Tungray Technologies Inc Reports Unaudited 2024 First Half Financial Results
Tungray Technologies, a global Engineer-to-Order company, reported its H1 2024 financial results showing mixed performance. Total revenues increased slightly by 1.5% to $5.4 million, while gross margin declined to 46.7% from 53.5% year-over-year. The company reported an operating loss of $0.9 million compared to an operating income of $0.1 million in H1 2023.
The company is implementing cost-cutting measures and exploring new revenue streams, including potential partnerships in metal 3D printing for precision engineering. Notable challenges include increased operating expenses, rising by 26.5% to $3.5 million, and declining standardized product revenues due to fierce price competition. The company also disclosed a restatement of its H1 2023 financial statements due to accounting errors in income tax expense and finance lease calculations.
Tungray Technologies, un'azienda globale di ingegneria su ordinazione, ha riportato i risultati finanziari del primo semestre 2024 mostrando una performance mista. I ricavi totali sono aumentati leggermente dell'1,5% a 5,4 milioni di dollari, mentre il margine lordo è diminuito al 46,7% rispetto al 53,5% dell'anno precedente. L'azienda ha registrato una perdita operativa di 0,9 milioni di dollari rispetto a un utile operativo di 0,1 milioni di dollari nel primo semestre 2023.
L'azienda sta attuando misure di riduzione dei costi ed esplorando nuove fonti di reddito, inclusi potenziali partnership nella stampa 3D dei metalli per ingegneria di precisione. Le sfide significative includono l'aumento delle spese operative, salite del 26,5% a 3,5 milioni di dollari, e il calo dei ricavi da prodotti standardizzati a causa della forte concorrenza sui prezzi. L’azienda ha anche comunicato una rettifica delle sue dichiarazioni finanziarie del primo semestre 2023 a causa di errori contabili nelle spese fiscali e nei calcoli dei contratti di leasing finanziario.
Tungray Technologies, una empresa global de ingeniería por encargo, reportó sus resultados financieros del primer semestre de 2024 mostrando un rendimiento mixto. Los ingresos totales aumentaron ligeramente un 1.5% a 5.4 millones de dólares, mientras que el margen bruto disminuyó al 46.7% desde el 53.5% interanual. La empresa reportó una pérdida operativa de 0.9 millones de dólares en comparación con un ingreso operativo de 0.1 millones de dólares en el primer semestre de 2023.
La compañía está implementando medidas de reducción de costos y explorando nuevas fuentes de ingresos, incluidas posibles asociaciones en la impresión 3D de metales para ingeniería de precisión. Los desafíos notables incluyen el aumento de los gastos operativos, que subieron un 26.5% a 3.5 millones de dólares, y el descenso de los ingresos por productos estandarizados debido a la feroz competencia en precios. La empresa también reveló una corrección de sus estados financieros del primer semestre de 2023 debido a errores contables en los gastos de impuestos sobre la renta y en los cálculos del arrendamiento financiero.
튠그레이 테크놀로지스, 엔지니어 투 오더 글로벌 업체,가 2024년 상반기 재무 결과를 발표하였으며 혼합된 성과를 나타냈습니다. 총 수익은 540만 달러로 1.5% 소폭 증가했으나, 매출 총 이익률은 작년 53.5%에서 46.7%로 감소했습니다. 회사는 2023년 상반기 10만 달러의 운영 소득에 비해 90만 달러 운영 손실을 기록했습니다.
회사는 비용 절감 조치를 시행하고 있으며 정밀 엔지니어링을 위한 금속 3D 프린팅의 잠재적인 파트너십을 포함하여 새로운 수익원을 탐색하고 있습니다. 주요 도전 과제로는 운영 비용의 증가가 있으며, 이는 350만 달러로 26.5% 상승했으며, 치열한 가격 경쟁으로 인해 표준화된 제품 수익이 감소하고 있습니다. 회사는 또한 소득세 비용 및 금융 임대 계산의 회계 오류로 인해 2023년 상반기 재무 상태를 재진술한다고 밝혔습니다.
