Trio-Tech International (NYSE MKT: TRT) today announced financial
results for the third quarter and first nine months of fiscal 2019.
Third Quarter Results
Net income for the third quarter of fiscal 2019 ended March 31, 2019 was
$683,000, or $0.19 per diluted share. This compares to a net loss of
$739,000, or $0.20 per share, for the third quarter of fiscal 2018.
Net income for the fiscal 2019 third quarter benefitted from $739,000 in
other income, which included a gain of $685,000 on the sale of assets
previously held for sale. In comparison, other income contributed a gain
of $47,000 for last year’s third quarter. Net income for the third
quarter of fiscal 2018 also was affected by a one-time, non-cash income
tax expense of $900,000 related to the 2017 United States Tax Cuts and
Jobs Act, which requires a mandatory one-time repatriation of certain
earnings and profits of the Company’s foreign subsidiaries previously
deferred from U.S. taxation. In the recent second quarter of fiscal
2019, there was a reversal of $145,000 as this tax was finalized to
$755,000.
Revenue for the third quarter of fiscal 2019 decreased 12% to $8,838,000
from $10,104,000 for the same quarter last fiscal year. Manufacturing
revenue decreased 1% to $3,097,000 compared to $3,124,000 in the third
quarter of last fiscal year. Testing services revenue declined 19% to
$3,989,000 from $4,913,000 in the third quarter of fiscal 2018,
primarily due to reduced demand from a major customer during the
quarter. Distribution revenue decreased 15% to $1,727,000 from
$2,033,000 for the third quarter of last fiscal year.
Reflecting the decrease in revenue, gross margin declined by 3%, to
$2,174,000 from $2,232,000 for the third quarter of fiscal 2018, but
improved as a percentage of revenue to 25% compared to 22% of revenue
for the third quarter of last fiscal year, due to aggressive cost saving
efforts at the Company’s Malaysia and China operations.
Income from operations for the third quarter of fiscal 2019 was $123,000
compared to $234,000 for the third quarter of fiscal 2018.
CEO Comments
S.W. Yong, Trio-Tech’s CEO, said, “We delivered substantial net income
and improved gross margin as a percentage of revenue despite lower sales
for this year’s third quarter compared to the third quarter last year.
Our fiscal third quarter results are typically affected by a slowdown in
business activity partially related to the Chinese New Year and
festivities. We are working to increase revenue and strive for better
performance in the current quarter.”
Nine Months Results
For the first nine months of fiscal 2019 ended March 31, 2019, revenue
decreased 10% to $28,573,000 compared to $31,601,000 for the same period
last year. Manufacturing revenue declined 15% to $10,086,000 from
$11,862,000, and testing services revenue declined 11% to $12,819,000
from $14,454,000 in the same period last year. Revenue for both business
segments was affected by reduced demand from a major customer.
Distribution revenue increased 8% in the first nine months of this
fiscal year to $5,587,000 from $5,175,000 in the same period in the last
fiscal year.
Gross margin for the first nine months of fiscal 2019 decreased 16% to
$6,533,000, or 23% of revenue, to $7,787,000, or 25% of revenue, for the
first nine months of fiscal 2018.
Net income for first nine months of fiscal 2019 was $1,096,000, or $0.29
per diluted share. This compares to net income of $509,000, or $0.14 per
diluted share, for the same period last year.
Shareholders’ equity at March 31, 2019 was $24,567,000, or $6.69 per
outstanding share, compared to $23,501,000, or $6.61 per outstanding
share, at June 30, 2018. There were approximately 3,673,055 common
shares outstanding at March 31, 2019.
About Trio-Tech
Established in 1958 and headquartered in Van Nuys, California, Trio-Tech
International is a diversified business group with interests in
semiconductor testing services, manufacturing and distribution of
semiconductor testing equipment, and real estate. Further information
about Trio-Tech’s semiconductor products and services can be obtained
from the Company’s Web site at www.triotech.com,
www.universalfareast.com,
and www.ttsolar.com.
