Trio-Tech Reports Fourth Quarter and Fiscal 2020 Results

Trio-Tech International (NYSE MKT: TRT) today announced financial results for the fourth quarter and fiscal year ended June 30, 2020.

Fourth Quarter Results

Revenue for the fourth quarter of fiscal 2020 decreased 32% to $7,179,000 compared to $10,625,000 for the fourth quarter of fiscal 2019, primarily due to the global COVID-19 pandemic which affected demand for Trio-Tech’s semiconductor manufacturing products and testing services. Manufacturing revenue decreased 43% to $2,724,000 compared to $4,803,000 in the same quarter last year, testing services revenue decreased 28% to $2,822,000 compared to $3,941,000, and distribution revenue decreased 13% to $1,620,000 compared to $1,864,000 in the same quarter last year.

The pandemic contributed to a decline in revenue, which, coupled with a change in product mix, reduced gross margin to $1,323,000 for the fourth quarter of fiscal 2020 from $2,468,000 for last year’s fourth quarter. As a percentage of revenue, gross margin declined to 18% compared to 23% of revenue for the same quarter last fiscal year.

The decline in sales, triggered primarily by the effect of the pandemic, resulted in a fourth quarter loss from operations of $541,000, compared to income from operations of $321,000 in the same quarter last fiscal year.

Net income for the fourth quarter of fiscal 2020 was $197,000, or $0.05 per diluted share, compared to net income of $449,000, or $0.12 per diluted share, in the same quarter last year. Net income for the fourth quarter of fiscal 2020 benefited from $455,000 in other income which is included in financial assistance received from local government in Singapore, Malaysia and China to mitigate the negative impact of the COVID-19 pandemic.

Shareholders' equity at June 30, 2020 increased to $25,146,000, or $6.84 per outstanding share, compared to $24,861,000, or $6.77 per outstanding share, at June 30, 2019. There were 3,673,055 common shares outstanding at June 30, 2020.

CEO Comments

S.W. Yong, Trio-Tech's CEO, said, “There is no doubt that Trio-Tech was hit hard in the past few months by the COVID-19 pandemic. Under these difficult circumstances we are proud to report that Trio-Tech remained profitable for the fiscal year and fourth quarter, posting profits from sales of properties held for sale in our Malaysia operation. Additionally, backlog at the close of fiscal 2020 was $9,340,000, a solid figure which compares favorably to our backlog of $10,149,000 at the end of fiscal 2019. While the continuing pandemic presents obstacles to the Company’s short-term outlook, we are taking significant steps to trim operations, cutting operating and overhead expenses to deal with the financial effects of the pandemic."

Fiscal 2020 Results

For the fiscal year ended June 30, 2020, revenue decreased 12% to $34,465,000 compared to $39,198,000 in fiscal 2019, primarily related to the effects of the COVID-19 pandemic. Manufacturing revenue decreased 22% to $11,605,000 compared to $14,889,000 and testing services revenue decreased 11% to $14,840,000 compared to $16,760,000 for fiscal 2019. Distribution revenue increased 7% to $7,958,000 compared to $7,451,000 for fiscal 2019.

Fiscal 2020 gross margin decreased to $7,266,000, or 21% of revenue, compared to $9,001,000, or 23% of revenue for fiscal 2019.

The revenue decline, primarily brought about by the pandemic, contributed to an operating loss for fiscal 2020 of $859,000, compared to income from operations of $794,000 for fiscal 2019.

Net income for fiscal 2020 was $966,000, or $0.26 per diluted share, compared to net income of $1,545,000, or $0.41 per diluted share, for fiscal 2019.

Net income for fiscal 2020 benefited from other income of $2,054,000, which included a pre-tax gain of $1,172,000 from the sale of real estate properties and an additional $718,000 in governmental grants to mitigate the negative impacts on our businesses from the pandemic. In fiscal 2019, other income amounting to $615,000 included a pre-tax gain of $685,000 from the sale of properties.

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 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; 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; 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

2020

2019

2020

2019

Manufacturing

$

2,724

$

4,803

$

11,605

$

14,889

Testing services

2,822

3,941

14,840

16,760

Distribution

1,620

1,864

7,958

7,451

Real estate

13

17

62

98

7,179

10,625

34,465

39,198

Cost of Sales

Cost of manufactured products sold

2,138

3,587

8,927

11,393

Cost of testing services rendered

2,307

2,851

11,353

12,202

Cost of distribution

1,393

1,674

6,847

6,505

Cost of real estate

18

45

72

97

5,856

8,157

27,199

30,197

Gross Margin

1,323

2,468

7,266

9,001

Operating Expenses:

General and administrative

1,657

1,826

6,976

7,049

Selling

132

246

679

826

Research and development

75

75

355

345

Impairment loss on long-lived assets

--

--

139

--

Gain on disposal of property, plant and equipment

--

--

(24

)

(13

)

Total operating expenses

1,864

2,147

8,125

8,207

(Loss) Income from Operations

(541

)

321

(859

)

794

Other (Expenses) Income

Interest expense

(44

)

(69

)

(230

)

(319

)

Other income, net

522

29

1,112

249

Gain on sale of properties

--

--

1,172

685

Total other Income (Expenses)

478

(40

)

2,054

615

(Loss) Income from Continuing Operations before Income Taxes

(63

)

281

1,195

1,409

Income Tax Benefit

124

201

12

42

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

61

482

1,207

1,451

Gain (Loss) from discontinued operations, net of tax

18

(1

)

(3

)

(3

)

NET INCOME

79

481

1,204

1,448

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

(118

)

32

238

(97

)

Net Income attributable to Trio-Tech International

197

449

966

1,545

Net Income Attributable to Trio-Tech International:

Income from continuing operations, net of tax

187

451

967

1,548

Gain (Loss) from discontinued operations, net of tax

10

(2

)

(1

)

(3

)

Net Income Attributable to Trio-Tech International

197

449

966

1,545

Basic Earnings per Share - Continuing Operations

$

0.05

$

0.12

$

0.26

$

0.42

Basic Loss per Share - Discontinued Operations

--

--

--

--

Basic Earnings per Share

$

0.05

$

0.12

$

0.26

$

0.42

Diluted Earnings per Share – Continuing Operations

$

0.05

$

0.12

$

0.26

$

0.41

Diluted Loss per Share – Discontinued Operations

--

--

--

--

Diluted Earnings per Share

$

0.05

$

0.12

$

0.26

$

0.41

Weighted Average Shares Outstanding - Basic

3,673

3,673

3,673

3,673

Weighted Average Shares Outstanding - Diluted

3,688

3,681

3,722

3,762

 

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,

2020

2019

2020

2019

Comprehensive Income Attributable to Trio-Tech International Common Shareholders:

Net income

$

79

$

481

$

1,204

$

1,448

Foreign currency translation, net of tax

309

(231

)

(742

)

(420

)

Comprehensive Income

388

250

462

1,028

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

(156

)

(11

)

220

(202

)

Comprehensive Income Attributable to Trio-Tech International

$

544

$

261

$

242

$

1,230

 

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

June 30,

2020

2019

ASSETS

(Audited)

CURRENT ASSETS:

Cash and cash equivalents

$

4,150

$

4,863

Short-term deposits

6,697

4,144

Short-term advances

141

--

Trade accounts receivable, net

5,951

7,113

Other receivables

998

817

Inventories, net

1,922

2,427

Prepaid expenses and other current assets

341

287

Assets held for sale

--

89

Total current assets

20,200

19,740

Deferred tax assets

247

390

Investment properties, net

690

782

Property, plant and equipment, net

10,310

12,159

Operating lease right-of-use assets

944

--

Other assets

1,609

1,750

Restricted term deposits

1,660

1,706

Total non-current assets

15,460

16,787

TOTAL ASSETS

$

35,660

$

36,527

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Lines of credit

$

172

$

187

Accounts payable

2,590

3,272

Accrued expenses

3,005

3,486

Income taxes payable

344

417

Current portion of bank loans payable

370

488

Current portion of finance leases

231

283

Current portion of operating leases

477

--

Current portion of PPP loan

54

--

Total current liabilities

7,243

8,133

Bank loans payable, net of current portion

1,836

2,292

Finance leases, net of current portion

435

442

Operating leases, net of current portion

467

--

Deferred tax liabilities

--

327

Income taxes payable

430

439

PPP loan, net of current portion

67

--

Other non-current liabilities

36

33

Total non-current liabilities

3,271

3,533

TOTAL LIABILITIES

10,514

11,666

EQUITY

TRIO-TECH INTERNATIONAL'S SHAREHOLDERS' EQUITY:

Common stock, no par value, 15,000,000 shares authorized; 3,673,055 shares issued and outstanding at June 30, 2020 and June 30, 2019, respectively

11,424

11,424

Paid-in capital

3,363

3,305

Accumulated retained earnings

8,036

7,070

Accumulated other comprehensive gain-translation adjustments

1,143

1,867

Total Trio-Tech International shareholders' equity

23,966

23,666

Non-controlling interest

1,180

1,195

TOTAL EQUITY

25,146

24,861

TOTAL LIABILITIES AND EQUITY

$

35,660

$

36,527

Contacts:

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

Investor Contact:
Berkman Associates
(310) 927-3108
info@BerkmanAssociates.com

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