8-K
TRIO-TECH INTERNATIONAL (TRT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 21, 2020
TRIO-TECH INTERNATIONAL
(Exact Name of Registrant as Specified in Its Charter)
California
(State or Other Jurisdiction of Incorporation)
| 1-14523 | 95-2086631 |
|---|---|
| (Commission File<br>Number) | (IRS Employer<br>Identification No.) |
| Block 1008 Toa Payoh North, Unit 03-09 Singapore | 318996 |
| (Address of<br>Principal Executive Offices) | (Zip<br>Code) |
(65)6265 3300
(Registrant’s Telephone Number, Including Area Code)
____________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, no<br>par value | TRT | NYSE<br>American |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b2 of the Securities Exchange Act of 1934 (17 CFR 240.12b2) Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Item 2.02 Results of Operations and Financial Conditions
On May 21, 2020, Trio-Tech International issued a press release announcing its financial results for the fiscal quarter ended March 31, 2020. A copy of the press release is attached as Exhibit 99.1.
The information in this Current Report, including the exhibit hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report, including the exhibit hereto, shall not be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release of Trio-Tech International dated May 21, 2020
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TRIO-TECH<br>INTERNATIONAL | |
|---|---|
| Date:<br><br><br>May 22, 2020 | |
| By:<br>/s/ VICTOR H.M.<br>TING<br><br><br>Name:<br>Victor H.M. Ting<br><br>Title: <br>Vice President and<br><br><br>Chief<br>Financial Officer |
EXHIBIT INDEX
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release of<br>Trio-Tech International dated May 21, 2020 |
ex99-1
Exhibit 99.1
| LOS<br>ANGELES<br><br><br>SINGAPORE<br><br><br>KUALA<br>LUMPUR<br><br><br>BANGKOK<br><br><br>SUZHOU<br><br><br>TIANJIN<br><br><br>CHONGQING | |
|---|---|
| FOR IMMEDIATE RELEASE | Company<br>Contact: <br>Investor Contact:<br><br><br>A. Charles<br>Wilson <br>Berkman Associates<br><br><br>Chairman <br>(310) 927-3108<br><br><br>(818)<br>787-7000 <br>info@BerkmanAssociates.com |
| --- | --- |
Trio-Tech Reports Third Quarter Results
Van Nuys, CA – May 21, 2020 – Trio-Tech International (NYSE MKT: TRT) today announced financial results for the third quarter and first nine months of fiscal 2020.
Third Quarter Results
Revenue for the three months ended March 31, 2020 decreased 4% to $8,501,000 compared to $8,838,000 for the third quarter of fiscal 2019. Manufacturing revenue decreased 19% to $2,519,000 compared to $3,097,000 last year, as customers’ uncertainties relating to the COVID-19 pandemic appear to have delayed certain orders. Testing services revenue decreased 6% to $3,741,000 from $3,989,000 for the same quarter last year, primarily reflecting the Malaysian government’s effort to reduce the spread of COVID-19 by restricting the transportation of workers. Distribution revenue increased 29% to $2,225,000 from $1,727,000 for the third quarter last year.
Reflecting lower revenue and unusually high labor costs in China due to the extension of the Lunar New Year holiday associated with the COVID-19 pandemic, gross margin decreased to $1,786,000, or 21% of revenue, for this year’s third quarter from $2,174,000, or 25% of revenue, for the third quarter a year ago.
Operating expenses increased 5% to $2,153,000 from $2,051,000 for the third quarter last year, primarily due to a one-time impairment charge of $139,000 on obsolete testing services equipment.
The loss from operations for the third quarter of fiscal 2020 was $367,000. This compares to an operating profit of $123,000 for the third quarter of fiscal 2019.
Net income attributable to Trio-Tech International Common Shareholders for the three months ended March 31, 2020 was $70,000, or $0.02 per diluted share, compared to $683,000, or $0.19 per diluted share, for the third quarter of fiscal 2019. Net income for the third quarter of 2020 benefitted from $263,000 in other income, which included financial assistance received from local governments in Singapore and China to mitigate the negative impact of the COVID-19 pandemic.
CEO Comments
S.W. Yong, Trio-Tech's CEO, said, "In response to the COVID-19 pandemic, we have implemented new operating procedures to enhance the safety of our employees and customers. Our Singapore and Malaysia operations have been classified as part of the global supply chain, but both are subject to social distancing requirements and manpower restriction that affect productivity and revenue. No one knows how long today’s stringent safety measures will last. Accordingly, we continue to closely monitor developments everywhere we operate, and will take additional precautionary steps if necessary to protect the interests of all Trio-Tech stakeholders and to protect the safety of our employees.”