Forward Looking Statements
This press release contains statements that are forward looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 and may contain forward looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and
assumptions regarding future activities and results of operations of the
Company. In light of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, the following factors, among
others, could cause actual results to differ materially from those
reflected in any forward looking statements made by or on behalf of the
Company: market acceptance of Company products and services; changing
business conditions or technologies and volatility in the semiconductor
industry, which could affect demand for the Company’s products and
services; the impact of competition; problems with technology; product
development schedules; delivery schedules; changes in military or
commercial testing specifications which could affect the market for the
Company’s products and services; difficulties in profitably integrating
acquired businesses, if any, into the Company; risks associated with
conducting business internationally and especially in Asia, including
currency fluctuations and devaluation, currency restrictions, local laws
and restrictions and possible social, political and economic
instability; changes in U.S. and global financial and equity markets,
including market disruptions and significant interest rate fluctuations;
and other economic, financial and regulatory factors beyond the
Company’s control. Other than statements of historical fact, all
statements made in this Quarterly Report are forward looking, including,
but not limited to, statements regarding industry prospects, future
results of operations or financial position, and statements of our
intent, belief and current expectations about our strategic direction,
prospective and future financial results and condition. In some cases,
you can identify forward looking statements by the use of terminology
such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,”
“potential,” “believes,” “can impact,” “continue,” or the negative
thereof or other comparable terminology. Forward looking
statements involve risks and uncertainties that are inherently difficult
to predict, which could cause actual outcomes and results to differ
materially from our expectations, forecasts and assumptions.
| TRIO-TECH INTERNATIONAL AND SUBSIDIARIES | |||||||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
|||||||||||||||||||
| UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||
| Revenue | 2019 | 2018 | 2019 | 2018 | |||||||||||||||
| Manufacturing | $ | 3,097 | $ | 3,124 | $ | 10,086 | $ | 11,862 | |||||||||||
| Testing Services | 3,989 | 4,913 | 12,819 | 14,454 | |||||||||||||||
| Distribution | 1,727 | 2,033 | 5,587 | 5,175 | |||||||||||||||
| Real Estate | 25 | 34 | 81 | 110 | |||||||||||||||
| 8,838 | 10,104 | 28,573 | 31,601 | ||||||||||||||||
| Costs of Sales | |||||||||||||||||||
| Cost of manufactured products sold | 2,303 | 2,530 | 7,806 | 9,247 | |||||||||||||||
| Cost of testing services rendered | 2,862 | 3,491 | 9,351 | 9,881 | |||||||||||||||
| Cost of distribution | 1,483 | 1,821 | 4,831 | 4,598 | |||||||||||||||
| Cost of real estate | 16 | 30 | 52 | 88 | |||||||||||||||
| 6,664 | 7,872 | 22,040 | 23,814 | ||||||||||||||||
| Gross Margin | 2,174 | 2,232 | 6,533 | 7,787 | |||||||||||||||
| Operating Expenses: | |||||||||||||||||||
| General and administrative | 1,742 | 1,773 | 5,223 | 5,339 | |||||||||||||||
| Selling | 246 | 181 | 580 | 612 | |||||||||||||||
| Research and development | 76 | 75 | 270 | 377 | |||||||||||||||
| (Gain) Loss on disposal of property, plant and equipment | (13 | ) | (31 | ) | (13 | ) | (20 | ) | |||||||||||
| Total operating expenses | 2,051 | 1,998 | 6,060 | 6,308 | |||||||||||||||
| Income from Operations | 123 | 234 | 473 | 1,479 | |||||||||||||||
| Other (Expenses) Income | |||||||||||||||||||
| Interest expense | (74 | ) | (64 | ) | (250 | ) | (174 | ) | |||||||||||
| Other income, net | 128 | 111 | 220 | 311 | |||||||||||||||
| Gain on sale of assets held for sale | 685 | — | 685 | — | |||||||||||||||
| Total other income | 739 | 47 | 655 | 137 | |||||||||||||||
| Income from Continuing Operations before Income Taxes | 862 | 281 | 1,128 | 1,616 | |||||||||||||||
| Income Tax Expenses | (209 | ) | (980 | ) | (159 | ) | (1,035 | ) | |||||||||||
| Income (Loss) from Continuing Operations | |||||||||||||||||||
| before Non-controlling Interest, net of tax | 653 | (699 | ) | 969 | 581 | ||||||||||||||
