Trio-Tech Fourth Quarter Net Income Increased 91% to $0.17 Per Diluted Share Versus $0.09 Per Share Last Year

Trio-Tech International (NYSE MKT: TRT) today announced financial results for the fourth quarter and fiscal year ended June 30, 2018:

— Fourth quarter net income increased 91% to $0.17 per diluted share vs $0.09 for the same quarter last year.

— Fiscal 2018 operating income increased 47% vs fiscal 2017.

— Fiscal 2018 net income after one-time $900,000 tax expense was $0.31 per diluted share vs $0.36 for fiscal 2017.

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CEO Comments

“The fourth quarter of fiscal 2018 was another good quarter for Trio-Tech. Improved gross margin and slightly higher revenue helped us deliver solid earnings growth for the quarter, capping an impressive year for our company.

“Fiscal 2018 revenue increased at each of Trio-Techs core business segments, compared to fiscal 2017, and was led by a 17% gain in our revenue at our testing services operations. However, our bottom-line performance for fiscal 2018 was affected by a one-time, income tax expense of $900,000, related to the Tax Cuts and Jobs Act of 2017, which requires a mandatory one-time repatriation of certain earnings and profits of the Companys foreign subsidiaries previously deferred from U.S. taxation. This estimated tax is payable over a period of eight years at no interest and is not expected to have a material effect on the Companys working capital position. Without this one-time tax expense, net earnings for fiscal 2018 would have exceeded our fiscal 2017 result.

“Trio-Tech’s financial condition grew even stronger in fiscal 2018. Higher cash flow from operations versus prior year contributed to an increase in cash and equivalents to $1.84 per outstanding share at June 30, 2018, compared to $1.35 per outstanding share at June 30, 2017. Shareholders’ equity also increased, to $6.61 per outstanding share at the close of fiscal 2018 compared to $6.11 per outstanding share at June 30, 2017.

“Our backlog at the end of fiscal 2018 remained strong at $8,699,000 compared to $7,546,000 at the end of fiscal 2017,” said S.W. Yong, Trio-Tech’s CEO.

Fiscal 2018 Fourth Quarter Results

For the fiscal fourth quarter ended June 30, 2018, revenue increased 1% to $10,760,000 compared to revenue of $10,638,000 for the fourth quarter of fiscal 2017. Testing services revenue increased 13% to $4,937,000 compared to $4,382,000 for the same quarter last year reflecting higher volume at the company’s Singapore, Malaysia and Tianjin, China facilities. Manufacturing revenue increased 1% to $4,116,000 from $4,068,000 due to firmer demand at Trio-Tech’s Suzhou, China and U.S. operations. Distribution revenue declined 22% to $1,678,000 from $2,151,000, primarily because of lower customer demand in Asia.

Gross margin for the fiscal fourth quarter improved to 27% of revenue, compared to 22% of revenue for the same quarter of the prior fiscal year, driven primarily by a favorable product mix in Trio-Tech’s manufacturing segment.

Operating expenses for the fourth quarter were $2,142,000, or 20% of revenue, compared to $2,014,000, or 19% of revenue, for the fourth quarter of fiscal 2017.

Income from operations for the fourth quarter more than doubled to $709,000 from $349,000 for the fourth quarter of fiscal 2017.

Net income attributable to Trio-Tech International common shareholders for the fourth quarter of fiscal 2018 increased 91% to $675,000, or $0.17 per diluted share, from $353,000, or $0.09 per diluted share, for the fourth quarter of the prior fiscal year.

Fiscal 2018 Results

For the twelve months ended June 30, 2018, revenue increased 10% to $42,361,000 compared to revenue of $38,538,000 for fiscal 2017. Testing services revenue increased 17% to $19,391,000, compared to $16,586,000 for fiscal 2017. Manufacturing revenue increased 5% to $15,978,000 compared to $15,289,000 in fiscal 2017. Distribution revenue increased 5% to $6,853,000 compared to $6,511,000 in fiscal 2017.

Gross profit for fiscal 2018 increased 12% to $10,638,000 compared to $9,462,000 for fiscal 2017. Gross margin was approximately 25% of revenue in both periods, as higher gross margin for the manufacturing segment was offset by lower gross margin in testing services.

Operating expenses for fiscal 2018 increased 6% to $8,450,000 compared to $7,973,000 for fiscal 2017, but declined, as percent of revenue, to 20% from 21% for fiscal 2017.

Income from operations increased 47% to $2,188,000 compared to $1,489,000 in fiscal 2017.

Net income attributable to Trio-Tech International common shareholders for fiscal 2018 declined 10% to $1,184,000, or $0.31 per diluted share, compared to $1,316,000, or $0.36 per diluted share in fiscal 2017. Fiscal 2018 net income was affected by a one-time, income tax expense of $900,000, related to the Tax Cuts and Jobs Act of 2017.

