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Trio-Tech Third Quarter Net Income is $0.19 Per Share Versus Loss

VAN NUYS, Calif.--(BUSINESS WIRE)--

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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