Trio-Tech Reports Second Quarter Results

Rhea-AI Summary

Trio-Tech International (TRT) reported a rise in shareholders' equity to $7.58 per share from $7.22 per share. However, revenue decreased by 2% to $12.2 million in the second quarter of fiscal 2024. Operating income also declined to $677,000, and net income remained unchanged at $507,000. Cash and cash equivalents increased to $10.97 million, and shareholders' equity rose to $31.53 million. CEO S.W. Yong expressed optimism about the company's distribution and manufacturing segments, citing a 63% increase in distribution revenue.

Positive

• None.

Negative

• Revenue decreased by 2% in the second quarter of fiscal 2024.
• Operating income declined to $677,000.
• Net income remained unchanged at $507,000.
• Gross margin decreased to 23% of revenue.
• Income from operations was $676,000 for the first six months of fiscal 2024, lower than the previous year.
• Total other income was $145,000 compared to expenses of $118,000 in the same period last year.

Insights

Financial Analyst

Analyzing Trio-Tech International's financial results reveals several key points that are significant from an investment perspective. The company's marginal decrease in quarterly revenue by 2% is a reflection of challenges within the testing services segment. This could suggest sector-specific issues or increased competition affecting the segment's performance. However, it is important to note that the distribution revenue has seen a substantial increase of 63%, which may indicate a strategic pivot or diversification that could benefit the company in the long run.

The gross margin contraction from 27% to 23% is indicative of cost pressures or a change in the sales mix, which could be a concern if the trend continues. Operating income has also decreased, which, when coupled with the narrowing gross margin, suggests that the company may be facing operational headwinds or increased costs that could affect profitability if not addressed.

The increase in shareholders' equity and cash equivalents is a positive sign, demonstrating financial stability and providing the company with a buffer to withstand market fluctuations. This financial cushion could be pivotal for strategic investments or weathering periods of subdued revenue growth.

Market Research Analyst

The semiconductor industry is known for its cyclicality and Trio-Tech's CEO's comments about the industry's gradual recovery from a downturn could be critical for investors. The reported improvement in capital spending within the semiconductor industry last fall, which has contributed to the company's backlog, is promising as it suggests potential revenue streams in the upcoming quarters. This could be a sign of resurgence in the industry, which would positively impact companies like Trio-Tech that are involved in manufacturing and distribution within the sector.

From a market perspective, the company's optimism and the anticipated delivery of the remaining dynamic test systems could be a catalyst for future growth. The strengthening of the manufacturing and distribution segments, as reported by the CEO, may also be a sign of strategic realignment within the company to focus on more profitable or growing areas of the business.

Economist

The reported strengthening of the US dollar against the Singapore dollar, leading to reduced currency exchange losses, is a double-edged sword. While it has benefited Trio-Tech's financials in the short term, it could also potentially impact the cost competitiveness of the company's exports and international business dealings. Investors should consider the potential volatility in currency exchange rates and its impact on the company's future earnings.

Furthermore, the company's tight expense controls and improving operating efficiency, as mentioned by the CEO, are indicative of proactive management in a challenging economic environment. These measures are crucial for maintaining profitability during periods of revenue decline and could reflect a robust risk management strategy that is essential for long-term sustainability.

Shareholders’ Equity Increases to $7.58 Per Share From $7.22 Per Share

VAN NUYS, Calif.--(BUSINESS WIRE)-- Trio-Tech International (NYSE MKT: TRT) today announced financial results for the second quarter and first six months of fiscal 2024.

Fiscal 2024 Second Quarter Results

For the three months ended December 31, 2023, revenue decreased 2% to $12,202,000 compared to $12,390,000 for the same quarter last year, primarily related to a decline in revenue in the Company’s testing services segment.

The overall gross margin was $2,854,000, or 23% of revenue, compared to $3,335,000, or 27% of revenue, for the same quarter last year. Operating income was $677,000, or 6% of revenue, compared to $1,069,000, or 9% of revenue, for the same quarter last year.

Total other expenses were $100,000, compared to $253,000 in the same quarter last year, due principally to an increase in interest income to $96,000 from $37,000, and a strengthening of the US dollar against the Singapore dollar, which reduced currency exchange losses to $236,000, compared to $349,000 in the same quarter last year.

