Trio-Tech Reports Third Quarter and Nine Months Results

Trio-Tech International (NYSE:TRT) announced financial results for the third quarter and first nine months of fiscal 2018.

The company that was established in 1958 and headquartered in Van Nuys, California, Trio-Tech International is a diversified business group with interests semiconductor testing services, manufacturing and distribution of semiconductor testing equipment and real estate.

For the first nine months of fiscal 2018 ended March 31, 2018, revenue increased 13% to $31,601,000 compared to $27,900,000 for the first nine months of fiscal 2017, reflecting higher revenue in each of the Company’s business segments. Gross margin for the first nine months of fiscal 2018 increased 10% to $7,787,000, or 25% of revenue, compared to $7,099,000, or 25% of revenue, for the first nine months of fiscal 2017.

Income from operations for this year’s first nine months increased 30% to $1,479,000, or 5% of revenue, compared to $1,140,000, or 4% of revenue, for the same period last year.

Trio-Tech recognized a one-time, non-cash income tax expense of $900,000, related to the 2017 United States Tax Cuts and Jobs Act, 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. After this one-time non-cash tax effect, net income attributable to Trio-Tech common shareholders for the first nine months of fiscal 2018 was $509,000, or $0.14 per diluted share.

Third Quarter Results

For the third quarter of fiscal 2018 ended March 31, 2018, revenue increased 3% to $10,104,000 compared to revenue of $9,825,000 for the third quarter last year. A 24% increase in testing services revenue and a 29% increase in distribution revenue offset a 26% decrease in manufacturing revenue attributable to a decrease in orders from a large customer. A change in product mix in both manufacturing and testing services reduced overall gross margin to 22% of sales for this year’s third quarter, compared to 25% of sales for the third quarter of fiscal 2017.

After the one-time non-cash income tax expense mentioned above, the net loss for the third quarter of fiscal 2018 was $739,000, or $0.20 per diluted share.

CEO Comments

S.W. Yong, Trio-Tech’s CEO, said, “It’s important to emphasize that income from operations increased 30% for the first nine months of fiscal 2018, compared to the same period last year and that the Company would have posted a strong increase in net income, after excluding the one-time effect of the new U.S. tax act.

“We are encouraged that demand for Trio-Tech’s testing and distribution services remained as robust in the third quarter as it was in the year’s first half. We are working diligently to take advantage of opportunities for growth. While our fiscal third quarter results are typically affected by a slowdown in business activity related to the Chinese New Year and its festivities, we expect improving business operations in the fourth quarter of fiscal 2018.

“As always, we are focused on improving operating efficiencies and reducing costs wherever possible, even as we deliver the highest standard of service and value to our customers. This time-tested strategy is viewed as the foundation for Trio-Tech’s continued success in the years ahead.”

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