Trio-Tech Reports Net Income Of $0.13 Per Share For The First Half Of Fiscal 2016 Versus A Loss Of $0.01 Per Share Last Year

Trio-Tech International (NYSEMKT:TRT) today announced financial results for the second quarter and first six months of fiscal 2016:
  • Fiscal 2016 second quarter net income increased to $0.05 per share compared to net income of $0.03 per share for the second quarter of fiscal 2015.
  • Fiscal 2016 first half net income increased to $0.13 per share compared to a net loss of $0.01 per share for the first half of fiscal 2015.
  • Operating income for the first half of fiscal 2016 doubled to $627,000 compared to operating income of $314,000 for the first half of fiscal 2015.
  • Cash and cash equivalents increased to $4,370,000, or $1.24 per share, at December 31, 2015 compared to $3,711,000, or $1.06 per share, at June 30, 2015.

CEO Comments

S.W. Yong, Trio-Tech's CEO, said, "Our focus on profitability is clearly evident in our financial results for the second quarter and even more dramatically for the first half of fiscal 2016. The combination of higher gross margin and lower operating expenses for this year's first half compared to the same period last year drove a 100% increase in operating income as well as a substantial increase in net income versus prior year. And we achieved these improvements despite a decrease in revenue, attributable to reduced demand for our semiconductor testing services this year compared to last year. Revenue and operating profitability were reduced by foreign currency translation adjustment reflecting the strength of the US dollar this year compared with the same period last year. These improvements attest to the flexibility of our operations and our control over operating costs.

"We are especially pleased by the rapid growth of our distribution business, which provides products manufactured by other companies that are complementary to Trio-Tech's proprietary semiconductor testing products sold through our manufacturing segment. One of our primary objectives is to further expand our distribution revenue to help offset the volatility which is characteristic of our semiconductor testing business. We are pursuing this objective diligently, and we are optimistic that we can continue building on the progress we have achieved to date."

Fiscal 2016 First Half Results

For the six months ended December 31, 2015, revenue decreased 4.2% to $16,284,000 compared to revenue of $16,990,000 for the first six months of fiscal 2015. Manufacturing revenue increased 0.3% to $6,416,000 for this year's first half compared to $6,395,000 for the same period a year earlier, and revenue from the distribution of products manufactured by others tripled to $2,334,000 compared to $817,000. These increases were offset by a 22.8% decrease in semiconductor testing services to $7,484,000 for this year's first half compared to $9,691,000 for the same period last fiscal year, primarily reflecting reduced orders from a major customer in Asia.

Net income attributable to Trio-Tech International common shareholders for the first six months of fiscal 2016 increased to $449,000, or $0.13 per basic and diluted share, which included a loss from discontinued operations of $4,000, or $0.00 per share. This compares to a net loss attributable to Trio-Tech International common shareholders for the first six months of fiscal 2015 of $30,000, or $0.01 per basic and diluted share, which included income from discontinued operations of $20,000, or $0.00 per share.

Gross margin for this year's first half was 26.4% compared to 25.0% for the same period last fiscal year. Operating expenses decreased to $3,666,000 for the first half of fiscal 2016 compared to $3,926,000 for the same period last fiscal year.

Income from operations for the first half of fiscal 2016 increased to $627,000 compared to $314,000 for the first half of fiscal 2015.

Shareholders' equity at December 31, 2015 was $19,966,000, or $5.68 per outstanding share, compared to $20,722,000, or $5.90 per outstanding share, at June 30, 2015. There were approximately 3,513,000 common shares outstanding at December 31, 2015 and June 30, 2015.

Fiscal 2016 Second Quarter Results

For the three months ended December 31, 2015, revenue decreased 6.1% to $8,354,000 compared to $8,897,000 for the second quarter of fiscal 2015, primarily the result of a 27.0% decrease in testing services revenue that more than offset a tripling of revenue from distribution for the period.

Net income attributable to Trio-Tech International common shareholders for the second quarter of fiscal 2016 increased to $190,000, or $0.05 per basic and diluted share. This compares to net income attributable to Trio-Tech International common shareholders of $94,000, or $0.03 per basic and diluted share, for the second quarter of fiscal 2015.