Net income for the second quarter of fiscal 2024 was unchanged at $507,000, or $0.12 per diluted share from the second quarter of fiscal 2023. Net income for this year’s second quarter benefited from non-controlling interests’ after-tax loss of $21,000, versus an after-tax income of $58,000 in the same quarter last year.

Cash and cash equivalents at December 31, 2023, increased to $10,966,000, compared to $7,583,000 at June 30, 2023, and shareholders' equity increased to $31,528,000, or $7.58 per outstanding share, compared to $29,571,000, or $7.22 per outstanding share at June 30, 2023. There were approximately 4,160,555 and 4,096,680 common shares outstanding at December 31, 2023 and June 30, 2023, respectively.

CEO Comments

S.W. Yong, Trio-Tech's CEO, said, “Distribution revenue increased 63% in the quarter and distribution margins improved to 18% from 15% compared to the second quarter last year. In addition, we received customer acceptance for the initial dynamic test system delivered in the recent first quarter and anticipate delivering the remaining five units in the second half of fiscal 2024.

“Semiconductor industry capital spending improved last fall, boosting second quarter manufacturing segment revenue and contributing to backlog, which is expected to be delivered during the remainder of fiscal 2024.

“We remain optimistic and encouraged by improvements in our manufacturing and distribution segments. Our strong cash position, improving operating efficiency and tight expense controls will enable the Company to quickly evaluate and react proactively when the semiconductor industry gradually recovers from the current downturn.”

Fiscal 2024 First Half Results

For the first six months of fiscal 2024, revenue decreased 9% to $22,168,000 compared to $24,329,000 for the same period last year.

Gross margin for the first six months of fiscal 2024 was $5,374,000, or 24% of revenue, compared to $6,957,000, or 29% of revenue for the same period last year.

Income from operations was $676,000, or 3% of revenue, compared to $2,136,000, or 9% of revenue for the same period last year.

Total other income was $145,000, compared to expenses of $118,000 in the same quarter last year, due to an increase in interest income to $174,000, compared to $55,000, and reduced currency exchange losses of $177,000, compared to $279,000 in the same period last year.

Net income for the first half of fiscal 2024 was $737,000, or $0.17 per diluted share, compared to $1,389,000, or $0.33 per diluted share for the same period last year.

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; the divestiture of one or more business segments in response to, 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
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
	Three Months Ended								Six Months Ended
	December 31,								December 31,
Revenue	2023				2022				2023				2022
Manufacturing	$	4,790			$	5,044			$	7,675			$	8,629
Testing services		4,646				5,648				9,810				12,012
Distribution		2,760				1,694				4,670				3,676
Real estate		6				4				13				12
		12,202				12,390				22,168				24,329
Cost of Sales
Cost of manufactured products sold		3,609				3,849				5,658				6,374
Cost of testing services rendered		3,464				3,747				7,248				7,873
Cost of distribution		2,256				1,441				3,852				3,089
Cost of real estate		19				18				36				36
		9,348				9,055				16,794				17,372
Gross Margin		2,854				3,335				5,374				6,957
Operating Expenses:
General and administrative		1,817				1,919				3,975				4,224
Selling		248				193				435				366
Research and development		131				151				216				224
(Gain) Loss on disposal of property, plant and equipment		(19	)			3				72				7
Total operating expenses		2,177				2,266				4,698				4,821
Income from Operations		677				1,069				676				2,136
Other (Expenses) Income
Interest expenses		(22	)			(10	)			(46	)			(54	)
Other (expenses) income, net		(82	)			(264	)			114				(106	)
Government grant		4				21				77				42
Total other (expenses) income		(100	)			(253	)			145				(118	)
Income from Continuing Operations before Income Taxes		577				816				821				2,018
Income Tax Expenses		(95	)			(241	)			(132	)			(466	)
Income from Continuing Operations before
Non-controlling Interest, Net of Tax		482				575				689				1,552
Income (Loss) from Discontinued Operations, Net of Tax		4				(10	)			4				(9	)
NET INCOME		486				565				693				1,543
Less: Net (Loss) Income Attributable to Non-controlling Interest		(21	)			58				(44	)			154
Net Income Attributable to Trio-Tech International		507				507				737				1,389
Net Income Attributable to Trio-Tech International:
Income from Continuing Operations, Net of Tax		503				512				730				1,394
Income (Loss) from Discontinued Operations, Net of Tax		4				(5	)			7				(5	)
Net Income attributable to Trio-Tech International	$	507			$	507			$	737			$	1,389
Basic Earnings per Share	$	0.12			$	0.12			$	0.18			$	0.34
Diluted Earnings per share	$	0.12			$	0.12			$	0.17			$	0.33
Weighted Average Shares Outstanding - Basic		4,120				4,074				4,109				4,074
Weighted Average Shares Outstanding - Diluted		4,259				4,162				4,270				4,160

