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Trio-Tech Third Quarter Net Income Improves to $0.05 Per Share Versus a Loss of $0.16 Per Share as Revenue Increases 24.5%

Trio-Tech International (NYSE MKT:TRT) today announced financial results for the third quarter and the first nine months of fiscal 2014.

"We are pleased by the steadily improving performance of our core semiconductor manufacturing equipment and semiconductor testing services businesses, both of which delivered solid revenue growth for the third quarter and first nine months of fiscal 2014 compared to the same periods of fiscal 2013. Gross margin, operating income, and net income also increased versus the same periods of the prior year. We believe our solid performance reflects our focus on customer service and operating efficiency, and we are optimistic about the outlook for the period ahead," said S.W. Yong, Trio-Tech's CEO.

Third Quarter Results

For the three months ended March 31, 2014, revenue increased 24.5% to $8,039,000, compared to revenue of $6,458,000 for the third quarter of fiscal 2013. Products revenue increased 12.5% to $3,394,000 compared to $3,018,000 for last year's third fiscal quarter, and semiconductor testing services revenue increased 35.0% to $4,599,000 compared to $3,407,000 for the third quarter of fiscal 2013.

Gross margin for this year's fiscal third quarter increased to $1,967,000, or 24.5% of revenue, compared to $1,267,000, or 19.6% of revenue, for the third quarter of fiscal 2013.

Operating expenses for the third quarter of fiscal 2014 of $1,946,000, or 24.2% of revenue, included non-cash stock option expense of $8,000. For the third quarter of fiscal 2013, operating expenses of $1,780,000, or 27.6% of revenue, included non-cash stock option expense of $21,000.

Income from operations for the third quarter of fiscal 2014 increased to $21,000 compared to an operating loss of $513,000 for the same period a year ago.

Net income attributable to Trio-Tech common shareholders for the third quarter of fiscal 2014 increased to $157,000, or $0.05 per diluted share, which included income from the discontinued fabrication services business of $34,000, or $0.01 per share. In comparison, for the third quarter of fiscal 2013, the net loss attributable to Trio-Tech common shareholders was $543,000, or $0.16 per share, which included a loss from the discontinued fabrication business of $52,000, or $0.01 per share. Trio-Tech terminated its fabrication facilities lease in December 2012 and discontinued this segment in the fourth quarter of fiscal 2013.

Nine Months Results

For the nine months ended March 31, 2014, revenue increased 15.6% to $26,875,000 compared to revenue of $23,254,000 for the first nine months of fiscal 2013. Products revenue increased 11.8% to $13,495,000 compared to $12,073,000 for the first nine months of fiscal 2013, and semiconductor testing services revenue increased 19.5% to $13,244,000 compared to $11,085,000 for the same period last year.

Gross margin for the first nine months of fiscal 2014 increased to $6,045,000, or 22.5% of revenue, compared to $4,654,000, or 20.0% of revenue, for the same period last year.

Operating expenses for the first nine months of fiscal 2014 increased 9.8% to $6,143,000, or 22.9% of revenue, including a non-cash stock option expense of $208,000. For the same period last year, operating expenses of $5,592,000, or 24.0% of revenue, included non-cash stock option expense of $40,000.

The operating loss for the first nine months of fiscal 2014 of $98,000 narrowed significantly from the operating loss of $938,000 for the first nine months of fiscal 2013.

The net loss attributable to Trio-Tech common shareholders for the first nine months of fiscal 2014 was $225,000, or $0.06 per share, which included a loss from the discontinued fabrication services business of $38,000, or $0.00 per share. In comparison, for the first nine months of fiscal 2013, the net loss attributable to Trio-Tech common shareholders was $1,065,000, or $0.32 per share, including a loss from the discontinued fabrication business of $541,000, or $0.08 per share.

Cash provided by operations for the first nine months of fiscal 2014 was $3,154,000, compared to cash provided by operations for the first nine months of fiscal 2013 of $4,104,000.

Shareholders' equity at March 31, 2014 was $20,583,000, or $5.86 per outstanding share, compared to $20,606,000, or $6.20 per outstanding share, at June 30, 2013. There were approximately 3,513,000 common shares outstanding for the first nine months of fiscal 2014, compared to approximately 3,322,000 common shares outstanding for the same period last year.