Nine Months Results
For the first nine months of fiscal 2020 ended March 31, 2020, revenue decreased 5% to $27,286,000 compared to $28,573,000 for the same period last year. Manufacturing revenue declined 12% to $8,881,000 from $10,086,000, while testing services revenue declined 6% to $12,018,000 from $12,819,000. Distribution revenue increased 13% to $6,338,000 compared to $5,587,000 for the first nine months of fiscal 2019.
Overall gross margin for the first nine months of fiscal 2020 decreased 9% to $5,943,000, or 22% of revenue, from $6,533,000, or 23% of revenue, for the same period of fiscal 2019.
(more)
16139 Wyandotte Street, Van Nuys, CA 91406, USA ● TEL: (818) 787-7000 ● FAX (818) 787-9130
Trio-Tech Reports Third Quarter and Nine Months Results
May 21, 2020
Page Two
Operating expenses increased 3% to $6,261,000 from $6,060,000 for last year’s first nine months, primarily the result of the impairment charge mentioned above. The operating loss for the first nine months of fiscal 2020 was $318,000, compared to an operating profit of $473,000 for the same period last year.
For the first nine months of fiscal 2020, other income increased to $1,576,000 from $655,000 for the first nine months of fiscal 2019. This increase was mainly due to a non-recurring gain on the sale of assets of $1,172,000 compared to $685,000 for the same period last year, coupled with the government grants mentioned above.
Net income attributable to Trio-Tech International Common Shareholders for the first nine months of fiscal 2020 was $769,000, or $0.21 per diluted share, compared to $1,096,000, or $0.29 per diluted share for the first nine months of fiscal 2019.
Shareholders' equity at March 31, 2020 was $24,867,000, or $6.77 per outstanding share, compared to $24,861,000, or $6.77 per outstanding share, at June 30, 2019. There were approximately 3,673,055 common shares outstanding at March 31, 2020.
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; public health issues related to the COVID-19 pandemic; 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.
(tables attached)
| TRIO-TECH INTERNATIONAL AND SUBSIDIARIES | ||||
|---|---|---|---|---|
| CONDENSED<br>CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
| UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE) | ||||
| Three Months Ended | Nine Months Ended | |||
| --- | --- | --- | --- | --- |
| March 31, | March 31, | |||
| Revenue | 2020 | 2019 | 2020 | 2019 |
| Manufacturing | $2,519 | $3,097 | $8,881 | $10,086 |
| Testing Services | 3,741 | 3,989 | 12,018 | 12,819 |
| Distribution | 2,225 | 1,727 | 6,338 | 5,587 |
| Real<br>Estate | 16 | 25 | 49 | 81 |
| 8,501 | 8,838 | 27,286 | 28,573 | |
| Costs of Sales | ||||
| Cost of manufactured<br>products sold | 1,851 | 2,303 | 6,789 | 7,806 |
| Cost of testing services rendered | 2,937 | 2,862 | 9,046 | 9,351 |
| Cost of<br>distribution | 1,909 | 1,483 | 5,454 | 4,831 |
| Cost of real<br>estate | 18 | 16 | 54 | 52 |
| 6,715 | 6,664 | 21,343 | 22,040 | |
| Gross Margin | 1,786 | 2,174 | 5,943 | 6,533 |
| Operating Expenses: | ||||
| General and administrative | 1,754 | 1,742 | 5,319 | 5,223 |
| Selling | 181 | 246 | 547 | 580 |
| Research and development | 79 | 76 | 280 | 270 |
| Impairment loss on<br>long-lived assets | 139 | -- | 139 | -- |
| Gain<br>on disposal of property, plant and equipment | -- | (13) | (24) | (13) |
| Total operating expenses | 2,153 | 2,051 | 6,261 | 6,060 |
| (Loss) income<br>from Operations | (367) | 123 | (318) | 473 |
| Other Income | ||||
| Interest expense | (63) | (74) | (186) | (250) |
| Gain on sale of<br>assets held for sale | -- | 685 | 1,172 | 685 |
| Other income,<br>net | 440 | 128 | 590 | 220 |
| Total other income | 377 | 739 | 1,576 | 655 |
| Income from Continuing Operations before Income Taxes | 10 | 862 | 1,258 | 1,128 |
| Income Tax Benefit<br>(Expenses) | 8 | (209) | (112) | (159) |
| income<br>from Continuing Operations | ||||
| before Non-controlling<br>Interest, net of tax | 18 | 653 | 1,146 | 969 |
| (Loss) income from<br>Discontinued Operations, net of tax | (21) | 2 | (21) | (2) |
| NET (LOSS)<br>INCOME | (3) | 655 | 1,125 | 967 |
