortization of prepaid land leases		107			211
Amortization of intangible assets		579			661
Allowance for credit losses		7,874			8,002
Gains on disposal of property, plant and equipment		(6	)		(1	)
Share of net income of equity investees		(774	)		(986	)
Share-based compensation expenses		2,713			6,306
Deferred income tax expenses		(2,983	)		(4,287	)
Other income (expense), net		(263	)		—
Gains on disposal of an investment in an equity investee		(7,995	)		(7,995	)
Changes in operating assets and liabilities:
Accounts receivable and retention		(37,548	)		(24,810	)
Costs and estimated earnings in excess of billings		(8,978	)		(21,797	)
Inventories		1,695			(12,612	)
Advances to suppliers		(1,434	)		(8,006	)
Other receivables		1,872			3,161
Prepaid expenses		104			154
Due from related parties		3,950			6,072
Accounts payable		22,863			29,382
Deferred revenue		11,026			11,057
Accruals and other payables		(4,136	)		(2,329	)
Due to related parties		(228	)		6,883
Income tax payable		2,049			2,572
Other tax payables		6,371			10,429
Net cash provided by operating activities		29,348			51,139
Cash flows from investing activities:
Purchases of short-term investments		(23,111	)		(26,259	)
Purchases of property, plant and equipment		(7,890	)		(11,095	)
Proceeds from disposal of property, plant and equipment		44			44
Maturity of short-term investments		190			40,430
Receipts from collection of advances to equity investees		9,497			9,497
Acquisition of a subsidiary, net of cash acquired		(6,527	)		(8,726	)
Net cash (used in) provided by investing activities		(27,797	)		3,891
Cash flows from financing activities:
Proceeds from short-term bank loans		49			49
Repayments of short-term bank loans		(38	)		(38	)
Proceeds from long-term bank loans		156			228
Repayments of long-term bank loans		(179	)		(365	)
Net cash used in financing activities		(12	)		(126	)
Effect of foreign exchange rate changes		9,847			9,099
Net increase in cash, cash equivalents and restricted cash	$	11,386			64,003
Cash, cash equivalents and restricted cash, beginning of period	$	748,164			695,547
Cash, cash equivalents and restricted cash, end of period		759,550			759,550

Hollysys Automation Technologies Ltd. March 15, 2022 Page 13

Non-GAAP Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, in evaluating our results, we use the following non-GAAP financial measures: non-GAAP gross profit and non-GAAP gross margin, non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts, non-GAAP net income attributable to Hollysys Automation Technologies Ltd., as well as non-GAAP basic and diluted earnings per share.

These non-GAAP financial measures serve as additional indicators of our operating performance and not as any replacement for other measures in accordance with U.S. GAAP. We believe these non-GAAP measures help identify underlying trends in the Company’s business that could otherwise be distorted by the effect of the share-based compensation expenses, which are calculated based on the number of shares or options granted and the fair value as of the grant date, and amortization of acquired intangible assets. They will not result in any cash inflows or outflows. We believe that using non-GAAP measures help our shareholders to have a better understanding of our operating results and growth prospects.

Non-GAAP gross profit and non-GAAP gross margin, non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts, non-GAAP net income attributable to Hollysys Automation Technologies Ltd., as well as non-GAAP basic and diluted earnings per share should not be considered in isolation or construed as an alternative to gross profit and gross margin, gross profit and gross margin of integrated solutions contracts, net income attributable to Hollysys Automation Technologies Ltd., basic and diluted earnings per share, or any other measure of performance, or as an indicator of the Company’s operating performance. Investors are encouraged to review the historical non-GAAP financial measures to the most directly comparable GAAP measures. Non-GAAP gross profit and gross margin, non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts, non-GAAP net income attributable to Hollysys Automation Technologies Ltd., as well as non-GAAP basic and diluted earnings per share presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data. The Company encourages investors and others to review the Company’s financial information in its entirety and not rely on a single financial measure.

We define non-GAAP gross profit and non-GAAP gross margin as gross profit and gross margin, respectively, adjusted to exclude non-cash amortization of acquired intangibles. The following table provides a reconciliation of our gross profit and gross margin to non-GAAP gross profit and non-GAAP gross margin for the periods indicated.

Hollysys Automation Technologies Ltd. March 15, 2022 Page 14

(In USD thousands, except for %)
	Three months ended						Six months ended
	December 31,						December 31,
	2021			2020			2021			2020
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Gross profit	$	77,987			73,619			130,382			117,120
Gross margin(1)		36.1	%		37.7	%		35.3	%		36.1	%
Add:
Amortization of acquired intangible assets		353			79			632			155
Non-GAAP gross profit	$	78,340		$	73,698		$	131,014		$	117,275
Non-GAAP gross margin(2)		36.2	%		37.7	%		35.4	%		36.1	%

(1) Gross margin represents gross profit for the period as a percentage of revenue for such period.

