Trio-Tech Reports Improved Third Quarter Results

Rhea-AI Summary

Trio-Tech International (NYSE MKT: TRT) reported improved financial results for the third quarter of fiscal 2024. Total revenue increased by 6% to $10,398,000, with significant growth in the manufacturing and distribution segments. Net income attributable to Trio-Tech International Common Shareholders for the quarter was $70,000, or $0.02 per diluted share. The company's CEO highlighted higher capital spending, increased backlog, and strong demand in key markets as key contributors to the positive results.

Positive

• Total revenue for the third quarter increased by 6% to $10,398,000.

• Manufacturing segment revenue saw a significant 62% increase to $4,813,000.

• Distribution segment revenue grew by 51% to $1,783,000.

• Net income attributable to Trio-Tech International Common Shareholders for the quarter was $70,000, or $0.02 per diluted share.

• Shareholders' equity increased to $31,452,000, or $7.47 per outstanding share.

Negative

• Testing Services segment revenue decreased by 33% to $3,796,000 for the quarter.

• Overall gross margin increased by 10% to $2,703,000, reflecting improvements in manufacturing and distribution segments, offset by lower margin in Testing Services.

• Net income for the first nine months of fiscal 2024 decreased to $807,000, or $0.19 per diluted share, compared to $1,382,000, or $0.33 per diluted share, for the same period in fiscal 2023.

• Gross margin for the first nine months decreased by 14% to $8,077,000, or 25% of revenue.

• Operating expenses for the first nine months of fiscal 2024 were $7,342,000, or 23% of revenue.

Insights

Financial Analyst

The reported increase in book value to $7.47 per share and cash position to $4.04 in cash and short-term deposits per share indicates a strengthening balance sheet. This is positive for investor confidence as it suggests a more robust financial standing. The increased revenue in the Manufacturing and Distribution segments by 62% and 51% respectively, in the third quarter, is a significant improvement. Particularly, the Manufacturing segment's performance in what is traditionally a weaker quarter can be seen as a bullish signal for the sector. However, the decline in Testing Services revenue by 33% paints a contrasting picture, reflective of current semiconductor market challenges. The modest increase in overall gross margins by 10% and operational expense control supports management's strategic focus on efficiency. For investors, the long-term outlook could be promising if the company can maintain cost control measures and capitalize on any market upticks. However, the year-on-year net income decrease over the nine months is a concern that warrants cautious monitoring. That said, the minimal increase in operating expenses as a percentage of revenue despite a revenue decrease highlights effective cost management.

Market Research Analyst

The CEO's comments offer insight into the company's strategic focus on growth markets such as electronic components and display products, which is a key takeaway for investors looking at sector trends. This targeted growth alongside an increased backlog suggests a proactive approach to capturing market share. Despite the performance dip in the Testing Services segment, the reported solid margins and cash flow show resilience. The reduction in non-current liabilities also signals an improved financial structure, potentially lowering risk. It is important to note the dynamic nature of the semiconductor industry, where current weaknesses can be offset by strategic positioning and operational efficiency, as indicated by the CEO's confidence in exploiting near-term opportunities. For investors, the mix of positive and negative trends requires a balanced view of potential risks and rewards.

$7.47 Book Value; $4.04 in Cash, Short-Term Deposits Per Share

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 2024.

Fiscal 2024 Third Quarter Results

For the three months ended March 31, 2024, total revenue increased 6% to $10,398,000 compared to $9,842,000 for same quarter last year. Manufacturing segment revenue increased 62% to $4,813,000, compared to $2,963,000 for the same quarter last year. Distribution segment revenue increased 51% to $1,783,000, compared to $1,179,000 for the same period last year. Testing Services segment revenue decreased 33% to $3,796,000 from $5,697,000 for the same quarter last year.

Overall gross margin increased 10% to $2,703,000, or 26% of revenue, compared to $2,458,000, or 25% of revenue for the same period last year. The increase in gross margin reflects improved operations in the Manufacturing and Distribution segments, partially offset by lower gross margin in Testing Services.

Total operating expenses for the third quarter of fiscal 2024 increased to $2,644,000, or 25% of revenue, from $2,495,000, or 25% of revenue, in the same quarter last year.

Pre-tax Income from continuing operations increased to $306,000, compared to pre-tax income from continuing operations of $57,000 for the same quarter last year.

Net income attributable to Trio-Tech International Common Shareholders for the three months ended March 31, 2024 increased to $70,000, or $0.02 per diluted share, which included non-cash stock compensation expense of $338,000. This compares to a net loss for the third quarter of fiscal 2023 of $7,000, or $0.00 per diluted share, which included non-cash stock compensation expense of $283,000.

CEO Comments

S.W. Yong, Trio-Tech’s CEO, said, “Higher capital spending by our key customers and increased backlog enabled the Manufacturing segment to achieve a 62% revenue gain in the seasonally weakest quarter of our fiscal year. Increasing demand for electronic components and display products, a market we specifically targeted for growth in the past year, drove a 51% increase in Distribution revenue. We are cautiously optimistic that these favorable trends in revenue and profitability for these two segments of our business will continue throughout this calendar year.

