TRT Trio Tech International

Fiscal 2018 Operating Income Increased 47% on a 10% Gain in Revenue

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.

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-Tech’s 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 Company’s 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 Company’s 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 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 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 Company’s 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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Company Contact:Trio-Tech InternationalA. Charles WilsonChairman(818) 787-7000orInvestor Contact:Berkman Associates(310) 477-3118info@BerkmanAssociates.com