(2) Non-GAAP gross margin represents non-GAAP gross profit for the period as a percentage of revenue for such period.

We define non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts as gross profit and gross margin of integrated solutions contracts, respectively, adjusted to exclude non-cash amortization of acquired intangibles associated with integrated solutions contracts. The following table provides a reconciliation of the gross profit of integrated solutions contracts to non-GAAP gross profit and non-GAAP gross margin of integrated solutions contracts for the periods indicated.

(In USD thousands, except for %)
	Three months ended December 31,						Six months ended December 31,
	2021			2020			2021			2020
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Gross profit of integrated solutions contracts	$	45,851		$	39,812		$	77,105		$	66,437
Gross margin of integrated solutions contracts(1)		27.5	%		27.9	%		26.5	%		26.8	%
Add:
Amortization of acquired intangible assets		353			79			632			155
Non-GAAP gross profit of integrated solutions contracts	$	46,204		$	39,891		$	77,737		$	66,592
Non-GAAP gross margin of integrated solutions contracts(2)		27.7	%		28.0	%		26.7	%		26.8	%

(1) Gross margin of integrated solutions contracts represents gross profit of integrated solutions contracts for the period as a percentage of integrated solutions contracts revenue for such period.

(2) Non-GAAP gross margin of integrated solutions contracts represents non-GAAP gross profit of integrated solutions contracts for the period as a percentage of integrated solutions contracts revenue for such period.

Hollysys Automation Technologies Ltd. March 15, 2022 Page 15

We define non-GAAP net income attributable to Hollysys as net income attributable to Hollysys adjusted to exclude the share-based compensation expenses and non-cash amortization of acquired intangible assets. The following table provides a reconciliation of net income attributable to Hollysys to non-GAAP net income attributable to Hollysys for the periods indicated.

(In USD thousands)
	Three months ended				Six months ended
	December 31,				December 31,
	2021		2020		2021		2020
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Net income attributable to Hollysys Automation Technologies Ltd.	$	30,071	$	31,364	$	44,329	$	51,913
Add:
Share-based compensation expenses		2,713		763		6,306		938
Amortization of acquired intangible assets		353		79		632		155
Non-GAAP net income attributable to Hollysys Automation Technologies Ltd.	$	33,137	$	32,206	$	51,267	$	53,006

Hollysys Automation Technologies Ltd. March 15, 2022 Page 16

Non-GAAP basic (or diluted) earnings per share represents non-GAAP net income attributable to Hollysys divided by the weighted average number of ordinary shares outstanding during the periods (or on a diluted basis). The following table provides a reconciliation of our basic (or diluted) earnings per share to non-GAAP basic (or diluted) earnings per share for the periods indicated.

(In USD thousands, except for number of shares and per share data)
	Three months ended				Six months ended
	December 31,				December 31,
	2021		2020		2021		2020
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Net income attributable to Hollysys Automation Technologies Ltd.	$	30,071	$	31,364	$	44,329	$	51,913
Add:
Share-based compensation expenses		2,713		763		6,306		938
Amortization of acquired intangible assets		353		79		632		155
Non-GAAP net income attributable to Hollysys Automation Technologies Ltd.	$	33,137	$	32,206	$	51,267	$	53,006
Weighted average number of basic ordinary shares		60,946,596		60,500,387		60,884,346		60,498,431
Weighted average number of diluted ordinary shares		61,682,393		60,933,785		61,556,602		60,693,633
Basic earnings per share(1)		0.49		0.52		0.73		0.86
Add:
non-GAAP adjustments to net income per share(2)		0.05		0.01		0.11		0.02
Non-GAAP basic earnings per share(3)	$	0.54	$	0.53	$	0.84	$	0.88
Diluted earnings per share(1)		0.49		0.51		0.72		0.86
Add:
non-GAAP adjustments to net income per share(2)		0.05		0.02		0.11		0.01
Non-GAAP diluted earnings per share(3)	$	0.54	$	0.53	$	0.83	$	0.87

(1) Basic (or diluted) earnings per share is derived from net income attributable to ordinary shareholders for computing basic (or diluted) earnings per share divided by weighted average number of shares (or on a diluted basis).

(2) Non-GAAP adjustments to net income per share is derived from non-GAAP adjustments to net income divided by weighted average number of shares (or on a diluted basis).

(3) Non-GAAP basic (or diluted) earnings per share is derived from non-GAAP net income attributable to ordinary shareholders for computing non-GAAP basic (or diluted) earnings per share divided by weighted average number of shares (or on a diluted basis).