“The performance of our Testing Services segment reflects continued weakness in global semiconductor demand. The cost control measures we have implemented across the Company have enabled Trio-Tech to maintain solid margins despite the decline in revenue in the Testing Services segment. We are confident that our tight manufacturing cost controls, strong cash flow and attention to market developments position Trio-Tech to exploit any near-term opportunities and developments in the semiconductor industry.”

Fiscal 2024 Nine Months Results

For the first nine months of fiscal 2024, revenue decreased 5% to $32,566,000 compared to $34,171,000 for the first nine months of fiscal 2023. Manufacturing revenue increased 8% to $12,488,000 from 11,592,000 for the first nine months of fiscal 2023. Distribution revenue increased 33% to $6,453,000 from $4,855,000 for the first nine months from fiscal 2023. Testing Services revenue decreased 23% to $13,606,000 from 17,709,000 for the first nine months of fiscal 2023.

Gross margin for the first nine months of fiscal 2023 decreased 14% to $8,077,000, or 25% of revenue, compared to $9,415,000, or 27% of revenue, for the same period last year.

Operating expenses were $7,342,000, or 23% of revenue, for this year’s first nine months compared to $7,316,000, or 21% of revenue, for the same period a year ago.

Net income attributable to Trio-Tech International Common Shareholders for the first nine months of fiscal 2024 was $807,000, or $0.19 per diluted share. This compares to net income of $1,382,000, or $0.33 per diluted share, for the first nine months of fiscal 2023.

Balance Sheet Highlights

Shareholders’ equity at March 31, 2024 increased to $31,452,000, or $7.47 per outstanding share, compared to shareholders’ equity of $29,571,000, or $7.21 per outstanding share, at June 30, 2023. Cash, cash equivalents and short-term deposits at March 31, 2024 increased to $17,025,000, or $4.04 per outstanding share, compared to $14,210,000, or $3.47 per outstanding share, at June 30, 2023.

Trio-Tech reported total non-current liabilities at March 31, 2024 of $1,839,000. This compares to total non-current liabilities at June 30, 2023 of $3,289,000.

There were approximately 4,210,305 common shares outstanding at March 31, 2024 compared to approximately 4,096,680 at June 30, 2023.

About Trio‑Tech

Established in 1958, Trio-Tech International is located in Van Nuys, California, with its Principal Executive Office and regional headquarter in Singapore. Trio-Tech International is a diversified business group with interests in semiconductor testing services, manufacturing and distribution of semiconductor testing equipment, and real estate. Our subsidiary locations include Tianjin, Suzhou, Chongqing and Jiangsu in China, as well as Kuala Lumpur Malaysia and Bangkok Thailand. Further information about Trio-Tech’s semiconductor products and services can be obtained from the Company’s Web site at www.triotech.com and www.universalfareast.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; or the divestiture in the future of one or more business segments; among other factors, 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; trade tension between U.S. and China; inflation; the war in Ukraine and Russia, the war between Israel and Hamas; and other economic, financial and regulatory factors beyond the Company's control. Other than statements of historical fact, all statements made in this 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. Many of these risks and uncertainties are beyond the Company's control. Reference is made to the discussion of risk factors detailed in the Company's filings with the Securities and Exchange Commission including its reports on Form 10-K and 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

TRIO‑TECH INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
		Three Months Ended								Nine Months Ended
		March 31,								March 31,
Revenue		2024				2023				2024				2023
Manufacturing		$	4,813			$	2,963			$	12,488			$	11,592
Testing Services			3,796				5,697				13,606				17,709
Distribution			1,783				1,179				6,453				4,855
Real Estate			6				3				19				15
			10,398				9,842				32,566				34,171
Cost of Sales
Cost of manufactured products sold			3,594				2,451				9,252				8,825
Cost of testing services rendered			2,601				3,940				9,849				11,813
Cost of distribution			1,482				975				5,334				4,064
Cost of real estate			18				18				54				54
			7,695				7,384				24,489				24,756
Gross Margin			2,703				2,458				8,077				9,415
Operating Expenses:
General and administrative			2,351				2,248				6,326				6,472
Selling			204				160				639				526
Research and development			89				87				305				311
Loss on disposal of property, plant and equipment			--				--				72				7
Total operating expenses			2,644				2,495				7,342				7,316
Income (Loss) from Operations			59				(37	)			735				2,099
Other Income (Expenses)
Interest expenses			(17	)			(29	)			(63	)			(83	)
Other income (expenses), net			252				40				366				(49	)
Government grant			12				83				89				108
Total other income (expenses)			247				94				392				(24	)
Income from Continuing Operations before Income Taxes			306				57				1,127				2,075
Income Tax Expenses			(142	)			(8	)			(274	)			(474	)
Income from Continuing Operations before Non-controlling Interest, net of tax			164				49				853				1,601
(Loss) Income from Discontinued Operations, net of tax			(1	)			5				3				(4	)
NET INCOME			163				54				856				1,597
Less: Net income Attributable to Non-controlling Interest			93				61				49				215
Net Income (Loss) Attributable to Trio-Tech International			70				(7	)			807				1,382
Net Income Attributable to Trio-Tech International:
Income (Loss) from Continuing Operations, net of tax			71				(10	)			801				1,384
(Loss) Income from Discontinued Operations, net of tax			(1	)			3				6				(2	)
Net Income (Loss) Attributable to Trio-Tech International		$	70			$	(7	)		$	807			$	1,382
Basic Earnings per Share		$	0.02			$	0.00			$	0.19			$	0.34
Diluted Earnings per Share		$	0.02			$	0.00			$	0.19			$	0.33
Weighted Average Shares Outstanding - Basic			4,176				4,075				4,131				4,075
Weighted Average Shares Outstanding - Diluted			4,282				4,159				4,274				4,161

