Trio-Tech Reports Third Quarter Results

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

 

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