Trio-Tech Reports Third Quarter and Nine Months Results

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

Nine Months Results

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.

Shareholders' equity at March 31, 2018 was $23,923,000, or $6.73 per outstanding share, compared to $21,527,000, or $6.11 per outstanding share, at June 30, 2017. Shareholder's equity benefited from a foreign currency translation gain of $1,809,000, compared to a loss of $1,087,000 for the first nine months last year. There were approximately 3,553,055 common shares outstanding at March 31, 2018.

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."

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 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.

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