Tungray Technologies, une entreprise d'ingénierie à l'échelle mondiale, a annoncé ses résultats financiers du premier semestre 2024, présentant des performances mitigées. Les revenus totaux ont légèrement augmenté de 1,5% à 5,4 millions de dollars, tandis que la marge brute a chuté à 46,7% contre 53,5% l'année précédente. L'entreprise a enregistré une perte d'exploitation de 0,9 million de dollars par rapport à un bénéfice d'exploitation de 0,1 million de dollars au premier semestre 2023.
L'entreprise met en œuvre des mesures de réduction des coûts et explore de nouvelles sources de revenus, y compris des partenariats potentiels dans l'impression 3D des métaux pour l'ingénierie de précision. Les défis notables incluent l'augmentation des dépenses d'exploitation, qui ont augmenté de 26,5% pour atteindre 3,5 millions de dollars, et la baisse des revenus des produits standardisés en raison de la forte concurrence sur les prix. L'entreprise a également annoncé un retraitement de ses états financiers du premier semestre 2023 en raison d'erreurs comptables dans les dépenses fiscales et les calculs des contrats de crédit-bail financier.
Tungray Technologies, ein global tätiges Unternehmen im Bereich Ingenieurleistungen nach Kundenwunsch, hat seine finanziellen Ergebnisse für das erste Halbjahr 2024 veröffentlicht, die eine gemischte Leistung zeigen. Der Gesamtumsatz stieg leicht um 1,5% auf 5,4 Millionen Dollar, während die Bruttomarge von 53,5% im Vorjahr auf 46,7% sank. Das Unternehmen verzeichnete einen operativen Verlust von 0,9 Millionen Dollar im Vergleich zu einem operativen Gewinn von 0,1 Millionen Dollar im ersten Halbjahr 2023.
Das Unternehmen führt Kostensenkungsmaßnahmen durch und erkundet neue Einnahmequellen, einschließlich potenzieller Partnerschaften im Bereich der metallischen 3D-Drucktechnologie für Präzisionsengineering. Zu den bemerkenswerten Herausforderungen gehören steigende Betriebskosten, die um 26,5% auf 3,5 Millionen Dollar angestiegen sind, sowie sinkende Einnahmen aus standardisierten Produkten aufgrund des heftigen Preiswettbewerbs. Das Unternehmen gab außerdem bekannt, dass es seine finanziellen Ergebnisse für das erste Halbjahr 2023 aufgrund von Buchhaltungsfehlern bei den Einkommenssteueraufwendungen und den Berechnungen von Finanzleasing verfeinern wird.
- Revenue increased by 1.5% to $5.4 million in H1 2024
- Customized products revenue grew by 11.6%
- R&D investment maintained with $0.4 million in expenses
- Operating loss of $0.9 million compared to $0.1 million income in H1 2023
- Gross margin declined to 46.7% from 53.5% year-over-year
- Operating expenses increased by 26.5% to $3.5 million
- Standardized products revenue decreased by 30.5%
- Net loss of $0.8 million compared to $0.2 million profit in H1 2023
- Required restatement of H1 2023 financial statements due to accounting errors
Insights
The financial results reveal concerning trends for Tungray Technologies. Despite a marginal
- Gross margin compression from
53.5% to46.7% , indicating pricing pressure and rising costs - A substantial
26.5% increase in operating expenses, primarily from higher salary costs and IPO-related fees - Standardized products revenue decline of
30.5% , showing vulnerability to competition
The financial restatement for 2023 raises questions about internal controls. The cost-cutting initiatives and strategic pivot toward 3D metal printing may be too late to reverse the negative trajectory without significant capital investment. The deteriorating margins in both customized (
The market positioning strategy reveals critical weaknesses in Tungray's competitive stance. The company's attempt to pivot into 3D metal printing for aviation and oil & gas sectors, while potentially promising, faces significant barriers to entry. The Singapore hub strategy overlooks established players with deeper industry relationships and proven technical capabilities. The declining standardized product performance reflects market saturation and commoditization pressures that won't be easily overcome.