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, oil and gas equipment fabrication 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
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
 
    Three Months Ended     Nine Months Ended
March 31, March 31,

 

2014     2013 2014     2013

Revenue

Products $ 3,394 $ 3,018 $ 13,495 $ 12,073
Testing Services 4,599 3,407 13,244 11,085
Other   46     33     136     96  
  8,039     6,458     26,875     23,254  
Costs of Sales
Cost of products sold 2,895 2,538 11,305 10,363
Cost of testing services rendered 3,142 2,621 9,420 8,140
Other   35     32     105     97  
  6,072     5,191     20,830     18,600  
Gross Margin 1,967 1,267 6,045 4,654
Operating Expenses:
General and administrative 1,757 1,567 5,429 4,982
Selling 140 143 553 399
Research and development 49 72 150 217
(Gain) Loss on disposal of property, plant and equipment   --     (2 )   11     (6 )
Total operating expenses   1,946     1,780     6,143     5,592  
Loss (Income) from Operations 21 (513 ) (98 ) (938 )
Other Income (Expenses)
Interest expense (62 ) (72 ) (196 ) (226 )
Other income, net   77     78     36     388  
Total other income (expenses)   15     6     (160 )   162  

Income (loss) from Continuing Operations before Income Taxes

36 (507 ) (258 ) (776 )
Income Tax Benefit (Expense)   184     (28 )   266     96  

Income (loss) from Continuing Operations before Non-controlling Interest, net of tax

220 (535 ) 8 (680 )
Income (loss) from discontinued operations, net of tax   34     (52 )   (38 )   (541 )
NET INCOME (LOSS) $ 254 $ (587 ) $ (30 ) $ (1,221 )
Less: Net income (loss) attributable to the non-controlling interest   97     (44 )   195     (156 )
Net Income (loss) attributable to Trio-Tech International 157 (543 ) (225 ) (1,065 )
Net Income (Loss) Attributable to Trio-Tech International:
Income (loss) from continuing operations, net of tax 138 (530 ) (204 ) (810 )
Income (loss) from discontinued operations, net of tax   19     (13 )   (21 )   (255 )
Net Income (Loss) Attributable to Trio-Tech International $ 157 $ (543 ) $ (225 ) $ (1,065 )
 
Comprehensive Income (Loss) Attributable to Trio-Tech International
Net income (loss) $ 254 $ (587 ) $ (30 ) $ (1,221 )
Foreign currency translation, net of tax   (249 )   (52 )   (394 )   665  
Comprehensive Income (Loss) 5 (639 ) (424 ) (556 )

Less: Comprehensive income (loss) attributable to non-controlling Interest

  88     (61 )   82     (8 )
Comprehensive Loss Attributable to Trio-Tech International   (83 )   (578 )   (506 )   (548 )
Basic and diluted earnings (loss) per share
From continuing operations $ 0.04 $ (0.15 ) $ (0.06 ) $ (0.24 )
From discontinued operations $ 0.01   $ (0.01 ) $ 0.00   $ (0.08 )
Basic and diluted Earnings (Loss) per Share $ 0.05   $ (0.16 ) $ (0.06 ) $ (0.32 )
 
Weighted Average Shares Outstanding - Basic 3,513 3,322 3,513 3,322
Weighted Average Shares Outstanding - Diluted 3,582 3,322 3,513 3,322
 
 
TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
 
           
Mar. 31 Jun. 30,
2014 2013
ASSETS (Unaudited)
CURRENT ASSETS:
Cash & cash equivalents $ 2,549 $ 2,793
Short-term deposits 101 104
Trade accounts receivable, net 8,163 8,728
Other receivables 429 993
Loan receivables from property development projects, net 803 1,139
Inventories, net 1,823 2,463
Prepaid expenses and other current assets   294   358
Total current assets 14,162 16,578
 
Investments -- 791
Investment Properties, Net 1,785 1,893
Property, Plant and Equipment, Net 13,024 12,851
Other Assets 1,720 437
Restricted Term Deposits   3,505   3,494
TOTAL ASSETS $ 34,196 $ 36,044
 

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Lines of credit $ 2,875 $ 3,864
Accounts payable 3,591 4,136
Accrued expenses 3,183 3,060
Income taxes payable 273 459
Current portion of bank loans payable 599 770
Current portion of capital leases   67   105
Total current liabilities 10,588 12,394
 
Bank Loans Payable, net of current portion 2,601 2,613
Capital Leases, net of current portion 229 228
Deferred Tax Liabilities 157 191
Other non-current liabilities   38   12
TOTAL LIABILITIES 13,613 15,438
 
Commitments and contingencies -- --
 
EQUITY
 
TRIO-TECH INTERNATIONAL'S SHAREHOLDERS' EQUITY:

Common stock, no par value, 15,000,000 shares authorized; 3,513,055 and 3,321,555 shares issued and outstanding at March 31, 2014 and June 30, 2013, respectively

10,882 10,531
Paid-in capital 2,964 2,756
Accumulated retained earnings 1,443 1,668
Accumulated other comprehensive gain-translation adjustments   3,399   3,680
Total Trio-Tech International shareholders' equity   18,688   18,635
Non-controlling interest   1,895   1,971
TOTAL EQUITY   20,583   20,606
TOTAL LIABILITIES AND EQUITY $ 34,196 $ 36,044

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