TRIO‑TECH INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
	Three Months Ended							Six Months Ended
	December 31,							December 31,
	2023				2022			2023				2022
Comprehensive Income Attributable to Trio-Tech International Common Shareholders:
Net income	$	486			$	565		$	693			$	1,543
Foreign Currency Translation, Net of Tax		1,158				1,568			975				355
Comprehensive Income		1,644				2,133			1,668				1,898
Less: Comprehensive (loss) income Attributable to Non-controlling Interest		(72	)			133			(74	)			212
Comprehensive Income Attributable to Trio-Tech International Common Shareholders	$	1,716			$	2,000		$	1,742			$	1,686

TRIO‑TECH INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
	Dec. 31,			Jun. 30,
	2023			2023
ASSETS	(Unaudited)			(Audited)
CURRENT ASSETS:
Cash and cash equivalents	$	10,966		$	7,583
Short-term deposits		5,791			6,627
Trade account receivables, net		12,388			9,804
Other receivables		1,029			939
Inventories, net		3,546			2,151
Prepaid expenses and other current assets		589			694
Assets held for sale		--			274
Financed sales receivable		6			16
Restricted term deposit		762			739
Total current assets		35,077			28,827
NON-CURRENT ASSETS:
Deferred tax assets		153			100
Investment properties, net		461			474
Property, plant and equipment, net		6,601			8,344
Operating lease right-of-use assets		2,359			2,609
Other assets		169			116
Restricted term deposits		1,778			1,716
Total non-current assets		11,521			13,359
TOTAL ASSETS	$	46,598		$	42,186
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Lines of credit	$	384		$	--
Accounts payable		2,345			1,660
Accrued expense		4,506			4,291
Contract liabilities		3,808			1,277
Income taxes payable		257			418
Current portion of bank loans payable		375			475
Current portion of finance leases		81			107
Current portion of operating leases		1,119			1,098
Total current liabilities		12,875			9,326
NON-CURRENT LIABILITIES:
Bank loans payable, net of current portion		762			877
Finance leases, net of current portion		15			42
Operating leases, net of current portion		1,240			1,511
Income taxes payable, net of current portion		141			255
Deferred tax liabilities		7			10
Other non-current liabilities		30			594
Total non-current liabilities		2,195			3,289
TOTAL LIABILITIES	$	15,070		$	12,615
EQUITY
TRIO-TECH INTERNATIONAL'S SHAREHOLDERS' EQUITY:
Common stock, no par value, 15,000,000 shares authorized; 4,160,555 and 4,096,680 shares issued and outstanding at December 31 and June 30, 2023, respectively		13,018			12,819
Paid-in capital		5,156			5,066
Accumulated retained earnings		11,500			10,763
Accumulated other comprehensive income-translation adjustments		1,763			758
Total Trio-Tech International shareholders' equity		31,437			29,406
Non-controlling interest		91			165
TOTAL EQUITY		31,528			29,571
TOTAL LIABILITIES AND EQUITY	$	46,598		$	42,186

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240212111431/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 increase in shareholders' equity per share for Trio-Tech International (TRT)?

Shareholders' equity increased to $7.58 per share from $7.22 per share.

What was the revenue for Trio-Tech International (TRT) in the second quarter of fiscal 2024?

Revenue decreased by 2% to $12.2 million in the second quarter of fiscal 2024.

What was the operating income for Trio-Tech International (TRT) in the second quarter of fiscal 2024?

Operating income was $677,000 in the second quarter of fiscal 2024.

What was the net income for Trio-Tech International (TRT) in the second quarter of fiscal 2024?

Net income remained unchanged at $507,000 in the second quarter of fiscal 2024.

What was the cash and cash equivalents for Trio-Tech International (TRT) at the end of December 31, 2023?

Cash and cash equivalents increased to $10.97 million at the end of December 31, 2023.

What was the CEO's outlook on Trio-Tech International's (TRT) performance?

CEO S.W. Yong expressed optimism about the company's distribution and manufacturing segments, citing a 63% increase in distribution revenue.