The planned expansion into non-printer markets in Southeast Asia, particularly semiconductor and automotive sectors, requires substantial investment in capabilities and relationship building. The hiring of a dedicated sales manager, while necessary, may be insufficient given the scale of market penetration required. The company's relatively small size (
First Half 2024 Financial Highlights
- Total revenues for the six months ended June 30, 2024 increased by
1.5% to$5.4 million $5.3 million - Gross margin for the six months ended June 30, 2024 was
46.7% , compared to53.5% for the same period in 2023. - Operating loss for the six months ended June 30, 2024, was
$0.9 million $0.1 million - Net loss for the six months ended June 30, 2024, was
$0.8 million $0.2 million
Recent Developments and Strategic Highlights:
Cost-Cutting Measures:
The Company has implemented targeted cost control actions aimed at reducing expenses, enhancing operational efficiency, and renegotiating supplier contracts.
These actions include:
- Identifying and utilizing high-trade volume suppliers.
- Leveraging volume to negotiate favorable rates for common-use components.
Revenue Enhancement:
To drive sales growth, the Company is exploring potential horizontal strategic partnerships to access new, high-value capabilities.
These initiatives include:
- Introducing new lines of business through potential partnerships with existing companies.
- Utilizing the "market-for-tech" model to leverage
Singapore's hub position for regional business expansion. - Exploring technologies and services such as metal 3D printing for precision engineering, standardized manufacturing of medical components, and contract repair work for aviation components, such as aircraft engine fan blades and turbines.
- Utilizing the "market-for-tech" model to leverage
- Enhancing sales and market penetration by hiring a dedicated business-focused market and sales manager. This initiative will focus on:
- Increasing market penetration of non-printer related markets in the
Southeast Asia (SEA) region. - Focusing primarily on the semiconductor, automotive and non-printer related consumer product sectors.
- Increasing market penetration of non-printer related markets in the
Restatement of Previously Issued Financial Statements
During the course of preparing the unaudited condensed consolidated financial statements for the six months ended June 30, 2024, the Company identified misstatements in its previously issued consolidated financial statements for the six months ended June 30, 2023 as below, and as a result the Company has restated the previously issued consolidated financial statements for the six months ended June 30, 2023 in accordance with ASC 250 Accounting Changes and Error Corrections, to reflect the effects of the restatement adjustments and to make certain corresponding disclosures.
The categories of adjustments and their impacts on previously issued financial statements are described below and identified in the column entitled "Reference":
a. The Company failed to record the correct income tax expense, taxes payable and retained earnings due to improper identification of non-deductible expenses which were not detected because of not performing a reconciliation between the financial statements and tax return. Such failure has resulted in the misstatements of "Income tax expense", "Net income attributable to Tungray Technologies Inc", and "Foreign currency translation adjustment" for the six months ended June 30, 2023. The impact to the accumulated other comprehensive loss and foreign currency translation adjustment was a result of the foreign currency translation difference to the misstatement.
b. The Company failed to take the purchase option into consideration for the finance lease and used the incorrect useful life for the assets amortization. Such failure has resulted in the misstatement of "Cost of revenue", "Net income attributable to Tungray Technologies Inc" and "Foreign currency translation adjustment" for the six months ended June 30, 2023. The impact to the accumulated other comprehensive loss and foreign currency translation adjustment was a result of the foreign currency translation difference to the misstatement.
The effects of restatement adjustments to the line items are as below:
For the six months ended June 30, | ||||||||||||||
2023 | ||||||||||||||
As previously reported | Adjustment | Reference | As restated | |||||||||||
Cost of revenues | $ | 2,480,629 | $ | 12,590 | b | $ | 2,493,219 | |||||||
Income tax expense | (88,638) | (16,853) | a | (105,491) | ||||||||||
Foreign currency translation adjustment | (305,719) | 12,507 | a, b | (293,212) | ||||||||||
Management Commentary
Mr. Wanjun Yao, Chairman and Chief Executive Officer of Tungray, commented, "This year, we faced challenges that impacted our year-over-year performance, particularly in revenue growth and profit margins. To remain viable amidst the price competition, we are implementing aggressive cost-cutting measures and seeking efficiencies in production. In addition, to complement our cost-cutting measures, we are also exploring new revenue streams and focusing on higher-margin products to improve profitability."
