Trio-Tech Reports Fourth Quarter and Fiscal 2019 Results

VAN NUYS, Calif.--(BUSINESS WIRE)--Trio-Tech International (NYSE MKT: TRT) today announced financial results for the fourth quarter and fiscal year ended June 30, 2019.

Fourth Quarter Results

Overall revenue for the fourth quarter of fiscal 2019 decreased 1% to $10,625,000 from $10,760,000 for the fourth quarter of fiscal 2018. While manufacturing revenue increased 17% to $4,803,000 compared to $4,116,000 last year, reflecting increased demand in the Company’s Singapore operations, and distribution revenue increased 11% to $1,864,000 from $1,678,000, lower demand in Trio-Tech’s Malaysia and Tianjin, China operations led to a 20% decrease in testing services revenue to $3,941,000 from $4,937,000 last year.

The decline in overall revenue, coupled with a change in product mix, reduced gross margin to $2,468,000 for the fourth quarter of fiscal 2019 from $2,851,000 for last year’s fourth quarter. As a percentage of revenue, gross margin declined to 23% compared to 27% of revenue for the same quarter last fiscal year.

Income from operations was $321,000 for the fourth quarter of fiscal 2019 compared to $709,000 for the fourth quarter of fiscal 2018.

Net income for the fourth quarter of fiscal 2019 was $449,000, or $0.12 per diluted share. This compares to net income for the fourth quarter of fiscal 2018 $675,000, or $0.17 per diluted share.

Shareholders' equity at June 30, 2019 was $24,861,000, or $6.77 per outstanding share, compared to $23,501,000, or $6.61 per outstanding share, at June 30, 2018. There were 3,673,055 common shares outstanding at June 30, 2019.

CEO Comments

S.W. Yong, Trio-Tech's CEO, said, “Despite the decrease in Trio-Tech’s fiscal 2019 revenue, we achieved a 31% increase in net income to $1,545,000, or $0.41 per diluted share, compared to $1,184,000, or $0.31 per diluted in fiscal 2018. Net income benefitted from a one-off gain on the sale of properties in our Chongqing real-estate operation and lower tax expenses for fiscal 2019. We remain convinced of the quality of our business and our opportunities for long term growth despite the headwinds created by the ongoing trade tension between the United States and China.

"We are encouraged by the sharp increase in fourth quarter revenue in our manufacturing and distribution segments, compared to the fourth quarter of fiscal 2018. We continued to invest in the business in fiscal 2019, including increased capital expenditures to address opportunities for growth in specific markets. We also were able to present Trio-Tech’s world-class capabilities in introductory and follow-up meetings with our counterparts at several potentially large new accounts, an effort we believe will benefit the Company over time."

Fiscal 2019 Results

For the fiscal year ended June 30, 2019, revenue decreased 7% to $39,198,000 compared to $42,361,000 in fiscal 2018. Manufacturing revenue decreased 7% to $14,889,000 from $15,978,000, and testing services revenue decreased 14% to $16,760,000 from $19,391,000 for fiscal 2018. Distribution revenue increased 9% to $7,451,000 from $6,853,000 for fiscal 2018.

Gross margin for fiscal 2019 decreased to $9,001,000, or 23% of revenue, compared to $10,638,000, or 25% of revenue, for fiscal 2018.

Income from operations decreased 64% to $794,000 for fiscal 2019 compared to $2,188,000 for fiscal 2018.

Net income for fiscal 2019 was $1,545,000, or $0.41 per diluted share. This compares to net income for fiscal 2018 of $1,184,000, or $0.31 per diluted share.

Net income for fiscal 2019 benefited from $615,000 in other income, which included a gain of $685,000 on the sale of properties. In comparison, other income contributed a gain of $102,000 for fiscal 2018. Net income for 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. As of December 31, 2018, the Company’s accounting for the Tax Act was complete. The provision for income taxes for the year ended June 30, 2019 includes a $145,000 decrease from the completion of our provisional accounting for the effects of the Tax Act under SAB 118. The decrease is associated with the one-time mandatory repatriation tax related to certain post-1986 earnings and profits that were deferred from U.S. taxation by the Company’s foreign subsidiaries. The US federal income tax return was filed during Q4, which included the $755,000 one-time repatriation tax as well as utilization of net operating losses and tax credits amounting to $192,000 which was not finalized until the filing of return.