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 Southeast 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; 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
 
      Three Months Ended       Six Months Ended
December 31, December 31,

 
2015       2014 2015       2014

Revenue
Manufacturing $ 3,276 $ 3,348 $ 6,416 $ 6,395
Testing services 3,701 5,073 7,484 9,691
Distribution 1,359 432 2,334 817
Others   18     44     50     87  
  8,354     8,897     16,284     16,990  
 
Cost of Sales
Cost of manufactured products sold 2,471 2,726 4,580 5,599
Cost of testing services rendered 2,499 3,356 5,257 6,405
Cost of distribution 1,240 337 2,093 677
Others   29     35     61     69  
  6,239     6,454     11,991     12,750  
 
Gross Margin 2,115 2,443 4,293 4,240
 
Operating Expenses:
General and administrative 1,599 1,711 3,261 3,438
Selling 141 165 312 296
Research and development 51 47 97 94
Impairment loss -- 55 -- 70
(Gain) loss on disposal of property, plant and equipment   (4 )   28     (4 )   28  
Total operating expenses   1,787     2,006     3,666     3,926  
 
Income from Operations 328 437 627 314
 
Other (Expenses) Income
Interest expenses (51 ) (58 ) (104 ) (122 )
Other income, net   18     7     226     54  
Total other (expenses) income (33 ) (51 ) 122 (68 )
 
Income from Continuing Operations before Income Taxes 295 386 749 246
Income Tax Expenses   (86 )   (132 )   (153 )   (86 )
 

Income from Continuing Operations before Non-controlling Interest, Net of Tax
209 254 596 160
Income (loss) from Discontinued Operations, Net of Tax   6     (6 )   (4 )   20  
NET INCOME 215 248 592 180
 
Less: Income Attributable to Non-controlling Interest   25     154     143     210  
Net Income (Loss) Attributable to Trio-Tech International $ 190   $ 94   $ 449   $ (30 )
 
Net Income (Loss) Attributable to Trio-Tech International:
Income (Loss) from Continuing Operations, Net of Tax 188 97 452 (41 )
Income (Loss) from Discontinued Operations, Net of Tax   2     (3 )   (3 )   11  
Net Income attributable to Trio-Tech International $ 190   $ 94   $ 449   $ (30 )
 
Basic and Diluted Earnings (Loss) per Share:
From continuing operations $ 0.05 $ 0.03 $ 0.13 $ (0.01 )
From discontinued operations   --     --     --     --  
Basic and Diluted Earnings (Loss) per Share $ 0.05   $ 0.03   $ 0.13   $ (0.01 )
 
Weighted Average Shares Outstanding - Basic 3,513 3,513 3,513 3,513
Weighted Average Shares Outstanding - Diluted 3,529 3,513 3,525 3,513
 
 
 
TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
 
      Three Months Ended       Six Months Ended
December 31, December 31,
2015       2014 2015       2014

Comprehensive Income (Loss) Attributable to Trio-Tech International:
 
Net income $ 215 $ 248 $ 592 $ 180
 
Foreign Currency Translation, Net of Tax   22   (574 )   (1,403 )   (414 )
 

Less: Comprehensive Income (Loss) Comprehensive Income (Loss)
237 (326 ) (811 ) (234 )
 
Attributable to Non-controlling Interest   114   36     (138 )   150  
 

Comprehensive Income (Loss) Attributable to Trio-Tech International
$ 123 $ (362 ) $ (673 ) $ (384 )
 
 
 
TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
 
      Dec. 31,                 Jun. 30,
2015 2015
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 4,370 $ 3,711
Short-term deposits 93 101
Trade accounts receivable, net 7,302 7,875
Other receivables 299 389
Inventories, net 1,709 1,141
Prepaid expenses and other current assets 269 244
Assets held for sale   86   98
Total current assets 14,128 13,559
 
Deferred tax assets 413 453
Investment properties, net 1,421 1,540
Property, plant and equipment, net 10,825 12,522
Other assets 1,737 1,823
Restricted term deposits   1,966   2,140
Total non-current assets   16,362   18,478
TOTAL ASSETS $ 30,490 $ 32,037
 

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit $ 1,472 $ 1,578
Accounts payable 3,042 2,770
Accrued expenses 2,647 3,084
Income taxes payable 232 296
Current portion of bank loans payable 319 346
Current portion of capital leases   206   197
Total current liabilities 7,918 8,271
 
Bank loans payable, net of current portion 1,792 2,198
Capital leases, net of current portion 504 475
Deferred tax liabilities 273 333
Other non-current liabilities   37   38
Total non-current liabilities   2,606   3,044
TOTAL LIABILITIES   10,524   11,315
 
COMMITMENTS AND CONTINGENCIES -- --
 
EQUITY
TRIO-TECH INTERNATIONAL'S SHAREHOLDERS' EQUITY:

Common stock, no par value, 15,000,000 shares authorized; 3,513,055 shares issued and outstanding at December 31, 2015 and June 30, 2015, respectively
10,882 10,882
Paid-in capital 3,142 3,087
Accumulated retained earnings 2,695 2,246
Accumulated other comprehensive gain-translation adjustments   1,649   2,771
Total Trio-Tech International shareholders' equity 18,368 18,986
Non-controlling interest   1,598   1,736
TOTAL EQUITY   19,966   20,722
TOTAL LIABILITIES AND EQUITY $ 30,490 $ 32,037
 

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