"Despite significant headwinds from fierce price competition, our commitment to innovation and quality improvements remains unchanged, and we remain focused on delivering sustainable growth and innovation as our long-term strategy. During this reporting period, we expensed
"As we move forward, we are dedicated to adapting to the evolving market landscape. To enhance Tungray's business portfolio and adapt to high-growth markets, we are actively exploring 3D metal printing solutions tailored for high-end sectors such as commercial aviation, offshore marine, and oil & gas industries in which
First Half 2024 Financial Results
Total Revenues
Total revenues increased slightly by
- Revenues from customized products increased by
$0.5 million 11.6% for the six months ended June 30, 2024, primarily driven by the delivery of a major customization project during the period. - Revenues from standardized products decreased by
$0.4 million 30.5% for the six months ended June 30, 2024, mainly due to the impact of increasing industry competition resulting in lower sales pricing.
Cost of Revenues
Total costs increased by
- The cost of revenues for customized products rose by
$0.6 million 31.3% for the same period ended June 30, 2024, in line with the revenue increase.
- The cost of revenues for standardized products decreased by
$0.2 million 21.1% for the same period ended June 30, 2024, corresponding with the revenue decline due to increased industry competition.
Gross Profit
Gross profit was
- Gross profit for customized products was
$2.2 million 3.6% as compared to$2.3 million 48.6% for the six months ended June 30, 2024, and56.3% for the six months ended June 30, 2023.
- Gross profit for standardized products was
$0.3 million 42.1% as compared to$0.6 million 37.2% for the six months ended June 30, 2024, and44.6% for the six months ended June 30, 2023.
Operating Expenses
Total operating expenses were
- Selling expenses increased by
$0.1 million 38.8% from$0.2 million $0.3 million
- General and administrative expenses increased by
$0.6 million 29.8% from$2.1 million $2.7 million $0.5 million $0.1 million
- R&D expenses increased slightly by
3.8% for the six months ended June 30, 2024 as compared with the same period last year. The increase was consistent with the R&D plan the Company previously set out.
(Loss) Income from operations
Loss from operations was
Other Income, net
Total other income was
Income tax expense
Income tax expense increased by approximately
Net (Loss) Income
Net loss was
About Tungray Technologies Inc
Tungray Technologies Inc is an Engineer-to-Order (ETO) company that provides customized industrial manufacturing solutions to original equipment manufacturers (OEMs) in the semiconductors, printers, electronics, and home appliances industries. With research, development and manufacturing bases in
Forward-Looking Statements
All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and in its other filings with the SEC.
For more information, please contact:
Investor Relations:
Bill Zima
Email: tungray@icrinc.com
Tungray Technologies Inc and Subsidiaries | ||||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||||
(Stated in | ||||||||
As of June 30, 2024 | As of December 31, 2023 | |||||||
As Restated | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 9,965,474 | $ | 10,802,405 | ||||
Accounts and notes receivable, net | 2,732,116 | 3,574,739 | ||||||
Accounts receivable - related parties | 295,487 | 319,589 | ||||||
Inventories, net | 1,424,207 | 2,283,809 | ||||||
Prepayments, net | 831,679 | 259,950 | ||||||
Prepayments - related parties | 1,462,583 | 1,048,745 | ||||||
Other receivables and other current assets, net | 805,048 | 215,651 | ||||||
Other receivables - related parties | 461,924 | 23,816 | ||||||
Total current assets | 17,978,518 | 18,528,704 | ||||||
PROPERTY AND EQUIPMENT, NET | 6,184,336 | 6,326,369 | ||||||
OTHER ASSETS | ||||||||
Prepaid expenses and deposits | 79,592 | 23,163 | ||||||
Prepayment for land use right | 1,988,386 | - | ||||||
Long-term investment | 206,407 | 211,271 | ||||||
Operating right-of-use assets | 1,594,282 | 712,261 | ||||||
Intangible assets, net | 72,884 | 55,842 | ||||||
Deferred initial public offering ("IPO") costs | - | 1,192,734 | ||||||