TRIO‑TECH INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
UNAUDITED (IN THOUSANDS)
		Three Months Ended								Nine Months Ended
		March 31,								March 31,
		2024				2023				2024			2023
Comprehensive (Loss) / Income
Attributable to Trio-Tech International:
Net income		$	163			$	54			$	856		$	1,597
Foreign Currency Translation, net of tax			(753	)			166				222			521
Comprehensive (Loss) Income			(590	)			220				1,078			2,118
Less: Comprehensive Income (Loss)
Attributable to Non-controlling Interest			93				(85	)			49			127
Comprehensive (Loss) Income
Attributable to Trio-Tech International		$	(683	)		$	305			$	1,029		$	1,991

TRIO‑TECH INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
		Mar. 31,			Jun. 30,
		2024			2023
ASSETS		(Unaudited)			(Audited)
CURRENT ASSETS:
Cash and cash equivalents		$	10,716		$	7,583
Short-term deposits			6,309			6,627
Trade account receivables, net			10,083			9,804
Other receivables			1,089			939
Inventories, net			2,742			2,151
Prepaid expenses and other current assets			577			694
Assets held for sale			--			274
Financed sales receivable			--			16
Restricted term deposits			754			739
Total current assets			32,270			28,827
NON-CURRENT ASSETS:
Deferred tax assets			117			100
Investment properties, net			433			474
Property, plant and equipment, net			6,081			8,344
Operating lease right-of-use assets			2,277			2,609
Other assets			149			116
Restricted term deposits			1,760			1,716
Total non-current assets			10,817			13,359
TOTAL ASSETS		$	43,087		$	42,186
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	2,406		$	1,660
Accrued expense			3,904			4,291
Contract liabilities			1,499			1,277
Income taxes payable			328			418
Current portion of bank loans payable			308			475
Current portion of finance leases			56			107
Current portion of operating leases			1,295			1,098
Total current liabilities			9,796			9,326
NON-CURRENT LIABILITIES:
Bank loans payable, net of current portion			676			877
Finance leases, net of current portion			10			42
Operating leases, net of current portion			982			1,511
Income taxes payable, net of current portion			141			255
Deferred tax liabilities			3			10
Other non-current liabilities			27			594
Total non-current liabilities			1,839			3,289
TOTAL LIABILITIES		$	11,635		$	12,615
EQUITY
TRIO-TECH INTERNATIONAL'S SHAREHOLDERS' EQUITY:
Common stock, no par value, 15,000,000 shares authorized; 4,210,305 and 4,096,680 shares issued and outstanding at March 31, 2024 and June 30, 2023, respectively			13,194			12,819
Paid-in capital			5,494			5,066
Accumulated retained earnings			11,570			10,763
Accumulated other comprehensive income-translation adjustments			984			758
Total Trio-Tech International shareholders' equity			31,242			29,406
Non-controlling interest			210			165
TOTAL EQUITY			31,452			29,571
TOTAL LIABILITIES AND EQUITY		$	43,087		$	42,186

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240513413690/en/

Company Contact:

Siew Wai Yong

Chairman & CEO

(818) 787-7000

Investor Contact:

Berkman Associates

(310) 927-3108

robert.jacobs@jacobscon.com

Source: Trio-Tech International

FAQ

What was the total revenue for Trio-Tech International in the third quarter of fiscal 2024?

Total revenue for the third quarter increased by 6% to $10,398,000.

How did the Manufacturing segment revenue perform in the third quarter of fiscal 2024?

Manufacturing segment revenue saw a significant 62% increase to $4,813,000.

What was the net income per diluted share for Trio-Tech International Common Shareholders in the third quarter of fiscal 2024?

Net income attributable to Trio-Tech International Common Shareholders for the quarter was $70,000, or $0.02 per diluted share.

What was the shareholders' equity per outstanding share at the end of March 31, 2024?

Shareholders' equity increased to $31,452,000, or $7.47 per outstanding share.