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Trio-Tech Reports Third Quarter Results

·10 min read

Trio-Tech International (NYSE MKT: TRT) today announced financial results for the third quarter and first nine months of fiscal 2020.

Third Quarter Results

Revenue for the three months ended March 31, 2020 decreased 4% to $8,501,000 compared to $8,838,000 for the third quarter of fiscal 2019. Manufacturing revenue decreased 19% to $2,519,000 compared to $3,097,000 last year, as customers’ uncertainties relating to the COVID-19 pandemic appear to have delayed certain orders. Testing services revenue decreased 6% to $3,741,000 from $3,989,000 for the same quarter last year, primarily reflecting the Malaysian government’s effort to reduce the spread of COVID-19 by restricting the transportation of workers. Distribution revenue increased 29% to $2,225,000 from $1,727,000 for the third quarter last year.

Reflecting lower revenue and unusually high labor costs in China due to the extension of the Lunar New Year holiday associated with the COVID-19 pandemic, gross margin decreased to $1,786,000, or 21% of revenue, for this year’s third quarter from $2,174,000, or 25% of revenue, for the third quarter a year ago.

Operating expenses increased 5% to $2,153,000 from $2,051,000 for the third quarter last year, primarily due to a one-time impairment charge of $139,000 on obsolete testing services equipment.

The loss from operations for the third quarter of fiscal 2020 was $367,000. This compares to an operating profit of $123,000 for the third quarter of fiscal 2019.

Net income attributable to Trio-Tech International Common Shareholders for the three months ended March 31, 2020 was $70,000, or $0.02 per diluted share, compared to $683,000, or $0.19 per diluted share, for the third quarter of fiscal 2019. Net income for the third quarter of 2020 benefitted from $263,000 in other income, which included financial assistance received from local governments in Singapore and China to mitigate the negative impact of the COVID-19 pandemic.

CEO Comments

S.W. Yong, Trio-Tech's CEO, said, "In response to the COVID-19 pandemic, we have implemented new operating procedures to enhance the safety of our employees and customers. Our Singapore and Malaysia operations have been classified as part of the global supply chain, but both are subject to social distancing requirements and manpower restriction that affect productivity and revenue. No one knows how long today’s stringent safety measures will last. Accordingly, we continue to closely monitor developments everywhere we operate, and will take additional precautionary steps if necessary to protect the interests of all Trio-Tech stakeholders and to protect the safety of our employees."

Nine Months Results

For the first nine months of fiscal 2020 ended March 31, 2020, revenue decreased 5% to $27,286,000 compared to $28,573,000 for the same period last year. Manufacturing revenue declined 12% to $8,881,000 from $10,086,000, while testing services revenue declined 6% to $12,018,000 from $12,819,000. Distribution revenue increased 13% to $6,338,000 compared to $5,587,000 for the first nine months of fiscal 2019.

Overall gross margin for the first nine months of fiscal 2020 decreased 9% to $5,943,000, or 22% of revenue, from $6,533,000, or 23% of revenue, for the same period of fiscal 2019.

Operating expenses increased 3% to $6,261,000 from $6,060,000 for last year’s first nine months, primarily the result of the impairment charge mentioned above. The operating loss for the first nine months of fiscal 2020 was $318,000, compared to an operating profit of $473,000 for the same period last year.

For the first nine months of fiscal 2020, other income increased to $1,576,000 from $655,000 for the first nine months of fiscal 2019. This increase was mainly due to a non-recurring gain on the sale of assets of $1,172,000 compared to $685,000 for the same period last year, coupled with the government grants mentioned above.

Net income attributable to Trio-Tech International Common Shareholders for the first nine months of fiscal 2020 was $769,000, or $0.21 per diluted share, compared to $1,096,000, or $0.29 per diluted share for the first nine months of fiscal 2019.

Shareholders' equity at March 31, 2020 was $24,867,000, or $6.77 per outstanding share, compared to $24,861,000, or $6.77 per outstanding share, at June 30, 2019. There were approximately 3,673,055 common shares outstanding at March 31, 2020.

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; public health issues related to the COVID-19 pandemic; 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

2020

2019

2020

2019

Manufacturing

$

2,519

$

3,097

$

8,881

$

10,086

Testing Services

3,741

3,989

12,018

12,819

Distribution

2,225

1,727

6,338

5,587

Real Estate

16

25

49

81

8,501

8,838

27,286

28,573

Costs of Sales

Cost of manufactured products sold

1,851

2,303

6,789

7,806

Cost of testing services rendered

2,937

2,862

9,046

9,351

Cost of distribution

1,909

1,483

5,454

4,831

Cost of real estate

18

16

54

52

6,715

6,664

21,343

22,040

Gross Margin

1,786

2,174

5,943

6,533

Operating Expenses:

General and administrative

1,754

1,742

5,319

5,223

Selling

181

246

547

580

Research and development

79

76

280

270

Impairment loss on long-lived assets

139

--

139

--

Gain on disposal of property, plant and equipment

--

(13

)

(24

)

(13

)

Total operating expenses

2,153

2,051

6,261

6,060

(Loss) income from Operations

(367

)

123

(318

)

473

Other Income

Interest expense

(63

)

(74

)

(186

)

(250

)

Gain on sale of assets held for sale

--

685

1,172

685

Other income, net

440

128

590

220

Total other income

377

739

1,576

655

Income from Continuing Operations before Income Taxes

10

862

1,258

1,128

Income Tax Benefit (Expenses)

8

(209

)

(112

)

(159

)

Income from Continuing Operations before Non-controlling Interest, net of tax

18

653

1,146

969

(Loss) income from Discontinued Operations, net of tax

(21

)

2

(21

)

(2

)

NET (LOSS) INCOME

(3

)

655

1,125

967

Less: Net (loss) income Attributable to Non-controlling Interest

(73

)

(28

)

356

(129

)

Net Income Attributable to Trio-Tech International

70

683

769

1,096

Net Income Attributable to Trio-Tech International:

Income from Continuing Operations, net of tax

81

682

780

1,097

(Loss) Income from Discontinued Operations, net of tax

(11

)

1

(11

)

(1

)

Net Income Attributable to Trio-Tech International

$

70

$

683

$

769

$

1,096

Basic Earnings per Share

$

0.02

$

0.19

$

0.21

$

0.30

Diluted Earnings per Share

$

0.02

$

0.19

$

0.21

$

0.29

Weighted Average Shares Outstanding - Basic

3,673

3,673

3,673

3,673

Weighted Average Shares Outstanding - Diluted

3,759

3,685

3,734

3,746

TRIO‑TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED (IN THOUSANDS)

Three Months Ended

Nine Months Ended

March 31,

March 31,

2020

2019

2020

2019

Comprehensive (Loss) Income Attributable to Trio-Tech International:

Net (loss) income

$

(3

)

$

655

$

1,125

$

967

Foreign Currency Translation, net of tax

(1,013

)

401

(1,051

)

(189

)

Comprehensive (Loss) Income

(1,016

)

1,056

74

778

Less: Comprehensive (Loss) Income Attributable to Non-controlling Interest

(64

)

1

376

(191

)

Comprehensive (Loss) Income Attributable to Trio-Tech International

$

(952

)

$

1,055

$

(302

)

$

969

TRIO‑TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

Mar. 31,

Jun. 30,

2020

2019

ASSETS

(unaudited)

CURRENT ASSETS:

Cash and cash equivalents

$

4,370

$

4,863

Short-term deposits

6,309

4,144

Trade accounts receivable, net

6,397

7,113

Other receivables

1,065

817

Inventories, net

2,226

2,427

Prepaid expenses and other current assets

267

287

Assets held for sale

--

89

Total current assets

20,634

19,740

Deferred tax assets

565

390

Investment properties, net

705

782

Property, plant and equipment, net

10,597

12,159

Operating lease right-of-use assets

1,073

--

Other assets

1,595

1,750

Restricted term deposits

1,627

1,706

Total non-current assets

16,162

16,787

TOTAL ASSETS

$

36,796

$

36,527

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Lines of credit

$

398

$

187

Accounts payable

3,129

3,272

Accrued expenses

3,065

3,486

Income taxes payable

396

417

Current portion of bank loans payable

378

488

Current portion of finance leases

246

283

Current portion of operating leases

541

--

Total current liabilities

8,153

8,133

Bank loans payable, net of current portion

1,919

2,292

Finance leases, net of current portion

486

442

Operating leases, net of current portion

532

--

Deferred tax liabilities

375

327

Income taxes payable

430

439

Other non-current liabilities

34

33

Total non-current liabilities

3,776

3,533

TOTAL LIABILITIES

11,929

11,666

EQUITY

TRIO-TECH INTERNATIONAL'S SHAREHOLDERS' EQUITY:

Common stock, no par value, 15,000,000 shares authorized; 3,673,055 issued and outstanding at March 31, 2020 and June 30, 2019, respectively

11,424

11,424

Paid-in capital

3,357

3,305

Accumulated retained earnings

7,839

7,070

Accumulated other comprehensive gain-translation adjustments

796

1,867

Total Trio-Tech International shareholders' equity

23,416

23,666

Non-controlling interest

1,451

1,195

TOTAL EQUITY

24,867

24,861

TOTAL LIABILITIES AND EQUITY

$

36,796

$

36,527

View source version on businesswire.com: https://www.businesswire.com/news/home/20200521005254/en/

Contacts

Company Contact:
A. Charles Wilson
Chairman
(818) 787-7000

Investor Contact:
Berkman Associates
(310) 927-3108
info@BerkmanAssociates.com