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

AUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)

 

Three Months Ended

Twelve Months Ended

 

June 30,

 

June 30,

Revenue

2019

2018

2019

2018

Manufacturing

$

4,803

 

 

$

4,116

 

 

$

14,889

 

 

$

15,978

 

Testing services

 

3,941

 

 

 

4,937

 

 

 

16,760

 

 

 

19,391

 

Distribution

 

1,864

 

 

 

1,678

 

 

 

7,451

 

 

 

6,853

 

Real estate

 

17

 

 

 

29

 

 

 

98

 

 

 

139

 

 

 

 

10,625

 

 

 

10,760

 

 

 

39,198

 

 

 

42,361

 

Cost of Sales

 

 

 

 

 

 

 

Cost of manufactured products sold

 

3,587

 

 

 

2,967

 

 

 

11,393

 

 

 

12,213

 

Cost of testing services rendered

 

2,851

 

 

 

3,442

 

 

 

12,202

 

 

 

13,323

 

Cost of distribution

 

1,674

 

 

 

1,470

 

 

 

6,505

 

 

 

6,068

 

Cost of real estate

 

45

 

 

 

30

 

 

 

97

 

 

 

119

 

 

 

 

8,157

 

 

 

7,909

 

 

 

30,197

 

 

 

31,723

 

Gross Margin

 

2,468

 

 

 

2,851

 

 

 

9,001

 

 

 

10,638

 

Operating Expenses:

 

 

 

 

 

 

 

General and administrative

 

1,826

 

 

 

1,911

 

 

 

7,049

 

 

 

7,250

 

Selling

 

246

 

 

 

214

 

 

 

826

 

 

 

826

 

Research and development

 

75

 

 

 

74

 

 

 

345

 

 

 

451

 

Gain on disposal of property, plant and equipment

 

--

 

 

 

(57

)

 

 

(13

)

 

 

(77

)

Total operating expenses

 

2,147

 

 

 

2,142

 

 

 

8,207

 

 

 

8,450

 

Income from Operations

 

321

 

 

 

709

 

 

 

794

 

 

 

2,188

 

Other (Expenses) Income

 

 

 

 

 

 

 

Interest expense

 

(69

)

 

 

(59

)

 

 

(319

)

 

 

(233

)

Other income, net

 

29

 

 

 

24

 

 

 

249

 

 

 

335

 

Gain on sale of properties

 

--

 

 

 

--

 

 

 

685

 

 

 

--

 

Total other (Expenses) Income

 

(40

)

 

 

(35

)

 

 

615

 

 

 

102

 

Income from Continuing Operations before Income Taxes

 

281

 

 

 

674

 

 

 

1,409

 

 

 

2,290

 

Income Tax Benefit (Expense)

 

201

 

 

 

48

 

 

 

42

 

 

 

(987

)

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

 

482

 

 

 

722

 

 

 

1,451

 

 

 

1,303

 

Loss from discontinued operations, net of tax

 

(1

)

 

 

(2

)

 

 

(3

)

 

 

(13

)

NET INCOME

 

481

 

 

 

720

 

 

 

1,448

 

 

 

1,290

 

Less: Net income (loss) attributable to the non-controlling interest

 

32

 

 

 

45

 

 

 

(97

)

 

 

106

 

Net Income attributable to Trio-Tech International

 

449

 

 

 

675

 

 

 

1,545

 

 

 

1,184

 

Net Income Attributable to Trio-Tech International:

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

451

 

 

 

677

 

 

 

1,548

 

 

 

1,197

 

Loss from discontinued operations, net of tax

 

(2

)

 

 

(2

)

 

 

(3

)

 

 

(13

)

Net Income Attributable to Trio-Tech International

 

449

 

 

$

675

 

 

 

1,545

 

 

$

1,184

 

Basic Earnings per Share - Continuing Operations

$

0.12

 

 

$

0.19

 

 

$

0.42

 

 

$

0.34

 

Basic Loss per Share - Discontinued Operations

 

--

 

 

 

(0.01

)

 

 

--

 