Total non-current assets | 3,941,551 | 2,195,271 | ||||||
Total assets | 28,104,405 | 27,050,344 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | 1,280,101 | 1,048,271 | ||||||
Accounts payable - related parties | 515,276 | 498,923 | ||||||
Contract liabilities | 3,859,463 | 4,010,832 | ||||||
Accrued expenses and other payables | 965,192 | 1,289,941 | ||||||
Other payables - related parties | 284,235 | 670,866 | ||||||
Current portion of banking facilities | 156,654 | 140,162 | ||||||
Current portion of operating lease liabilities | 236,305 | 46,232 | ||||||
Current portion of operating lease liabilities - related party | 269,960 | 123,094 | ||||||
Taxes payable | 635,216 | 1,206,141 | ||||||
Total current liabilities | 8,202,402 | 9,034,462 | ||||||
OTHER LIABILITIES | ||||||||
Banking facilities | 1,810,412 | 1,951,389 | ||||||
Operating lease liabilities | 769,997 | 10,603 | ||||||
Operating lease liabilities - related party | 228,627 | 339,450 | ||||||
Total other liabilities | 2,809,036 | 2,301,442 | ||||||
Total liabilities | 11,011,438 | 11,335,904 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS' EQUITY | ||||||||
Class A ordinary shares ( | 1,179 | 1,044 | ||||||
Class B ordinary shares ( | 456 | 456 | ||||||
Additional paid-in capital | 3,135,124 | 332,574 | ||||||
Retained earnings | 14,716,555 | 15,530,562 | ||||||
Statutory reserves | 248,761 | 248,761 | ||||||
Accumulated other comprehensive loss | (913,916) | (284,444) | ||||||
Total Tungray Technologies Inc shareholders' equity | 17,188,159 | 15,828,953 | ||||||
NONCONTROLLING INTERESTS | (95,192) | (114,513) | ||||||
TOTAL EQUITY | 17,092,967 | 15,714,440 | ||||||
Total liabilities and equity | $ | 28,104,405 | $ | 27,050,344 | ||||
Tungray Technologies Inc and Subsidiaries | ||||||||
Unaudited Condensed Consolidated Statements of Income (Loss) and Comprehensive Loss | ||||||||
(Stated in | ||||||||
For the six months ended June 30, | ||||||||
2024 | 2023 | |||||||
(Unaudited) | As Restated (Unaudited) | |||||||
Revenue - products | $ | 5,435,786 | $ | 5,313,634 | ||||
Revenue - related party | - | 42,790 | ||||||
Total revenues | 5,435,786 | 5,356,424 | ||||||
Cost of revenue - products | 2,897,866 | 2,460,361 | ||||||
Cost of revenue - related party | - | 32,858 | ||||||
Total cost of revenues | 2,897,866 | 2,493,219 | ||||||
Gross profit | 2,537,920 | 2,863,205 | ||||||
Operating expenses: | ||||||||
Selling expenses | 300,122 | 216,168 | ||||||
General and administrative expenses | 2,735,835 | 2,106,952 | ||||||
Research and development expenses | 447,234 | 430,809 | ||||||
Total operating expenses | 3,483,191 | 2,753,929 | ||||||
(Loss) Income from operations | (945,271) | 109,276 | ||||||
Other income | ||||||||
Other income, net | 172,687 | 128,614 | ||||||
Lease income - related party | 9,855 | 10,263 | ||||||
Financial expenses, net | 44,262 | 22,074 | ||||||
Total other income, net | 226,804 | 160,951 | ||||||
(Loss) Income before income taxes | (718,467) | 270,227 | ||||||
Income tax expense | (126,219) | (105,491) | ||||||
Net (loss) income | (844,686) | 164,736 | ||||||
Less: net loss attributable to noncontrolling interests | (30,679) | (38,426) | ||||||
Net (loss) income attributable to Tungray Technologies Inc | (814,007) | 203,162 | ||||||
Net (loss) income | (844,686) | 164,736 | ||||||
Foreign currency translation adjustment | (629,472) | (293,212) | ||||||
Comprehensive loss | (1,474,158) | (128,476) | ||||||
Less: comprehensive loss attributable to noncontrolling interests | (30,679) | (36,732) | ||||||
Total comprehensive loss attributable to Tungray Technologies Inc | (1,443,479) | (91,744) | ||||||
Weighted average number of common shares outstanding - basic and diluted | 15,539,074 | 15,000,000 | ||||||
(Loss) Earnings per common share - basic and diluted | (0.05) | 0.01 | ||||||
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SOURCE Tungray Technologies Inc
FAQ
What caused Tungray Technologies' operating loss in H1 2024?
How much did Tungray's revenue grow in H1 2024?
What strategic initiatives is Tungray implementing to improve performance?
Why did Tungray restate its H1 2023 financial statements?
What caused the decline in Tungray's gross margin for H1 2024?
