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Trio-Tech Fourth Quarter Net Income Increased 91% to $0.17 Per Diluted Share Versus $0.09 Per Share Last Year

September 25, 2018

VAN NUYS, Calif.--(BUSINESS WIRE)--Sep 25, 2018--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.

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