| Income (Loss) from Discontinued Operations, net of tax | 2 | (6 | ) | (2 | ) | (11 | ) | ||||||||||||
| NET INCOME (LOSS) | 655 | (705 | ) | 967 | 570 | ||||||||||||||
| Less: Net (loss) income Attributable to Non-controlling Interest | (28 | ) | 34 | (129 | ) | 61 | |||||||||||||
| Net Income (Loss) Attributable to Trio-Tech International | 683 | (739 | ) | 1,096 | 509 | ||||||||||||||
| Net Income (Loss) Attributable to Trio-Tech International: | |||||||||||||||||||
| Income (loss) from Continuing Operations, net of tax | 682 | (736 | ) | 1,097 | 520 | ||||||||||||||
| Income (loss) from Discontinued Operations, net of tax | 1 | (3 | ) | (1 | ) | (11 | ) | ||||||||||||
| Net Income (Loss) Attributable to Trio-Tech International | $ | 683 | $ | (739 | ) | $ | 1,096 | $ | 509 | ||||||||||
| Basic Earnings (Loss) per Share | $ | 0.19 | $ | (0.21 | ) | $ | 0.30 | $ | 0.15 | ||||||||||
| Diluted Earnings (Loss) per Share | $ | 0.19 | $ | (0.20 | ) | $ | 0.29 | $ | 0.14 | ||||||||||
| Weighted Average Shares Outstanding – Basic | 3,673 | 3,553 | 3,673 | 3,553 | |||||||||||||||
| Weighted Average Shares Outstanding – Diluted | 3,685 | 3,772 | 3,746 | 3,778 | |||||||||||||||
| TRIO-TECH INTERNATIONAL AND SUBSIDIARIES | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||
| UNAUDITED (IN THOUSANDS) | ||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| March 31, | March 31, | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
|
Comprehensive (Loss) Income
Attributable to Trio-Tech International: |
||||||||||||||
| Net income (loss) | $ | 655 | $ | (705 | ) | $ | 967 | $ | 570 | |||||
| Foreign Currency Translation, net of tax | 401 | 849 | (189 | ) | 1,809 | |||||||||
| Comprehensive Income | 1,056 | 144 | 778 | 2,379 | ||||||||||
| Less: Comprehensive Income (loss) | ||||||||||||||
| Attributable to Non-controlling Interest | 1 | 142 | (191 | ) | 255 | |||||||||
| Comprehensive Income | ||||||||||||||
| Attributable to Trio-Tech International | $ | 1,055 | $ | 2 | $ | 969 | $ | 2,124 | ||||||
| TRIO-TECH INTERNATIONAL AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (IN THOUSANDS, EXCEPT NUMBER OF SHARES) | ||||||
| Mar. 31, | Jun. 30, | |||||
| 2019 | 2018 | |||||
| ASSETS | (unaudited) | |||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | $ | 4,602 | $ | 6,539 | ||
| Short-term deposits | 3,646 | 653 | ||||
| Trade accounts receivable, net | 7,120 | 7,747 | ||||
| Other receivables | 1,034 | 881 | ||||
| Inventories, net | 2,918 | 2,930 | ||||
| Prepaid expenses and other current assets | 307 | 208 | ||||
| Assets held for sale | 90 | 91 | ||||
| Total current assets | 19,717 | 19,049 | ||||
| Deferred tax asset | 335 | 400 | ||||
| Investment properties, net | 828 | 1,146 | ||||
| Property, plant and equipment, net | 12,687 | 11,935 | ||||
| Other assets | 1,728 | 2,249 | ||||
| Restricted term deposits | 1,705 | 1,695 | ||||
| Total non-current assets | 17,283 | 17,425 | ||||
| TOTAL ASSETS | $ | 37,000 | $ | 36,474 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Lines of credit | $ | 622 | $ | 2,043 | ||
| Accounts payable | 3,021 | 3,704 | ||||
| Accrued expenses | 3,882 | 3,172 | ||||
| Income taxes payable | 404 | 285 | ||||
| Current portion of bank loans payable | 492 | 367 | ||||
| Current portion of capital leases | 257 | 250 | ||||
| Total current liabilities | 8,678 | 9,821 | ||||
| Bank loans payable, net of current portion | 2,442 | 1,437 | ||||
| Capital leases, net of current portion | 325 | 524 | ||||
| Deferred tax liabilities | 343 | 327 | ||||
| Income taxes payable | 613 | 828 | ||||
| Other non-current liabilities | 32 | 36 | ||||
| Total non-current liabilities | 3,755 | 3,152 | ||||
| TOTAL LIABILITIES | $ | 12,433 | $ | 12,973 | ||
| EQUITY | ||||||
| TRIO-TECH INTERNATIONAL’S SHAREHOLDERS’ EQUITY: | ||||||
| Common stock, no par value, 15,000,000 shares authorized; | ||||||
| 3,673,055 and 3,553,055 shares issued and outstanding at | ||||||
| March 31, 2019 and June 30, 2018, respectively | 11,424 | $ | 11,023 | |||
| Paid-in capital | 3,261 | 3,249 | ||||
| Accumulated retained earnings | 6,621 | 5,525 | ||||
| Accumulated other comprehensive gain-translation adjustments | 2,055 | 2,182 | ||||
| Total Trio-Tech International shareholders’ equity | 23,361 | 21,979 | ||||
| Non-controlling interest | 1,206 | 1,522 | ||||
| TOTAL EQUITY | $ | 24,567 | $ | 23,501 | ||
| TOTAL LIABILITIES AND EQUITY | $ | 37,000 | $ | 36,474 | ||
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