 

 

(0.01

)

Basic Earnings per Share

$

0.12

 

 

$

0.18

 

 

$

0.42

 

 

$

0.33

 

Diluted Earnings per Share – Continuing Operations

$

0.12

 

 

$

0.18

 

 

$

0.41

 

 

$

0.32

 

Diluted Loss per Share – Discontinued Operations

 

--

 

 

 

(0.01

)

 

 

--

 

 

 

(0.01

)

Diluted Earnings per Share

$

0.12

 

 

$

0.17

 

 

$

0.41

 

 

$

0.31

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding - Basic

 

3,673

 

 

 

3,553

 

 

 

3,673

 

 

 

3,553

 

Weighted Average Shares Outstanding - Diluted

 

3,681

 

 

 

3,714

 

 

 

3,762

 

 

 

3,771

 

 

 

 

 

 

 

 

 

 

TRIO‑TECH INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

AUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)

 

Three Months Ended

Twelve Months Ended

June 30,

June 30,

2019

2019

2019

2018

Comprehensive Income Attributable to Trio-Tech International Common Shareholders:

 

 

 

 

 

 

 

Net income

$

481

 

 

$

720

 

 

$

1,448

 

 

$

1,290

Foreign currency translation, net of tax

 

(231

)

 

 

(1,081

)

 

 

(420

)

 

 

728

Comprehensive Income (Loss)

 

250

 

 

 

(361

)

 

 

1,028

 

 

 

2,018

Less: Comprehensive (Loss) Income attributable to non-controlling interests

 

(11

)

 

 

30

 

 

 

(202

)

 

 

285

Comprehensive Income (Loss) Attributable to Trio-Tech International

$

261

 

 

$

(391

)

 

$

1,230

 

 

$

1,733

 

TRIO‑TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

 

 

June 30,

2019

 

2018

ASSETS

(Audited)

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

 

4,863

 

$

 

6,539

Short-term deposits

 

4,144

 

 

653

Trade accounts receivable, net

 

7,113

 

 

7,747

Other receivables

 

817

 

 

881

Inventories, net

 

2,427

 

 

2,930

Prepaid expenses and other current assets

 

287

 

 

208

Assets held for sale

 

89

 

 

91

Total current assets

 

19,740

 

 

19,049

Deferred tax assets

 

390

 

 

400

Investment properties, net

 

782

 

 

1,146

Property, plant and equipment, net

 

12,159

 

 

11,935

Other assets

 

1,750

 

 

2,249

Restricted term deposits

 

1,706

 

 

1,695

Total non-current assets

 

16,787

 

 

17,425

TOTAL ASSETS

$

 

36,527

 

$

 

36,474

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Lines of credit

$

 

187

 

$

 

2,043

Accounts payable

 

3,272

 

 

3,704

Accrued expenses

 

3,486

 

 

3,172

Income taxes payable

 

417

 

 

285

Current portion of bank loans payable

 

488

 

 

367

Current portion of capital leases

 

283

 

 

250

Total current liabilities

 

8,133

 

 

9,821

Bank loans payable, net of current portion

 

2,292

 

 

1,437

Capital leases, net of current portion

 

442

 

 

524

Deferred tax liabilities

 

327

 

 

327

Income taxes payable

 

439

 

 

828

Other non-current liabilities

 

33

 

 

36

Total non-current liabilities

 

3,533

 

 

3,152

TOTAL LIABILITIES

 

11,666

 

 

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 issued and outstanding at June 30, 2019 and June 30, 2018, respectively

 

11,424

 

 

11,023

Paid-in capital

 

3,305

 

 

3,249

Accumulated retained earnings

 

7,070

 

 

5,525

Accumulated other comprehensive gain-translation adjustments

 

1,867

 

 

2,182

Total Trio-Tech International shareholders' equity

 

23,666

 

 

21,979

Non-controlling interest

 

1,195

 

 

1,522

TOTAL EQUITY

 

24,861

 

 

23,501

TOTAL LIABILITIES AND EQUITY

$

 

36,527

 

$

 

36,474

 

 

 

 

 


Contacts

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

Investor Contact:
Berkman Associates
(310) 477-3118
info@BerkmanAssociates.com