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 Companys 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 Companys 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 to government policies, potential legislative 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 Companys control. Other than statements of historical fact, all statements made in this press release 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 2018 2017 2018 2017
 
Manufacturing $ 4,116 $ 4,068 $ 15,978 $ 15,289
Testing services 4,937 4,382 19,391 16,586
Distribution 1,678 2,151 6,853 6,511
Others   29     37     139     152  
  10,760     10,638     42,361     38,538  
Cost of Sales
Cost of manufactured products sold 2,967 3,329 12,213 12,091
Cost of testing services rendered 3,442 2,988 13,323 11,057
Cost of distribution 1,470 1,929 6,068 5,828
Others   30     29     119     100  
  7,909     8,275     31,723     29,076  
Gross Margin 2,851 2,363 10,638 9,462
Operating Expenses:
General and administrative 1,911 1,733 7,250 6,911
Selling 214 220 826 807
Research and development 74 52 451 208
(Loss) Gain on disposal of property, plant and equipment   (57 )   9     (77 )   47  
Total operating expenses   2,142     2,014     8,450     7,973  
Income from Operations 709 349 2,188 1,489
Other (Expenses) Income
Interest expense (59 ) (53 ) (233 ) (202 )
Other income, net   24     156     335     514  
Total other (Expenses) Income   (35 )   103     102     312  
Income from Continuing Operations before Income Taxes 674 452 2,290 1,801
Income Tax Benefit Expense   48     (85 )   (987 )   (341 )

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

722 367 1,303 1,460
Loss from discontinued operations, net of tax   (2 )   (1 )   (13 )   (5 )
NET INCOME 720 366 1,290 1,455
Less: Net income attributable to the non-controlling interest   45     13     106     139  
Net Income attributable to Trio-Tech International 675 353 1,184 1,316
Net Income Attributable to Trio-Tech International:
Income from continuing operations, net of tax 677 355 1,197 1,325
Loss from discontinued operations, net of tax   (2 )   (2 )   (13 )   (9 )
Net Income Attributable to Trio-Tech International $ 675   $ 353   $ 1,184   $ 1,316  
Basic Earnings per Share – Continuing Operations $ 0.19 $ 0.10 $ 0.34 $ 0.38
Basic Loss per Share – Discontinued Operations   (0.01 )       (0.01 )    
Basic Earnings per Share $ 0.18   $ 0.10   $ 0.33   $ 0.38  
Diluted Earnings per Share “ Continuing Operations $ 0.18 $ 0.09 $ 0.32 $ 0.36
Diluted Loss per Share “ Discontinued Operations   (0.01 )       (0.01 )    
Diluted Earnings per Share $ 0.17   $ 0.09   $ 0.31   $ 0.36  
Weighted Average Shares Outstanding – Basic 3,553 3,523 3,553 3,523
Weighted Average Shares Outstanding – Diluted 3,714 3,737 3,771 3,644
 
 
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,
2018     2017 2018     2017
 

 

Comprehensive Income Attributable to Trio-Tech International:

Net income $ 720 $ 366 $ 1,290 $ 1,455
Foreign currency translation, net of tax   (1,081 )   408   728   (679 )
Comprehensive (Loss) Income (361 ) 774 2,018 776

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

  30     64   285   (11 )

Comprehensive (Loss) Income Attributable to Trio-Tech International

$ (391 ) $ 710 $ 1,733 $ 787  
 
 
TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
 
  June 30,     June 30,
2018     2017
ASSETS (audited)
 
CURRENT ASSETS:
Cash and cash equivalents $ 6,539 $ 4,772
Short-term deposits 653 787
Trade accounts receivable, net 8,007 9,009
Other receivables 621 401
Inventories, net 2,930 1,756
Prepaid expenses and other current assets 208 226
Assets held for sale   91   86
Total current assets 19,049 17,037
Deferred tax assets 400 375
Investment properties, net 1,146 1,216
Property, plant and equipment, net 11,935 11,291
Other assets 2,249 1,922
Restricted term deposits   1,695   1,657
Total non-current assets   17,425   16,461
TOTAL ASSETS $ 36,474 $ 33,498
 
LIABILITIES AND SHAREHOLDERS EQUITY
 
CURRENT LIABILITIES:
Lines of credit $ 2,043 $ 2,556
Accounts payable 3,704 3,229
Accrued expenses 3,172 3,043
Income taxes payable 285 233
Current portion of bank loans payable 367 260
Current portion of capital leases   250   228
Total current liabilities 9,821 9,549
Bank loans payable, net of current portion 1,437 1,552
Capital leases, net of current portion 524 531
Deferred tax liabilities 327 295
Income taxes payable 828
Other non-current liabilities   36   44
Total non-current liabilities   3,152   2,422
TOTAL LIABILITIES   12,973   11,971
COMMITMENTS AND CONTINGENCIES
EQUITY
TRIO-TECH INTERNATIONAL’S SHAREHOLDERS’ EQUITY:

Common stock, no par value, 15,000,000 shares authorized; 3,553,055 and 3,523,055 issued and outstanding at June 30, 2018 and June 30, 2017, respectively

11,023 10,921
Paid-in capital 3,249 3,206
Accumulated retained earnings 5,525 4,341
Accumulated other comprehensive gain-translation adjustments   2,182   1,633
Total Trio-Tech International shareholders’ equity 21,979 20,101
Non-controlling interest   1,522   1,426
TOTAL EQUITY   23,501   21,527
TOTAL LIABILITIES AND EQUITY $ 36,474 $ 33,498
 

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