| Less: Net (loss)<br>income Attributable to Non-controlling Interest | (73) | (28) | 356 | (129) |
| Net Income Attributable to Trio-Tech International | 70 | 683 | 769 | 1,096 |
| Net Income Attributable to Trio-Tech International: | ||||
| Income from Continuing Operations, net of tax | 81 | 682 | 780 | 1,097 |
| (Loss)<br>Income from Discontinued Operations, net of tax | (11) | 1 | (11) | (1) |
| Net Income Attributable to Trio-Tech International | $70 | $683 | $769 | $1,096 |
| Basic Earnings per<br>Share | $0.02 | $0.19 | $0.21 | $0.30 |
| Diluted Earnings<br>per Share | $0.02 | $0.19 | $0.21 | $0.29 |
| Weighted Average Shares Outstanding - Basic | 3,673 | 3,673 | 3,673 | 3,673 |
| Weighted Average Shares Outstanding - Diluted | 3,759 | 3,685 | 3,734 | 3,746 |
| TRIO-TECH INTERNATIONAL AND SUBSIDIARIES | ||||
| --- | ||||
| CONDENSED<br>CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
| UNAUDITED (IN THOUSANDS) | ||||
| Three Months Ended | Nine Months Ended | |||
| --- | --- | --- | --- | --- |
| March 31, | March 31, | |||
| 2020 | 2019 | 2020 | 2019 | |
| Comprehensive (Loss)<br>Income Attributable to Trio-Tech<br>International: | ||||
| Net (loss)<br>income | $(3) | $655 | $1,125 | $967 |
| Foreign Currency Translation, net of tax | (1,013) | 401 | (1,051) | (189) |
| Comprehensive (Loss)<br>Income | (1,016) | 1,056 | 74 | 778 |
| Less: Comprehensive (Loss)<br>Income | ||||
| Attributable to Non-controlling Interest | (64) | 1 | 376 | (191) |
| Comprehensive (Loss)<br>Income | ||||
| Attributable to Trio-Tech International | $(952) | $1,055 | $(302) | $969 |
| TRIO-TECH INTERNATIONAL AND SUBSIDIARIES | ||||
| --- | ||||
| CONDENSED<br>CONSOLIDATED BALANCE SHEETS | ||||
| (IN THOUSANDS, EXCEPT NUMBER OF SHARES) | ||||
| Mar.<br>31, | Jun. 30, | |||
| --- | --- | --- | ||
| 2020 | 2019 | |||
| ASSETS | (unaudited) | |||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | $4,370 | $4,863 | ||
| Short-term deposits | 6,309 | 4,144 | ||
| Trade accounts receivable, net | 6,397 | 7,113 | ||
| Other receivables | 1,065 | 817 | ||
| Inventories, net | 2,226 | 2,427 | ||
| Prepaid expenses and other current assets | 267 | 287 | ||
| Assets held for sale | -- | 89 | ||
| Total current assets | 20,634 | 19,740 | ||
| Deferred tax assets | 565 | 390 | ||
| Investment properties, net | 705 | 782 | ||
| Property, plant and equipment, net | 10,597 | 12,159 | ||
| Operating<br>lease right-of-use assets | 1,073 | -- | ||
| Other assets | 1,595 | 1,750 | ||
| Restricted term deposits | 1,627 | 1,706 | ||
| Total non-current assets | 16,162 | 16,787 | ||
| TOTAL ASSETS | $36,796 | $36,527 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Lines of credit | $398 | $187 | ||
| Accounts payable | 3,129 | 3,272 | ||
| Accrued expenses | 3,065 | 3,486 | ||
| Income taxes payable | 396 | 417 | ||
| Current portion of bank loans payable | 378 | 488 | ||
| Current portion of finance leases | 246 | 283 | ||
| Current<br>portion of operating leases | 541 | -- | ||
| Total current liabilities | 8,153 | 8,133 | ||
| Bank loans payable, net of current portion | 1,919 | 2,292 | ||
| Finance leases, net of current portion | 486 | 442 | ||
| Operating<br>leases, net of current portion | 532 | -- | ||
| Deferred tax liabilities | 375 | 327 | ||
| Income<br>taxes payable | 430 | 439 | ||
| Other non-current liabilities | 34 | 33 | ||
| Total non-current liabilities | 3,776 | 3,533 | ||
| TOTAL LIABILITIES | 11,929 | 11,666 | ||
| EQUITY | ||||
| TRIO-TECH INTERNATIONAL'S SHAREHOLDERS' EQUITY: | ||||
| Common stock, no par value, 15,000,000 shares authorized; 3,673,055 | ||||
| issued and outstanding<br>at March 31, 2020 and June 30, 2019,<br>respectively | 11,424 | 11,424 | ||
| Paid-in capital | 3,357 | 3,305 | ||
| Accumulated retained earnings | 7,839 | 7,070 | ||
| Accumulated other comprehensive gain-translation adjustments | 796 | 1,867 | ||
| Total Trio-Tech International shareholders' equity | 23,416 | 23,666 | ||
| Non-controlling interest | 1,451 | 1,195 | ||
| TOTAL EQUITY | 24,867 | 24,861 | ||
| TOTAL LIABILITIES AND EQUITY | $36,796 | $36,527 |